- Japanese firms protect independence in wake of Mitsui defections
- Orrick hopes of liberalisation hit Chinese wall
- Simpson Thacher snares M&A specialist for new Beijing office
- Richards Butler HK agrees to talk tie-ups with Reed Smith
- Sidley leads the way in Hong Kong IPO boom
Japanese firms scramble to repel foreign threat
Independent Japanese law firms have been bolstering their front line of defence during the past month to ward off foreign firms looking to expand in their market.
This became clear when Japanese powerhouse Nishimura & Partners and Asahi Koma Law Offices announced plans to become Japan’s biggest law firm, agreeing in principle to merge, as revealed on www.thelawyer.com (17 April).
While both firms are sticking to the official line that the merger will help to attract and retain more associates, it is likely that there is more to it than that.
Many foreign lawyers in Japan think the move was a protective measure by the firms in a bid to remain independent following regulatory changes which opened the door to integrated partnerships between Japanese and foreign lawyers.
In fact, a number of smaller Japanese firms are understood to be searching for local merger partners to defend against foreign merger attempts.
One source told The Lawyer that a number of Japanese firms were “spooked” by Linklaters‘ capture of two of Japan’s leading bengoshi, Mitsuhiro Yasuda and Akihiro Wani, along with 20 associates from domestic firm Mitsui Yasuda Wani & Maeda.
Sources believe the move could also be a precursor to more Japanese firms establishing foreign offices in an effort to attract and maintain talented associates.
As associates continue to be poached by foreign law firms, particularly law firms in which associates are seconded to the US and London, many lawyers have predicted that more Japanese law firms will set up new offices to try to keep their associates.
“The competition is viewed slightly differently in Japan,” one source said. “It’s not just about being the biggest law firm, but keeping and attracting associates.”
Orrick continues effort to overcome Chinese barrier
While regulatory laws have pushed Nishimura and Partners and Asahi Koma Law Offices into defence mode, US law firm Orrick Herrington & Sutcliffe has had to fight its corner against regulatory laws in China (The Lawyer, 17 April).
Orrick has fading hopes that it will be the catalyst for further liberalisation of the Chinese legal market as it struggles to secure operating licences for the Chinese offices it acquired from Coudert Brothers last year.
If Orrick manages to successfully petition the Chinese Ministry of Justice (MoJ) to grant licences for the Beijing and Shanghai offices simultaneously, it would set a precedent and potentially open the market to other foreign firms.
But other sources have warned that the MoJ could just as easily force Orrick to close either the Beijing or Shanghai office permanently, or shut down both offices while the firm applies for a new licence.
Under existing Chinese regulations, law firms have to hold a licence to operate in China for three years before being able to apply for a second licence in another city.
The Lawyer understands that Orrick was hoping to use a loophole in the rules to transfer Coudert’s licence across by classifying the offices as going concerns, but the Chinese authorities have instead demanded the firm apply for a new licence of its own.
Orrick has declined to comment other than to say that the firm was “following the procedures of government officials in China”.
Simpson Thacher lands M&A lawyer for Beijing
Meanwhile, Simpson Thacher & Bartlett will be playing by established rules after announcing its plan to launch on China’s mainland.
As reported by The Lawyer (10 April), Simpson Thacher has raided domestic law firm Fangda Partners for a new recruit for its planned Beijing office.
The firm has applied to the Chinese MoJ to register an office after poaching Beijing-based M&A partner Shaolin Luo to establish its operations in the capital.
Luo has been recruited as of counsel in Beijing.
In addition to hiring Luo, Simpson Thacher has also boosted its Asian presence by snaring capital markets partner Leiming Chen, who will join the Hong Kong office.
Reed Smith hopeful of wooing Richards Butler HK
Reed Smith is also hopeful of joining the US-into-China hordes after securing a crucial meeting with Richards Butler Hong Kong to talk about a possible tie-up.
The Lawyer understands that a meeting was held during the last week of April between Reed Smith and the management from Richards Butler in London and the firm’s hugely profitable Asian arm.
As first revealed by The Lawyer (10 April), Reed Smith and the management have already entered into a merger agreement, but Richards Butler Hong Kong did not take part in the negotiations.
Reed Smith is keen to include the Hong Kong office, which acts as a separate partnership, as part of the transatlantic merger, but Richards Butler Hong Kong has not yet made any decision.
Sources close to the talks say the Hong Kong operation has ruled out going solo and will consider merging with a third-party UK or US firm.
The arrangement has alerted headhunters and other firms, which could provide attractive alternative options for the successful Hong Kong branch.
Richards Butler Hong Kong, which turns over £30m per year, accounts for almost a third of the firm’s overall £89m revenue.
Sidley outstrips rivals in Hong Kong IPO work
While strategic matters have been preoccupying China-bound US firms, Sidley Austin has just been getting on with it.
The US firm has taken the bulk of the riches in the IPO goldrush sweeping Hong Kong (The Lawyer, 17 April), advising on more IPOs than any other firm, according to figures released by the Hong Kong Stock Exchange (HKSE) and published by Asia Legal Business.
US firms with the capacity to advise on local and US law featured prominently in the rankings, including firms such as Paul Hastings Janofsky & Walker and Heller Ehrman.
Sidley lists the Chinese government, which has been steadily relinquishing control of a number of state-owned companies, among its key clients.
Freshfields in particular has taken top advisory roles on a number of high-profile IPOs, such as Bank of China’s $8bn (£4.5bn) IPO in January.
Freshfields corporate partner Kay Ian Ng won the bank’s instruction after a competitive tender process.
The transaction was China’s second-largest flotation on the HKSE after the listing of the China Construction Bank last year.