Greg Jordan has just come out of a board meeting conducted via teleconference, an efficient way to discuss the business of Reed Smith with its partners in Europe and the United States.
Communications technology is a critical tool for Jordan, Reed Smith’s managing partner, to keep the growing law firm connected across thousands of miles and multiple practice disciplines.
But while technology can offer great tools for the firm’s 1,400 lawyers, it’s no panacea for solving all of the challenges that it might face. While Jordan is a progressive who heartily embraces the new, he realizes that there are not yet equivalent alternatives for the traditional methods of forming relationships and keeping them warm and fuzzy.
“One of the things that there’s no substitute for is face time,” says Jordan. “And so if you’re going to be involved in a business that’s in four countries — and soon we’ll be in six, perhaps seven or eight — you need to make sure that your key people are traveling and are there to build the key kinds of relationships so that you can resolve other things over the telephone or by e-mail when you need to do it expeditiously.
“You can’t just do that, though, unless you’ve built a position of trust and confidence and a relationship, and that takes time, it takes face time. So a global business requires lots of people on lots of airplanes for lots of hours.”
For Jordan, it means lots of meetings, “lunch-and-learn” events with partners and associates, even improving foreign language skills to interact more effectively with his European counterparts.
“We go to see the clients and we let them know we’re a relationship firm,” Jordan says. “We’re a firm that likes to build relationships for the long haul.”
Racking up frequent flier miles alone isn’t enough to grow a law firm, either. The ambition to more than double Reed Smith’s revenue from 2000 to 2005 — from $211 million to $563 million — and transform it from an essentially mid-Atlantic firm to a global one started with a plan designed to accommodate the changes in how law is practiced and the realities of a global economy.
While a solid chunk of Reed Smith’s revenue — $27 million, or 10 percent in 2002 — still originates from its original clients and organizations associated with them, those charter clients have expanded globally, as have many other businesses. The center of business enterprise has shifted away from the heavy industry centers like Pittsburgh and over to financial, technology and services hubs in the United States and abroad. By 2000, Reed Smith realized that, while it had developed a strong presence regionally, if it were to continue to grow, its strategy would have to take it global.
“Increasingly in our business, we’ve had to get bigger and expand into new markets so that we’re more able to serve the clients as they’ve expanded, whether you’re talking about the banks or the steel companies in Pittsburgh or other companies in other cities,” Jordan says. “And as a result, what’s happening in the industry is firms are combining with each other across markets, firms are becoming, as we are, more global because the clients are becoming more global.
“Interestingly, as clients are getting more far-flung, they want to work with fewer law firms. So it’s really put a priority on our strategy to make sure we’re where we need to be and do what we need to do to win those contests because with those convergence programs, you either become a bigger supplier of high-value legal work, or you’re out.”
So Reed Smith put together a strategy that called for the firm to grow to a global presence, to add to its toolbox of professional competencies and to put in place programs that would allow it to maintain the quality of its services to a stable of top-shelf clients.
Jordan was elected managing partner in 2001, just as the firm was deciding that it had to develop a broader focus. That year, leading British firm Warner Cranston came into Reed Smith’s fold. Another step to fulfilling the growth strategy was to find a West Coast firm that would give the firm a national focus and entrench it in one of the most lucrative legal markets. It found the right match with Oakland’s Crosby, Heafey, Roach & May and its 112 lawyers in 2003.
That decision, like all of its acquisitions, required a careful examination of how well the firms might fit together before the papers were signed.
“Management has to spend a lot of time kicking the tires, getting to know people, testing the fit, and then what we do is have huge numbers of partners meeting their counterparts before any decision is made because we are a partnership, and the partners control the decisions of the firm,” says Jordan. “Management has a lot to do with it, but the partners have the final say. So if you want the partners to support one thing or another, you have to make the case to them, but you also have to get them involved so they can decide.”
And the work isn’t over when the deal closes.
“We’re mindful that to really move an organization, let alone put two organizations together, you need to be really clear about what we’re trying to do, why we’re trying to do it and as you check on it and report on it, that we’re doing it and how it’s working,” says Jordan.
“We thought if we combined with the right firm, we would be able to serve those clients on their California legal needs, and that’s really worked,” says Jordan. “We did almost $51 million in business last year alone as a result of the California combination that we wouldn’t have been able to do but for that combination.”
