White & Case London head Oliver Brettle recently replaced New York partner Dimitrios Drivas on the firm’s executive committee.
He will join Turkish partner Asli Basgoz and New York partner Anthony Kahn on the committee that works under firmwide chairman Hugh Verrier.
November 3, 2010
Kirkland & Ellis effect layoffs in NYC
Kirkland & Ellis finally followed suit and joined the list of US firms to make mass redundancies.
The firm laid off more than 20 associates in New York in September, following its annual performance review period, citing the turbulent economic climate as the cause.
Kirkland had roughly 335 lawyers in the New York office prior to the cuts being made.
The firm laid off more than 20 associates in New York in September, following its annual performance review period, citing the turbulent economic climate as the cause.
Kirkland had roughly 335 lawyers in the New York office prior to the cuts being made.
Skadden slashes summer associate intake
Skadden Arps Slate Meagher & Flom recently decided to reduce the size of its summer associate intake for 2010, following a delay in the start dates of its 2009 group.
The firm advised US law schools it would only be recruiting around 100 associates for its intake as a result of the dismal economic climate. It later informed successful candidates that their start dates would be deferred until 2011.
The new figures are in stark contrast to the numbers the firm recruited for its 2009 program: 225 summer associates were accepted of whom 95% were offered full-time positions.
The firm will also implement a ‘Skadden Offer Day’, where associates from its 2010 intake will receive their offers on the same day (22 September 2009). The firm will continue to give those who receive offers 45 days to evaluate them, in compliance with guidelines set down by the National Association for Law Placement.
The firm advised US law schools it would only be recruiting around 100 associates for its intake as a result of the dismal economic climate. It later informed successful candidates that their start dates would be deferred until 2011.
The new figures are in stark contrast to the numbers the firm recruited for its 2009 program: 225 summer associates were accepted of whom 95% were offered full-time positions.
The firm will also implement a ‘Skadden Offer Day’, where associates from its 2010 intake will receive their offers on the same day (22 September 2009). The firm will continue to give those who receive offers 45 days to evaluate them, in compliance with guidelines set down by the National Association for Law Placement.
White & Case steppes into Kazakhstan
White & Case recently assisted the Kazakhstan government on the creation of new restructuring laws in the country, following the US firm winning a role advising UBS on the restructuring of Kazakhstan’s BTA Bank earlier this year.
The firm also advised Goldman Sachs on the restructuring of Kazakhstan financial institution Alliance Bank. London-based European capital markets co-head Francis Fitzherbert-Brockholes led the advice team.
The firm also advised Goldman Sachs on the restructuring of Kazakhstan financial institution Alliance Bank. London-based European capital markets co-head Francis Fitzherbert-Brockholes led the advice team.
Dewey scores big in M&A
Dewey & LeBoeuf’s corporate group recently secured two high-profile M&A mandates. Dewey M&A head Mort Pierce advised Disney on its US$4bn acquisition of Marvel Entertainment; and Richard Climan and Keith Flaum led a team advising eBay on the US$1.9bn sale of Skype.
The firm won a role in both deals as the result of longstanding relationships, highlighting why Dewey has been among the more successful US firms during the downturn in deal flow.
Mergermarket’s global M&A survey for the first half of 2009 recently revealed that the US firm moved up to 12th place from 25th in the global deals value table.
The firm won a role in both deals as the result of longstanding relationships, highlighting why Dewey has been among the more successful US firms during the downturn in deal flow.
Mergermarket’s global M&A survey for the first half of 2009 recently revealed that the US firm moved up to 12th place from 25th in the global deals value table.
UK firms star in big business rankings
The Hemscott rankings of legal advisers to FTSE 100 companies has revealed Linklaters and Slaughter and May as the firms currently advising the highest number – 25 – of the UK’s biggest companies.
The rest of the top five is rounded out by Herbert Smith (which saw its FTSE 100 client count drop one from 19 to 18, as it is no longer listed as an adviser to Friends Provident), Allen & Overy (A&O) and Freshfields Bruckhaus Deringer. Freshfields recently gained two top-ranked clients – the London Stock Exchange Group and Wolseley – and is now running head to head with A&O, with 17 FTSE 100 clients.
The rest of the top five is rounded out by Herbert Smith (which saw its FTSE 100 client count drop one from 19 to 18, as it is no longer listed as an adviser to Friends Provident), Allen & Overy (A&O) and Freshfields Bruckhaus Deringer. Freshfields recently gained two top-ranked clients – the London Stock Exchange Group and Wolseley – and is now running head to head with A&O, with 17 FTSE 100 clients.
Clifford Chance elections approaching
Clifford Chance will soon embark on a series of senior leadership elections. David Childs is expected to stand for re-election as the firm’s managing partner. If he is successful, his second four-year term at the firm’s helm would begin in May 2010.
