What Does It Take to Run One of the World’s Most Powerful Law Firms? With Alan Mason, Global Managing Partner, Freshfields

23:26You could say obnoxious. Obnoxious. Brusque is a French word, I think. Exactly. So there is certainly a side of me that it's helpful to have a different sort of way of thinking about things in Europe rather than a purely British way going to America, because I think there are lots of differences there.

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24:29Alan Mason:Today, they provide world-class technology, data, and analytics, playing a critical role in shaping modern finance. From their role in sustainable investing to their contributions to financial innovation, LSEG is helping to build a more connected and efficient market. Visit lseg.com via the link in the show notes to see how they're driving the future of finance. So the cultural sort of cohesion, or at least the challenge of growing a business, particularly on two sides of the Atlantic, is not to be underestimated. What would you say have been the lever or levers that have been most effective in building culture and reinforcing the virtue of a great firm?

25:10Look, Derek, right now I think that's another thing that's happening in the legal industry, because if you step back and look at what's happening across the legal world at the moment, It's very similar, I believe, to what happened in previous decades across, and you mentioned the investment banking community. But when you look at what's happened in investment banking, in management consultancy, in accountants, you've seen the sort of professionalization of traditional partnership models. Sort of the corporatization, if you were, of the traditional partnership model. And the legal profession is having a bit of a moment like that as well at the moment.

25:44So there are two ways to get things done in a law firm. You can lead a law firm in sort of more of a corporate direction where your partners are in effect highly paid senior executives like managing directors and investment bank. Or you can hang on to the more traditional partnership model where partners are also owners of the business and therefore have a say in the decisions that are made by the firm. Some of our competitors have leaned more into the first example, going down a more corporate command and control. So I come in and say, we're going to the US and, you know, that's what we're doing.

26:22Take it or leave it. That's not the route we went down. That's not who we are as a firm. That's not our culture, our identity. We've gone down the, let's talk amongst ourselves. Let's explain the business opportunity. Let's explain the rationale. Now let's explain the strategy and let's bring people along the journey. So arguably our approach can sometimes take a little bit longer because it requires a little bit more time to build consensus around an idea. But once the idea has landed, as it were, then suddenly you have, in my example, 490 partners on board with the idea. And that's incredibly powerful when you have people actually bought into what the firm is trying to do.

27:04Alan Mason:Very clear. Let's come back to the clients. You're operating at this high level with top institutions. And the mystique, I think, to the outsider is what's the advice that is most valued by those clients? That's a great question. Secret source of any law firm or any organization. So what makes us special? No, what our clients are looking for is, I believe, three things. It's a mixture of, of course, legal advice. We're here to get the law right. And that doesn't involve answering theoretical questions. It means actually advising them on how they can conduct their business in a way that, I guess, strikes the right balance for them in terms of risk and reward.

27:52So identifying the risks, advising on how to manage the risks. And that can be event-driven. That could be a piece of litigation. It could be a transaction, a piece of M &A, etc. or just what is the outlook in the industry and how do they need to start thinking about changing regulations to comply with the law. So first of all, the first part is very much getting the legal advice right in a practical way. But secondly, it's beyond that. It's exceptional client service. So we're in the service industry like the other professional services that I've mentioned. So making sure that we are there by our client side 24-7 when it matters the most to them.

28:33And then third, and this is, I think, something that's happened really, again, more recently, it's making sure that we are providing advice that is relevant to them from an industry point of view. So if I'm advising a tech client, I do that in a very different way than if I'm advising an investment bank or a traditional chemicals company, because they're going to have different issues. They're going to care less about certain points. They're going to care more about other points. So by advising our clients through an industry lens as well, I think we make the advice we give them more relevant.

29:10So it's legal, it's client service, and it's industry relevant.

29:14Alan Mason:And the other thing that sort of jumps out at me is that if, and I may have this wrong, but if Freshfields advise Blackstone, Carlisle, Warburg, Pinkers, General Atlantic, you know, somebody who spent time at Morgan Stanley where there was always this conversation about conflict of interest. How do you manage the fact that you are advising competitive institutions day in, day out? Yeah. And look, it's at the heart of our profession. So again, I go back to an industry that's going through this change, becoming more and more business focused, trying to run ourselves more as an industry, more and more like a business.

