Ex-2Birds partner targets Asian ally for ABS in City
14 November 2011 | By Yun Kriegler
24 October 2013
26 March 2014
30 June 2014
26 March 2014
25 March 2014
With ABSs the talk of the town, a new frontier has opened up: Asian-owned ABSs.
Former Bird & Bird partner Stephen Kines, who set up the firm’s Central and Eastern European operations, is leading the charge. Having left Bird & Bird in the autumn, Kines has set up Kines Global, a law firm development company the aim of which is to find a Chinese or Indian law firm to bring to the UK ABS market.
The plan is to join forces with one of the pre-eminent Chinese or Indian law firms. Kines Global will create an ABS in London that will be invested in jointly by the foreign firm and a private equity investor. The initial capital investment by the foreign firm is estimated to be no less than e5m (£4.28m).
Once the platform is set up Kines Global will run the business on behalf of the foreign partner firm, working on an interim basis for a period of around three years.
According to Kines, a vital part of the process will be recruiting top legal talent from leading City firms.
“Attracting top talent requires a significant amount of financial investment. But money alone won’t make the cut,” he concedes. “It also needs a good strategy that can produce long-term success to attract partners and good lawyers.”
There has been strong interest in ABS investment from abroad, particularly from US, European and Australian law firms. Kines’ decision to zero in on Chinese and Indian law firms may be a riskier strategy, but he believes his business plan is solid.
“It’s clear that the power in the global economy is shifting towards Asia. China and India’s rise in economic strength continues gathering pace,” Kines says. “The size of the economy and the amount of outbound investment from these two countries have reached a critical mass to allow their law firms to become truly global and to follow their clients.”
Kines notes that UK and US firms have long dominated the Asian legal markets, but adds that the advent of the ABS, coupled with current market conditions, offer an unprecedented opportunity for Asian firms to reclaim their fair share.
Theoretically Kines’ plan could work. In reality, though, finding the right partner firm will prove a huge challenge. According to Kines, the right candidate needs to meet several important criteria, including having a war chest of at least e5m, a well-established domestic base, a focus on high-end corporate and commercial work, a strong global strategy and a willingness to take on local law capability - in other words, compete directly with the City firms.
Dacheng Law Offices, Yingke Law Firm and Zhonglun W&D Law Firm, three of China’s largest players by headcount, have already branched out into a number of overseas locations, including London. But they do not have the qualities Kines is seeking.
“These firms’ overseas offices are generally very small and don’t target high-end transactions. More importantly, they don’t have a clear and strong global strategy,” Kines explains.
The elite People’s Republic of China (PRC) firms Jun He Law Offices, King & Wood and Zhong Lun Law Firm are more fitting candidates, but are not likely to be interested.
ing & Wood is executing its own global strategy through its proposed merger with Australia’s Mallesons Stephen Jaques, while Jun He and Zhong Lun are understood to take very conservative approaches to international expansion. This leaves Kines a very shallow pool of candidates to choose from.
“There’s no doubt that a number of PRC firms already have the wealth and ability to make the deal; they just need a visionary leader, like ex-Linklaters chief Tony Angel [who joined DLA Piper on 8 November], to really drive the revolution,” stresses Kines.
Many commentators agree on the inevitability and progress of PRC firms’ international expansion, but some have doubts as to whether they will go down the ABS route to achieve their goals, at least in the near term.
“PRC firms have made fantastic progress over the past 20-odd years. Their involvement in the global economy will surely increase and they’ll be an important group to watch,” says Jomati Consultants principal Tony Williams. “But the ABS concept is very new, even more so to Chinese firms. It will take some time to see how it works and what opportunities it actually offers.
“I think it’s unlikely we’ll see a Chinese-controlled ABS in the next three years. It also depends on the outcome of the King & Wood and Mallesons discussions. If the combination’s successful, it will create a whole new dimension to law firms’ globalisation strategies.”