Singapore is holding its own in the competitive South East Asia market, as evidenced by a steady stream of law firm arrivals. Joanne Harris reports
As growth markets go, Singapore must surely be near the top. The list of law firms opening up in the jurisdiction gets longer by the week.
The latest in a long line of names to set up in South East Asia’s financial hub is Withers, which is planning to move two partners to the jurisdiction once the partnership has given its approval later this year.
Lawyers heading out to Singapore are following clients to what has become a key country for a wide variety of businesses. Although the Singapore Exchange (SGX) does not compete on the same level as its counterpart in Hong Kong, the jurisdiction has a other attractions for corporations and their advisers that are keeping interest levels high.
“We’re seeing a surge in the markets here in Singapore and South East Asia. Our key markets are in the neighbouring countries of Singapore – India, Indonesia, Thailand and Malaysia,” reveals Norton Rose corporate partner Adam Summerly.
The same story is told by firms of all types in Singapore. Clients and their activities are spread out across the region, with Indonesia earmarked by many as a key centre. GDP in Indonesia is increasing rapidly and commodities in particular are a booming sector in that country.
“Indonesia’s always been a good source of work for lawyers in Singapore and particularly the international firms located in Singapore,” notes Tan Woong Tiang, managing partner at Conyers Dill & Pearman’s Singapore office.
Welcome one and all
Work flowing out of the surrounding countries into Singapore covers the full range of services and accordingly supports the full range of law firms. The largest domestic practices, such as Allen & Gledhill, Drew & Napier and WongPartnership are flourishing alongside the six Anglo-Saxon firms granted Singapore law licences in 2009. Meanwhile another large and growing group of US and UK firms continue to find opportunities for foreign lawyers, and the offshore presence in Singapore is also expanding.
WongPartnership managing partner Rachel Eng thinks there is space for all the players and indeed welcomes the competition.
“I’d say the product offerings are very different,” she says.
Eng believes the addition of licencees Allen & Overy, Clifford Chance, Herbert Smith, Latham & Watkins, Norton Rose and White & Case to the domestic law market has not made a big impact on the major Singapore firms.
“Sophisticated clients know that if you want to do an onshore deal here you can go to one of the top domestic firms and get very good service, while the smaller clients won’t pay the fee structures of the foreign firms,” Eng adds.
She thinks the small sizes (relative to those of domestic firms) of the Singapore-qualified teams at international firms means they are unable to compete on the major transactions due to lack of depth.
Norton Rose finance partner Nick Merritt disagrees, explaining that his firm has invested heavily in its Singapore law capability over the past two years. Norton Rose now has Singapore-qualified partners in all three of its major practice areas – corporate, finance and litigation – in the jurisdiction and Merritt says the licence has helped the firm retain work that would previously have gone to domestic rivals.
“The intention was never to go toe-to-toe with WongPartnership or Drew & Napier or whatever,” says Merritt. “There are significant efficiencies. This facilitates other areas of work.”
Baker & McKenzie local managing partner Clive Cook believes competition in Singapore is becoming increasingly fierce. “I think some of the firms arriving now may struggle. Where they’re following clients it makes sense and generally there’s a demand and a base they can build on,” he points out. “But there are others coming here on the basis that the market’s expanding while domestic markets are stuck and still. They’re not going to find it easy. We compete against very strong domestic firms in Singapore for domestic and regional work.”
He warns that Singapore’s legal market could follow a similar pattern to that of Central Europe in the 1990s, when firms poured in on the back of the fall of communism and general liberalisation. More recently many of these firms have withdrawn due to the difficulty of turning a profit.
“I don’t think it will happen to the same degree, but I think it will happen,” contends Cook. “Not only is the market intensely competitive, but even though the market for legal services is expanding clients are placing fee pressures here.”
The initial awarding of the qualifying foreign law practice licences has not yet been repeated, but lawyers are hopeful that the Singapore government will further liberalise the market in the future.
In the meantime firms moving into Singapore are doing so to practise the laws of their home jurisdictions. Recent announcements of an intention to set up Singapore offices came from newly merged Channel Islands firm Collas Crill and, as reported by The Lawyer last week (25 July), Withers.
Sean Cheong, the Collas Crill partner who is relocating from Guernsey to kick-start the new venture, says both legacy firms of Collas Crill had already been looking at Asia and see the region as a diversifier from the Channel Islands.
“Given how much movement there is out of Asia, we thought it was important to look further afield,” Cheong explains.
She reveals that the firm already has clients with business in Singapore and says more are hoping to set up bases in the country.
“We want to be close to them and to be helping them in all aspects of their business. It will be a lot easier to assist in their own timezone,” she adds, explaining that this will involve advising clients on private wealth management, funds and general corporate work, with additionally a key role for the firm’s fiduciary business. “The primary focus for us was to look at the high-net-worth fiduciary side – we thought that there were more opportunities for us in that area.”
Private client work is also driving Withers to Singapore. Wealth management co-head Richard Cassell says the firm has analysed the high-net-worth market and sees significant and continuing growth in the sector.
But Singapore is not all about the expanding middle class. Other firms have gone there seeking different opportunities. Nabarro, for instance, opened up in September 2010 to focus on construction, engineering and international arbitration.
Beachcroft set up its Singapore office in January as an extension of its existing international risks group. Partner Ben Nicholson, who relocated to the region, says the first few months have proved the venture is worthwhile.
“The specialist insurance risk group has dealt with claims from South East Asia for a number of years,” explains Nicholson. “We saw that the development and the growth in the market meant more and more of the risks written were being managed out here in South East Asia as well.”
Nicholson says the recent earthquakes in New Zealand and Japan have also meant business was good this year – as ever, what is a horrific situation on the ground leads to plenty of work in the insurance sector.
“One of the things that’s happened since we’ve been here in Singapore is that the situation in Christchurch has worsened, so our New Zealand office is doing quite a bit of work on that and we’ve also given some advice to clients here in Singapore as to their exposure here,” Nicholson says.
Insurance is just one piece of the jigsaw of work for lawyers in Singapore at the moment. Funds work is keeping the offshore firms busy. Walkers’ local managing partner Ashley Gunning says this applies to both private equity and hedge funds.
“I think generally it follows on the back of general corporate activity. People see more opportunity and are therefore able to raise funds a little bit more easily,” Gunning comments.
Tan at Conyers agrees, saying that the offshore jurisdictions are gaining in popularity among South East Asian investors.
Meanwhile, mainstream corporate business is picking up, although less so in capital markets.
“Immediately what we see is that probably, in the coming six to eight months, more companies will delist than list,” says Cook at Bakers.
Nevertheless, some firms are investing in capital markets work. Eng says WongPartnership recently hired Shearman & Sterling of counsel Gail Ong, who is US-qualified and who is also working towards being Singapore-qualified. Eng says the hire will make the firm more competitive in capital markets, enabling it to offer a wider range of services to clients.
The big growth area in Singapore and the surrounding region right now is infrastructure, energy and commodities. Merritt points to work for Australian mining companies in Indonesia and says Norton Rose’s merger with Australia’s Deacons has paid off for the firm in picking up this type of work.
Lawyers are confident that Singapore’s position as a regional hub will be maintained, despite the strong competition coming from Hong Kong. Most firms believe that there is room to be in both jurisdictions and work enough – for the moment at least.
“Singapore’s really put itself a lot more on the legal map over the past few years,” explains Summerly at Norton Rose. “Years ago firms would go to Hong Kong. Now they have a choice of market and a lot of law firms are choosing Singapore as their first port of call in Asia.”