29:45We have to remember at the heart and the core of what we do. We are a profession providing a service and we have ethical standards of which conflicts of interest are probably one of the one of the most important. So we have an incredibly talented and global business, what we call business acceptance team that advises us from, we look at this through two layers. One, what are we technically allowed to do? And then secondly, from a commercial point of view, how do we manage competing commercial interests? but really we have a team that manages this for us and we sort of decide up front strategically what clients are we trying to develop, where do we want to position the business and we have to make decisions that reflect that.

30:31Alan Mason:So I listened to Mike Bloomberg a while back say about data that if you can't measure it, you can't manage it. A lot of talk about productivity, but partner, et cetera. When you look at the data, what really matters to you? It's a great question because there are so many different data points today and where the industry is going through a phase as well where we're trying to everybody's talking about data as an asset, which I'm always a little bit suspicion of jargon like that, because when you start digging, it's it's it's not exactly clear what people really mean. I think every law firm has their own metrics.

31:09What I personally look at is how much, basically how much revenue is everybody generating, not for themselves, but for the firm. So metrics that cut sort of data in different, sorry, revenue in different ways, and then divide it by the number of people you need to produce it. that for me is a very good indication of not so much our productivity, but are we aligning what we're doing to what our clients want? So if you see a fast growing part of the business, it means that what we're doing is that's a demand driven sort of growth spurt, as it were. And that's for me, a good sign of the health of the business, because it shows that we're thinking ahead, we're thinking about what our clients need.

32:00And therefore, we're doing something right. And then of course, you look at how you turn that into profitability, etc. But I'm sure we can come on to this as well. But when you look at the change in technology, AI, etc, some of the traditional metrics are going to be changed very, very quickly.

32:18Alan Mason:Well, you knew that was my next question, because it is the segue. It is the segue. And I can't imagine that you were asked any question more than the one about AI as a lawyer. So can I possibly have an original question? The answer is, of course, no. But could you just maybe start by saying how it has already improved productivity? Yeah, so I think, look, right now, we're still at the start of the AI journey. And I don't think, I certainly don't believe anybody who tells me that they know where this is going and what the sort of end game is going to be. So I think we are going to continue to see significant improvements in productivity as we go on.

32:59We've already we're already starting to see them. But I guess the first the first point is what do we really mean by productivity improvements? And I don't think what we're not seeing at the moment are many examples of doing the same task more quickly and stopping there. What we are seeing is doing some tasks more quickly. And then with that, going on to do more things, more interesting analysis of the data that we're seeing so we can provide a better service. So by way of example, I can go through, I used to be able to ask somebody to do some research on cases to try and find some trends and then provide advice to our clients on the basis of those trends.

33:47Right now with AI, I can look at every single case that's ever been decided on any particular topic. So I get almost perfect information on that. But then I can start then going deeper in my analysis to say, OK, in order to avoid the same things happening to our clients, what do they need to be doing to get ahead of the issues that were decided by those cases? So at the moment, what we're seeing is actually it's giving us the ability to provide more services and better quality advice to our clients because the industry is still figuring out what it is that we're going to be doing with all this sort of compute power being brought to the legal profession.

34:29If I look at what does it mean to be a lawyer and how have we traditionally operated, we've taken data and knowledge, sort of raw data and knowledge. We've added humans onto that to repackage that, analyze it and repackage it in a way that then we can deliver or turn into a service we can deliver to our client. more and more i think over the next phase what we will see is the sort of human element of that the middle part of the sandwich as it were sort of being less relevant in some respects so the clients being able to take the raw data and the um yeah the sort of the the knowledge and they have they can have access to the same information we can have but that so our our profession will evolve because we will then be doing different things, providing different services to our clients on the basis of the information that they also have access to.

35:29And we've recently signed, you would have seen maybe, we recently signed, or last year we signed a strategic partnership with Google to help develop or help take their products, to help us develop different tools or take their tools for us to develop new products for our clients. And a couple of weeks ago, we've signed a new agreement, a partnership again with Anthropic to do the same thing using Claude. So we're really excited about these new tools coming out from big tech companies and also some of the more specialist legal tech companies because we think they give us the ability to do more things for our clients.

