Two Singapore firms have merged to form the nation's second-largest law practice in an attempt to compete with the threat posed by competition from overseas firms.
Lawyers from other countries are due to be given the go-ahead to practice Singapore law for financial transactions by linking with local firms.
The country's legal services review committee, chaired by Singapore's attorney general, recommended the move after a two-year inquiry. However, it is not yet clear when the recommendations will be implemented.
The prospect of the likes of Clifford Chance, Baker & McKenzie and Herbert Smith – which already have offices on the island state – forming local alliances has prompted the merger of Rajah & Tann, Arthur Andersen's tied firm, and Yeo Wee Kiong & Partners.
The 100-lawyer litigation specialist Rajah & Tann – which made its mark as the Singapore legal adviser to the liquidators of failed investment bank Barings – is merging with niche corporate finance firm Yeo Wee Kiong.
The union will create a practice of about 120 lawyers on 1 October.
Rajah & Tann senior counsel VK Rajah says the merger was not about size but about bringing in top-notch corporate experts.
Rajah says: “There are close to 60 foreign law firms in Singapore.
“They are not allowed to practice law in Singapore yet, but already they are competing with us for the same regional projects.
“The recession has helped make Singapore come out stronger and we want to position ourselves so that we can compete with international names when the region fully recovers.”
He says that the firm plans to take in lawyers from overseas in a bid to build up its expertise in fields other than litigation.
Rajah & Tann is presently ranked at number three in Singapore. Allen & Gledhill and Drew & Napier currently hold the number one and two spots respectively.
The merger comes just months after five of the country's smaller law firms – Khoo Aeria & Partners, Tan Sei Bee & Co, Haridas V, PK Ng & Partners and Janet Wee & Co – merged to form Raffles.
Legal commentators in the region say that this latest tie-up marks a new model for Singapore's legal arena.
They say that while it is commonplace on the island for partners to leave the big firms and set up smaller partnerships and for firms to bring in new partners to strengthen certain areas, it is rare for a firm to merge with another to boost certain aspects of business.