Rising sums in the East

The number of fee earners abroad among all sizes of firm has increased this year, though in general additional lawyers are not being hired, and the growth has been caused by redeployment.

The largest proportional increase in fee earners posted overseas is at Nabarro Nathanson, which doubled its lawyers abroad to 22, while largest UK-based international player Clifford Chance, added a fifth more fee earners to its 527-strong overseas team.

One quarter of Freshfields' lawyers are abroad, but a more typical percentage for the large international firms is slightly over one in seven. Gouldens, which quadrupled last year's trio of lawyers abroad to 12, typifies the Boy's Own spirit of adventure in the profession.

And UK firms are servicing business off the beaten track – in the Russian republics, South East Asia, China and South America. As a result, areas unexploited and unexplored by UK law firms are shrinking.

These areas are beginning to fill a gap created by the relative quiet of New York and Tokyo. The strength of the Yen means that, in the words of Lovell White Durrant partner Nicholas Gould, “it is unlikely that a large volume of legal work for English lawyers will become available in the medium term”.

Gould, who has been visiting Japan for 25 years, believes that in the long term, small to medium Japanese businesses will come out from behind the shelter of the multinationals and want to do business abroad. For now, however, the strain on UK law firms in expensive Tokyo is telling.

Slaughter and May withdrew last year, and McKennas quit the year before. Other casualties seem inevitable. At the same time, US work, particularly in property transactions, is not as brisk as in the Eighties.

But for firms looking to fill the gaps, there are stumbling blocks to doing business in far flung corners. Russia offers large amounts of new work – but it is becoming harder to recruit commercially-experienced Russian-speaking lawyers, and the country can be dangerous.

Nevertheless, the shooting of Sinclair Roche & Temperley solicitor John Hyden in St Petersburg in March has not put UK lawyers off tackling a goldmine of work in oil, gas, minerals, timber, inward investment and manufacturing.

Gouldens partner James Campbell says the Commonwealth of Independent States is one of the two biggest areas of growth for the firm.

“Institutional investors are confident about the future there – they will have an easier time when we know who the next president is,” Campbell says.

Nabarro is also working from a new Tbilisi office. The work is mainly on energy and privatisation, which is also the mainstay of its Warsaw-based business. The firm's practice is the fifth biggest in Poland.

Political uncertainty causes problems for firms seeking work in China, because Hong Kong's status as a centre for legal work is under scrutiny. A succession of reviews by the Hong Kong Law Society are also making life difficult for English firms practising there.

Despite this, Hong Kong offices are busy as western companies scramble to invest in China. Geoffrey Howe, managing partner at Clifford Chance, says a huge amount of work is coming out of China and is being handled by its Hong Kong office, which has more than doubled in size over the last three years.

Other firms, like Gouldens, have acquired licences to practise on mainland China – just in case the region's economic centre shifts to Shanghai. Some prefer to keep their options in Hong Kong open – Nabarro signed a deal with Hong Kong practice Livasiri & Co to take on work in China last winter.

UK firms are also already looking beyond Hong Kong for footholds in the emerging economies. In February it emerged that UK firms had won four out of 16 practice licences issued by the Vietnam government, and last autumn Freshfields appointed its first ever managing partner for the firm's Asian network which includes Tokyo, Hong Kong/China, Bangkok, Hanoi, Ho Chi Minh City and Singapore.

Freshfields chief executive Alan Peck says the firm needed two Vietnam offices because of the volume of work coming out of the country and the huge distances between cities.

Clifford Chance, meanwhile, reports that the Bangkok office it opened in January is already busy. It is advising major financial institutions, investment houses and multinationals.

Like China and South East Asia, India is seen as an emerging centre for work, just as the courts there have started to back local lawyers by cracking down on foreign practitioners. The Indian Court of Justice admitted a writ petition of the Bombay Lawyers Collective last October that claims foreign practitioners are flouting local rules and acting in a “totally illegal and unregulated manner”.

Despite the setback, Terence Kyle, managing partner at Linklaters & Paines, says the political will in the country is in favour of opening the market.

“UK and US lawyers have a huge advantage in that the language of commerce and government in India is English, and their law is similar to ours.”