36:07Alan Mason:So correct me if I'm wrong, but my understanding is you, along with all the other law firms, as a result of, you know, I'm going to say broadly AI, don't need to hire as many graduates. and my question is whilst that is you know a progression maybe with a small p is that if you're a client five years hence fewer lawyers have gone through the learning experience of making mistakes because they've been able to hit the you know give me the answer button you know is that actually not going forwards so i certainly think we need and we're doing a lot of work thinking about what type of lawyers we need for the future what skill sets do we need we've recently entered also into a partnership with King's College in London to give all of our graduate recruits the opportunity to do an LLM there on AI in the law for example because we know that the sort of partners such as myself it will take us longer to get our heads around new technologies we want all of our young lawyers joining the firm to be trained in using AI in the law.

37:12I developed, so I'm an M &A and private equity partner, and I learnt my profession sitting in dark rooms all night, reviewing contracts and doing due diligence and writing reports. I'm not sure that made me necessarily a better lawyer, but that's certainly how my generation learnt how to sort of learnt our profession. The next generation will be doing that differently because a lot of the grind work that we used to do, and we called it experience, will be done by technology and different tools. We just have to make sure that we're giving our young lawyers the opportunity to gain the experience in a different way, arguably more interesting, more useful, possibly quicker as well than the way I gained my experience.

38:00Alan Mason:Which begs the question of what are the characteristics you're looking for in a new legal hire? So I think curiosity, ability to adapt, move quickly, adopt new ways of working. Those are some of the core characteristics that we can then over time through working on various mandates, transactions, cases, you then develop the experience that you need to finally acquire what ultimately our clients come to us for, which is judgment. OK, so judgment will still be an absolutely essential element of the legal profession. But again, I learned judgment through from my experience of sitting in dark rooms reviewing paper files.

38:47A younger generation will acquire experience in different ways, I think, better and less soul destroying in many ways.

38:58Alan Mason:We can't leave the industry that you specialize in without asking. PE more than M &A. Private markets have exploded. We all know what's happened. There's a sort of a cloud is hanging over, you know, certain parts of the polite way might be indigestion and the other thing might be too much capital trash and returns. How would you characterize the world of private assets today? So not specific to the legal market more generally. So I think it's a, I mean, there's clearly more private capital out there than ever before looking to be deployed, as you say, and maybe the market is going through a period of indigestion.

39:39But I don't think that, I think I'm not expecting there to be a swing back to sort of the dominance of the public markets we've had for many decades. I think private capital, private assets and public markets, the balance between the two is here to stay. I think it's, again, a logical consequence of what we saw happening in coming out of the global financial crisis, a shift of capital away from the more highly regulated public markets into less regulated private markets. So I think that is absolutely logical to be where we are today. I think it's set to stay. But over time, possibly some of the private markets will become more regulated and you'll see perhaps more of a balancing out and arguably some more convergence between the two.

40:28Alan Mason:Okay, which actually leads us into a section of RNC called the Outsiders Inquiry, where we go out and we find some questions from people that you may or may not know. Any competitors in that? No, we didn't, you know, in this case. So the first one is actually from Rob Rooney, who was CEO of Morgan Stanley International. He says, my sense is big law firms fees and compensation has outpaced everyone except the PE crowd over the last decade. Do they owe this an extraordinary expansion to the post GFC global regulatory climate? And if so, will it continue? So I think there is probably a reset going on at the moment.

41:07So the last big moment of disruption across the market was the global financial crisis. We're coming up for close to 20 years on now. And I think when you see everything that's going on in the world, in the economy, geopolitically, it does feel as though we're going through a bit of a reset moment. And there's no reason why the legal profession will be sort of an exception to that. I think the legal profession has perhaps over the last 20 years been a bit of a doubt, has been an exception to the general rule about somehow some other industries have been impacted. I think the legal industry has been rather insulated from some of the challenges that have been going on.

41:53And I'm not sure that will continue to be the case.