Adding capabilities
Just as better technology doesn’t ensure a better law firm, more lawyers in more locations doesn’t guarantee better performance or more profits. The key to Reed Smith’s success has been at least as much in acquiring the right competencies as it has in adding lawyers and offices. The Crosby, Heafey, Roach & May acquisition, for instance, brought needed expertise in the product liability arena.
And as its traditional clients in the financial services industry grew their enterprises both geographically and in terms of their capabilities, Reed Smith hunted for a way to package its services for those clients.
“We didn’t have a practice that dealt with the investment side of the business,” says Jordan. “Mellon had bought Dreyfus, PNC controlled BlackRock, big clients of ours ,and we didn’t have a practice that dealt with that part of the business. So we struck our deal with Federated Investors and brought the Federated legal group into Reed Smith to both continue to serve Federated and to serve Federated’s customers and the other clients of Reed Smith. That all happened in Pittsburgh, so there wasn’t any expansion geographically from that, but it helped us fill out a product line that we needed for a major industry that we were serving.”
The expansion hasn’t been simply arithmetic. Net revenue per lawyer has grown from $375,000 in 2000 to $609,000 in 2005.
“We’ve been able to triple the business from our top 250 clients over that five-year period, and it’s because we’re able to do more things in more places,” says Jordan. “Now, when a big client gets sued in California, we have one of the best California litigation practices anywhere. When they’re going to do a major transaction in London, Paris and Munich, we can do that because we have people in those markets.
“So we’ve been able to reposition ourselves to be more important to them, so it solidifies relationships and really helps drive the revenue.”
Maintaining quality
Jordan places a premium on listening to clients and responding to their needs, and that becomes more difficult but no less critical as the firm — as well as the kinds of work it takes on — grows larger and more complex. Jordan created in 2004 a position new to the industry, a general counsel liaison, to interface with clients.
“I think we really need to pay attention to the clients and make sure we’re listening to them,” Jordan says. “That’s why we hired the general counsel liaison to go talk to the clients and gather that feedback. I think we have to make sure we’re focused on quality initiatives, because as you get bigger, if you dilute the quality, that’s an unforgiving mistake to make because you’re going to put at risk your reputation for being trustworthy.”
The job of the general counsel liaison is simply to contact clients and gather feedback — “no sales, no service, just quality control,” says Jordan — to assess Reed Smith’s performance from the clients’ perspective. Not a practice development or marketing function, the task is handled by a former corporate general counsel who meets with clients in comprehensive sessions that probe the state of their relationship with Reed Smith.
She reports her findings, assembled through surveys and interviews, back to the client’s relationship partner and to senior management. The program has spawned some significant results, such as changes in the firm’s communications patterns with one client, hiring more local attorneys in one office to make it more responsive and changing lead counsel in a litigation action.
One of Reed Smith’s most ambitious initiatives is Reed Smith University, a state-of-the-art people-development initiative launched in 2004. Created in a partnership with the Wharton School at the University of Pennsylvania, its curriculum offers the firm’s lawyers and staff continuing education on legal matters as well as skills training in business and management.
Day-to-day focus
While he finds the notion of growing Reed Smith an exciting proposition, Jordan hasn’t lost sight of the need to stay on top of the everyday activities of the firm. Flying around the country and the world to make the deals that will add more lawyers, more offices and more revenue to the firm makes for exhilarating work for an executive who spent 170 nights on the road last year.
But at least as important in Jordan’s mind is the less glamorous but every bit as important blocking and tackling that it takes to keep a growing enterprise like a law firm on track.
“It is exciting to have strategy sessions and it is exciting to have preliminary merger discussions with firms in different cities,” says Jordan. “But the real heart of making the business work is keeping focused on the execution, keeping focused on the day-to-day things.”
For him, that means clearing the bottlenecks, keeping the firm’s people focused on their jobs and making sure that they are empowered to make decisions.
“What kind of work should we be going after in one sector or another, how should we price it, do we want to go after Bank A or Bank B,” says Jordan. “I probably would have a view on all of those things, but there are probably people who know a lot more about them, real estate in Virginia, let’s say. I could have a half-baked idea of how to approach the real estate market in Virginia, but we have people who have lived that, so we want to make sure they’re empowered to make the decisions, how to fully develop that practice, how to price it, how to structure it instead of letting it bubble up to someone who really doesn’t have the time or knowledge to make the decision.”
How to reach: Reed Smith, www.reedsmith.com