The termination of the agreement between the global firm DLA Piper and the Colombian firm Martínez Beltrán announced a few days ago, forces us to question what went wrong in their joint positioning strategy in Colombia, or rather, which of the markets in which the alliance competed was misaligned and motivated the change of strategy: was it a failure with the internal talent? was it a problem in the configuration of the partnership? or was it the clients who required a service provided in a different way?

At the time, the landing of two large networks of lawyers (Dentons through its agreement with Cárdenas y Cárdenas and DLA Piper through Martínez Beltrán), marked a milestone in Colombia. The consolidation of both firms changed the legal market and the way legal services were provided in the country.

There are as many types of global and regional alliances or networks as there are business models. At one end of the spectrum are networks that share brand, benefits, governance and even talent. At the other end are alliances that function as groupings of independent law firms working together with some level of cohesion and seeking to generate work for each other, but without any exclusivity.

When the dynamism and strength of the economy converge with a firm’s desire for growth and institutionalization, joining an international alliance is a useful strategic decision. Alliances make it possible to formalize structures and processes in an accelerated manner and to leverage on consistent models with proven success. Likewise, these alliances allow to nurture an international network and reach profitable and international clients that see the country as attractive, and which, on its own, would have been difficult for the firm to reach. Likewise, it allows clients with growth not to defect to the structures of more developed firms, with better positioning and international presence.

An example of this was the alliance between DLA Piper – Martínez Beltrán, which obtained 4 notable achievements: First, it incorporated lateral partners quickly, creating a striking scheme that offered them sustainability and profitability, achieving historical and outstanding growth in turnover year after year. Second, it managed to compete head-to-head with traditional firms for the best talent in the market and built solid teams. Third, it increased its participation in the country’s landmark transactions. Finally, hand in hand with its international partner, it took a giant step towards the institutionalization and opening of the firm’s partnership, leaving behind what for twenty years was a family firm with a single founding partner and successfully transferring the management of the firm to a second generation. So what went wrong with this alliance?

From the sidelines, it would appear that it was not due to a problem with internal talent, and I suspect it was more likely due to a problem in shaping the partner market and the client market that the firm wants to reach in the coming years.

When the economy falters, the country is no longer attractive to the clients that nurtured the international alliance, and business transactions, which are large and profitable enough for robust structures, become scarce. It is then that the bidding among the “first class” firms to participate in these operations becomes more acute.

What else could have happened?

The alliance may have limited the possibility of advising on good-sized transactions. It could also have restricted the incorporation of lateral partners with relevant client portfolios (often due to conflicts in a distant and unrelated jurisdiction), thus removing the possibility of alleviating the cost of the alliance structure itself.

This could rust it, since the loss of efficiency immediately punishes the profitability of the partners, and what had once been a firm in growth and development, is now a consolidated firm with its own wings that is less dependent on external alliances.

In an industry where competitiveness is so high, guaranteeing the best service under all circumstances must be one of the three main objectives of a firm and, I am sure, this was what the partners had in mind when they made the difficult decision to abandon the alliance, in addition to the obvious, which is to protect profitability and avoid a loss of efficiency in the current economic situation in Colombia.

Antonio Gómez Montoya.