41:55Alan Mason:Same question from Hardy McLean, former managing partner at CVC. He said, work hours at elite law firms are insane. how does the new generation react to that? And if their hours get cut, do total billings drop? I think going back to the previous conversation, AI is the way you square that circle. Because how you would do it otherwise, in a pre-AI world, it's pretty simple. It requires a minimum number of hours. So the question from private equity deals, for us to be able to get absolutely everything right and provide the service that our clients require takes a minimum number of hours. You can't cut any corners.

42:41Clients don't come to us to get it just about okay. They come to us because they know we're going to get it absolutely right. The traditional model has been relatively small teams running very, very hard at transactions. That is changing again because as AI comes on, And a lot of the tasks, a lot of the manual tasks that take a lot of time will be able to be automated to a certain extent. They will still have to be checked.

43:07Alan Mason:Who was your great mentor and how do you encourage good mentorship as opposed to mentorship? Yeah, I think we all need careers. we have very long careers and having somebody or multiple people who, as it were, look out for us is incredibly important. And mentorship is not just about looking out for us. It's actually taking the time to provide advice, going out of your way to put yourself in the other person's shoes, think about what they're going through, picking them up when they're feeling down, advising them that when they're on a high it is a very very time intensive exercise but one that's immensely rewarding I've been lucky enough to have a few mentors in my career the one who jumps out most of all and probably why I'm here today is now Sir Edward Braham the former senior partner of the firm and now the chair of a FTSE 100 company M &G who was the first partner I started working with when I joined Freshfields almost 30 years ago.

44:18He knew that I was, I'd studied in France and I was half French and he walked into my office on the first day. He was working on a very big French transaction or a big transaction in France and dumped some papers on my desk saying, you're the French guy, aren't you? Hey, have a look at that. And we spent the next seven years working together and kept in contact ever since. And he's always been somebody who I've turned to for advice, but also who's gone out of his way to offer up his advice spontaneously.

44:49Alan Mason:And the last in this section was from the co-founder of the Money Mates podcast, Will Campion. He says, when might law firms need external capital? And is an IPO ever a route that some might consider? Great question. One that comes up a lot. And going back to Lloyd's book earlier, obviously, he describes the Goldman IPO in a lot of detail. That was needed for very specific reasons because they were worried about their capital position. We don't have the same constraints in that respect. We don't, as a legal industry, we don't have huge CapEx requirements. I often get the question, don't you need to take private equity capital or external capital to invest in AI?

45:33At the moment, that's not the case. That's not how the model is evolving. You could see, though, as the profession continues to professionalize or become more and more business focused, like, again, the investment banking community, like management consultants, like accountants, maybe the legal profession becomes more like the same. And then why wouldn't we take external capital? Right now, the biggest question is what would we do with it? And because we're not investors, we're advisors. We don't act as principal. We act as third party advisories, advisers. But right now, interestingly, over the last six months, I've had far fewer inquiries about this simply because some of what we've seen, I think, in the SaaS industry, the model being sort of reset a little bit with the impact of AI.

46:30I think lots of third party investors who previously were thinking about law firms are right now trying to think about what the future model looks like before deciding whether or not to invest. So I think there's a little bit of a pause in what was otherwise a very topical question up until even six, nine months ago.

46:49Alan Mason:Got it. A different question, which is around London. And there were two thoughts I had here is that, you know, will London continue its preeminent position as a dispute resolution centre? But sort of, you know, asking a second question, which is US law firms have been investing heavily in the UK whilst the capital markets have been moribund. So I'm asking you the first question and then I'm asking you to resolve this question I can't quite answer. Look, again, stepping back a second, Brexit 10 years ago now, who would have thought that the City of London would be in such a strong position today?

47:30I think the City of London as a whole has done a fantastic job about reinventing its position in the global economy today. And for us as a business, like any business, London, you know, we just reflect, we just sort of follow where the markets are. You mentioned earlier, follow the capital. We follow the capital. London is one of the biggest, brightest, most exciting global financial centers of the world. So it's a hugely important market for us, but also a very successful market, I think, for all investors. Any global organisation, be it an asset manager, private equity firm, large corporate, investment bank, you name it, nobody would think seriously about not having a presence in London.

