22 October 2007
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Floods of firms rushed into Singapore in the 1990s, although the majority retreated over the following decade as focus shifted to the US and its larger Asian neighbours. But the tide has turned back again.
While the China legal market is reaching capacity, firms such as Ashurst, Berwin Leighton Paisner (BLP), Duane Morris and Lovells have gone against the grain to highlight the significance of Singapore in their Asian assault. But why the sudden interest?"Those who missed the China dragon-boat can now take comfort in Singapore," declares a partner at a magic circle firm.
Despite the austerity of the statement, it may prove to be accurate. Duane Morris Asia managing partner Ramos Gomez says the firm, which opened its Singapore office in January, explored setting up offices in Hong Kong and Shanghai before settling on Singapore as the firm's base for Asia.
"We decided that it was too late to go into China," he adds. "Firms had been there for 10 to 15 years - we didn't want to be one of many."
Gomez is right. US firms such as Heller Ehrman have been laying inroads into China since the 1970s. But despite being labelled as a 'second best option', Singapore is now proving to be better placed to serve the wider Asia market than China.
"Singapore has multiple tentacles," says BLP's newly appointed Asia managing partner Paul Subramaniam. "We want to use our Singaporean office as our eyes and ears into Asia."
BLP launched its Singapore outpost last year and while the office is initially focused on corporate and private equity work, Subramaniam says there is a "phased plan" to expand into project finance and capital markets work in "due course".
By comparison, Duane Morris has taken a far different approach, preferring to position itself as a direct competitor to Singaporean firms.
"We don't want to bring our American lawyers here," says Gomez, adding that this should enable the firm to tap government-linked companies and regional corporates as clients.
Ashurst, one of the older Western firms in the region, having opened its Singaporean office in 1996, has chosen to focus on the infrastructure sector; it recently worked on the Brunei Methanol project - a 800MW repowering project. Yet while the office was downgraded to just one lawyer in 2004, Ashurst has recently reaffirmed its commitment to Singapore and is planning to expand its headcount from the current nine lawyers to 15 by next spring.
"There is a three-hour circle from Singapore, which makes it accessible to a number of key jurisdictions," explains Ashurst Singapore managing partner Matthew Bubb.
While this three-hour radius permits firms in Singapore to offer services to the country's neighbours, firms are also seeing mandates come in from outside of this perimeter, including from the Middle East.
"Singapore is more attractive to Middle-Eastern clients," affirms Subramaniam, who says that around 20 per cent of BLP's Singapore office's top line is generated from Middle East-related work.
The Middle Eastern trend is one that has also been picked up by Lovells Singapore managing partner James Harris, who says the firm is seeing increased outbound work to the region.
Lovells, which opened its Singapore office in 1998, had also downsized its offering to just one partner in 2001. However, the firm has since rebuilt this to 21 lawyers and its Asia managing partner Crispin Rapinet is seeking to expand the office's corporate offering by the end of the year.
Yet while many UK firms are bolstering their Singapore outfits, Freshfields Bruckhaus Deringer took the brutal decision to close its local office and end its partnership with local firm Drew & Napier last May. The firm's management had taken the view that China offered a larger, more lucrative pie than Singapore, with Asia managing partner Perry Noble saying that the nation was "much lower in the list of priorities" and that clients in China were of more importance "at board level".
But this drastic move may not have been the wisest. Although China is undoubtedly lucrative, Singapore's economy has been boosted by the development of two integrated resorts: the Marina Bay Sands and Resorts World Santosa, the largest developments in the nation's history.
Local firm Harry Elias Partnership is the main adviser to Marina Bay Sands, while Resorts World has instructed Clifford Chance, which has had a joint law venture with Singapore's leading firm (and member of Singapore's very own magic circle) Wong Partnership since 2002.
Another key injection into the Singaporean economy has been the government's recent announcement that all future government projects exceeding S$50m (£16.73m) will be executed through PPPs.
One of the largest PPPs stemming from this is the S$800m (£267.67m) Singapore Sports Hub development, for which Lovells has scored the lead role advising the Singapore Sports Council.
Linklaters, which has had a joint venture partnership with another Singaporean magic circle firm Allen & Gledhill since 2000, has similarly scooped the lead mandate advising the government on the Institution for Technological Education PPP. Lovells scored the role advising bidders Babcock & Brown on the tender process.
The rise of the Asian and Middle Eastern jurisdictions cannot be ignored and with many shying away from liberalising their legal sectors, Singapore's close proximity coupled with its official language being English is spurring on its resurrection.
Yet Singapore still remains underestimated as a viable jurisdiction by many Western firms. As one partner at a magic circle plainly put it: "A number of people think like Freshfields. If you treat Singapore like Birmingham, and put in your B-team, you get B-team results."