In a land of plenty
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The Singapore authorities have made a limited number of joint venture licences available; and although they eventually extended the number, only eight have yet been awarded. There are then a number of conditions that must be met once licences are granted. IT systems must be aligned and non-domestic firms are not permitted to practise litigation, for example.
The big sell behind joint ventures is simple - international firms will be able to pick up new clients. They can also advise existing clients on Singapore law, meaning they no longer have to lose fees through referrals.
Well, that's the argument. But is it going to add to the coffers? After all, as a joint venture there will be more people taking from the same pot than there was before. Roger Dyer, Freshfields Bruckhaus Deringer Singapore managing partner, says: "This is not the structure we would have chosen if we had been given a free hand. "It is all a bit of an experiment. The pressure for this came from the international banking community; the authorities started the process but the local bar was not very keen on the idea."
Most of the UK operations feel that merger would have been the ideal, be it firm-wide or just with the Singapore office. Many are pinning their hopes on full merger if and when the rules change.
Asked whether this is an option that interests him, Dyer is emphatic in his response: "If the rules change and if there was the possibility of having a full Freshfields office, then yes. The Drew & Napier joint venture is a precursor to merger. This is why our joint venture needs to be very close in the way it functions."
Allen & Overy's (A&O) Singapore head, Chris Rushton, echoes Dyer's sentiments, saying: "You don't get engaged if you are not planning on marriage."
So if UK firms are coy brides, where exactly do the local firms stand? Just as not all international firms wanted a licence - Watson Farley & Williams for example, which has an extremely profitable Singapore operation, did not even apply - so not all domestic firms thought joint ventures were a good idea.
Ultimately it boils down to referral work. While the UK firms may view joint ventures as an opportunity to sop up lost fees, for domestic practices it is a different story because joint ventures limit available referral work. Some have therefore taken measures to try to keep other referral relationships in place. Allen & Gledhill, for example, is understood to have insisted on a non-exclusivity clause.
Nigel Thomas, Watson Farley's Asia managing partner, also had concerns. "I am keen, when the circumstances permit, to offer our clients an integrated service, including Singapore law. But for the time being our Asian practice provides better service by having the opportunity of using the various local Singapore lawyers who are specialists," he says.
Like Watson Farley, leading local firm Khattar Wong did not apply for a licence. Instead it has forged an association with Eversheds, which does not have an office in Singapore. Managing partner Rajan Menon says: "Eighteen months to two years down the line we will review with an idea of establishing a joint venture."
But with sentiments any capitalist would applaud, he adds: "At the end of the day, the form of association does not matter. What matters is that we make money, that I make money, that we all make money. What we want is a relationship that will create more money."
Because ultimately, as ever, all that matters is the bottom line. As A&O's Rushton says: "US firms thought joint ventures were bad news and some of the UK firms also thought that. But there was an acceptance fairly early on that it was going to happen, whether you thought it good or bad.
"Joint ventures have had difficulties but we are fully expecting them to develop into very credible practices."
These "difficulties" could easily be put down to teething troubles and it is certainly too early to judge the success of the ventures. But issues have arisen. Although many people believe the Linklaters joint venture is one of the stronger ones, because of Allen & Gledhill's dislike of exclusive relationships, integration is believed to be a problem. Some see a clash between Freshfields' finance practice and Drew & Napier's lending practice. Then there is the basic stuff - finding large enough premises in an expensive real estate market is a big enough headache for any firm.
But joint ventures remain a popular choice for firms aiming to build a one-stop shop. The benefits for A&O's Asia head of capital markets, Andrew Harrow, are clear: "We can provide local law as well as international, UK or New York law. In Singapore we have the joint venture. In Tokyo, we have set up a joint venture with Akatsuki International Law. It means we can be that all-important one-stop shop."
Global brand junkie Linklaters concurs. Roberts argues it is what clients want, and the firm has to give, if anyone is going to make any money. The investment banks in particular are the jewels the firm is chasing. As Roberts argues, they will be in a range of jurisdictions whereas what he calls "monster companies" are, by their very nature, sparser on the ground.
Last year, the firm joined the Asia panels of Chase Manhattan and Citigroup after establishing relationships through the London office. Roberts' argument is simple: offer more on a global basis and the client will reward you with more work. He adds: "Sometimes you are accused of wanting to conquer the world, but it is simply a case of serving your clients."
The final piece of the Singapore jigsaw is local firm Rajan & Tann, highly regarded for its banking and finance work and also known for its instructions during the Barings fiasco. It may be the associated law firm of Arthur Andersen, but it recently announced it had also aligned itself with US firm Weil Gotshal & Manges as well (The Lawyer, 31 July).
Proof, if needed, that Singapore is indeed a land of possibilities. From continuing independence right up to engagements and bigamist arrangements, at the moment it is all up for grabs. Whether the work itself is there is another matter. Yes, Asia is coming through the crisis and south Asia in particular is dominated by restructuring work at the moment. Countries such as Indonesia and Malaysia have traditionally always been serviced out of Singapore and are some of the biggest markets for repackaging debt. There is also some tentative project work and securitisation, which is booming throughout Asia.
But south Asia has always been the little sister to north Asia's more sophisticated markets. Plus there is China and South Korea, two emerging markets that are getting everyone excited and will be serviced from north Asia. None of this makes for a level playing field. But the Singapore authorities are determined to drag the country out of its port origins to make it a serious financial centre. To do that they need the banks, and to get them they need to make sure the support services are in place.
The proof therefore of whether joint ventures are really going to be worth the effort will not be in increased profits or client increases across Asia. It will be in the number of clients who decide to investigate the emerging market of south Asia that little bit more closely. n