48:20Okay, so first of all, strength of London as a market is, I guess, well, London is stronger than ever as a market. And therefore, for us, remains an incredibly important market. So in a way, how do we fix London as a market generally? I think it's in a great shape. Capital flows coming in stronger than ever. So I'm very, very confident about London as a marketplace. I don't think there's much to fix at the moment.

48:51Alan Mason:OK, and that question around dispute resolution? Well, what is it? Why is London such an important centre for dispute resolution? It's the rule of law. Fundamental, the predictability of the English legal system means that parties around the world will continue to look to English courts, English arbitration as a way of settling their disputes because of the predictability of the outcome, because of the impartiality of the system, and because of the quality of the legal profession here. And I don't see that. There are other areas, I mean, Singapore, the Middle East, the US, of course, there are other centres around the world, but London continues.

49:33And you can see, I think the US firms who have invested into London have done so very effectively, as you said, often in quite narrow areas. What they've done is they've picked their spot and then they've gone quite deep in a relatively narrow silo. So private equity is obviously one of those. We're seeing increased focus on dispute resolution now, litigation and arbitration here, but not. So yes, I think other firms are seeing that it's a great place to be, but not yet at the same scale as we're seeing in private equity here. Great.

50:09Alan Mason:Well, I am going to ask you five rapid fire questions. Number one, advice for young people thinking about the law profession. Advice to a young person going to the legal profession. Do it. Lean in. Be curious. How do you relax? I run. What's the best book that you've read in the last year? Hmm. I'm reading... I have a very bad memory. I can remember nobody's names. I am. Don't worry, Philip. I'm reading at the moment one that recommended to me recently, The Infinity Machine, which is a biography of the founder of DeepMind on AI. Fascinating. Wow. Okay. And is there one place in the world you haven't been to for holiday that you really want to go?

51:02Australia.

51:03Alan Mason:Australia. Presumably you have quite a large practice there, don't you? We don't, no. No. Very different market. We don't have a presence in Australia. Is that typical of your competitive peers? It's a market where there's some very strong firms locally. So we have great partnerships there. And we have great sort of, there are great firms with which we have partnerships. We work closely with them, but we don't actually have our own office there. And the reason is it's about as far away as I can imagine from anywhere else. And as a friend who's just come back from having sailed around the world said, of all the places he wouldn't want to live is Australia because there's so many things that can kill you.

51:43And my final question... I have my partners for that.

51:46Alan Mason:Okay. And my final question after that book, if you could say just one thing, one piece of advice, not to people listening from around the world, not legal advice, just the one piece of advice probably that you've learnt. So I've never had a master plan for my career or my life more generally. I've never had like a master plan of I must do this, et cetera. But I've always taken the sort of unpredictable – I've always sort of leaned into things as they happen and tried to adapt. So I think just the ability to get on with things, adapt, not be put off when things go wrong. There is something to be said for sort of getting up every day in your personal life or in your professional life and getting on with things that over time there's a compounding effect.

52:41It makes you stronger. You find enjoyment over things that, first of all, you find quite challenging. So what I enjoy the most is, I guess, is this sense of overcoming a challenge. Something that when I do something for the first time, I think, oh my God, how would I ever be able to do that? When you've done it a few times, it's immensely satisfying when you can turn a challenge or a failure into a success.

53:07Alan Mason:A version of what Tony Blair said when he came on, which was that he goes to bed at night and counts his blessings and wakes up in the morning with a sense of purpose. Alan, we had to wait a little bit to get you over here in the studio, but it's terrific to see you again and to understand what, I think even people who have been in the financial industry like myself for a very, very long time, you know, a lot of stuff that one doesn't really understand and the absolute imperative for large firms operating in various parts of the world to have help with that complexity, the ability to work with firms in different locations, the importance of incorporating technology but not losing sight of the value of experience and judgment.

53:46Alan Mason:And I hadn't really thought that, you know, as advisors, you're not capital starved. So anybody expecting suddenly lots of corporate activity in the legal space might be waiting a long time. So thank you so much for being with us today. Thank you, Simon.