Other management positions soon to be up for grabs include London managing partner, general counsel and practice head roles for real estate and tax, pensions and employment.
Clifford Chance is reportedly also reviewing the position of global litigation and dispute resolution head, which became redundant after the May departure of Mark Kirsch to join global player Gibson Dunn & Crutcher.
Other management positions soon to be up for grabs include London managing partner, general counsel and practice head roles for real estate and tax, pensions and employment.
Clifford Chance is reportedly also reviewing the position of global litigation and dispute resolution head, which became redundant after the May departure of Mark Kirsch to join global player Gibson Dunn & Crutcher.
Herbert Smith raises bar on partner performance
Herbert Smith has switched its former ‘make a difference’ initiative for partner appraisals to more formal assessments on their performance, in a bid to place more emphasis on the firm’s international ambition.
The new system will include formal feedback from partners in international offices for the first time and assessments on matters such as cross-selling between offices. Partners will also be assessed annually against four distinct areas: client skills, technical skills, people skills and how their performance fits with the firm’s strategy.
The move to monitor partner performance more closely follows a change in the firm’s associate appraisal process made earlier this year. It is a definite step away from the consensual approach introduced in 2007 by senior partner David Gold, clearly sending the message to partners that the expectations upon them will be rising.
The new system will include formal feedback from partners in international offices for the first time and assessments on matters such as cross-selling between offices. Partners will also be assessed annually against four distinct areas: client skills, technical skills, people skills and how their performance fits with the firm’s strategy.
The move to monitor partner performance more closely follows a change in the firm’s associate appraisal process made earlier this year. It is a definite step away from the consensual approach introduced in 2007 by senior partner David Gold, clearly sending the message to partners that the expectations upon them will be rising.
Lovells tie up with French firm
Lovells recently formed a co-operation agreement with Paris-based insolvency boutique Kuntz & Associés which will allow the two firms (who have a history of working together) to form a closer bond without entering into a full-scale alliance.
The arrangement will also grant Kuntz access to Lovells’ full-service French practice and will permit Lovells to utilise Kuntz’s specialist insolvency expertise.
The arrangement will also grant Kuntz access to Lovells’ full-service French practice and will permit Lovells to utilise Kuntz’s specialist insolvency expertise.
Partners down in UK’s top 50 firms
If Clifford Chance and Simmons & Simmons are anything to go by, new partner promotions across the United Kingdom’s top 50 law firms have decreased somewhat, with 399 promotions made in 2009, compared with 598 in 2008. As a group, Magic Circle firms also experienced a drop across the board, with promotions falling 41% from 120 to 71.
Female partner promotions across the top 50 firms have also plummeted – just 95 women were promoted to partner in 2009, compared with 149 in 2008. However, despite the fall in overall promotions, the number of new partners in London alone has only fluctuated slightly.
Female partner promotions across the top 50 firms have also plummeted – just 95 women were promoted to partner in 2009, compared with 149 in 2008. However, despite the fall in overall promotions, the number of new partners in London alone has only fluctuated slightly.
China infrastructure built up by firms
An increasing number of law firms are reaping good returns from the thriving business relationship developing between China and Australia.
China Everbright Limited (CEL) has ventured Down Under, building two funds with Australia’s Macquarie Bank to leverage China’s infrastructure opportunities. Mallesons and CEL’s ongoing legal advisor, Paul Hastings, both have a hand in the joint venture.
Australian and Hong Kong partners, John Sullivan and Hayden Flinn, are leading Mallesons representation for Macquarie Bank. Paul Hastings’s Hong Kong-based corporate partner Raymond Li, partner Vivian Lam and Jenny Law are acting for CEL. The joint venture will raise US$1.5bn to create two funds for Chinese infrastructure investments.
China Everbright Limited (CEL) has ventured Down Under, building two funds with Australia’s Macquarie Bank to leverage China’s infrastructure opportunities. Mallesons and CEL’s ongoing legal advisor, Paul Hastings, both have a hand in the joint venture.
Australian and Hong Kong partners, John Sullivan and Hayden Flinn, are leading Mallesons representation for Macquarie Bank. Paul Hastings’s Hong Kong-based corporate partner Raymond Li, partner Vivian Lam and Jenny Law are acting for CEL. The joint venture will raise US$1.5bn to create two funds for Chinese infrastructure investments.
Litigation booming in Dubai
Herbert Smith has transferred London partner Stuart Paterson to the Dubai office to strengthen the firm’s litigation and arbitration practice, as the number of construction-related disputes surge in the region.Paterson will work alongside Dubaibased dispute resolution partner, Craig Shepherd, on commercial and banking litigation, ADR and risk management.
While the law firm had always planned to augment their Middle East Practice, this was accelerated to meet recent demand. “The original plan was to have a litigation partner in the second half of 2011,” - said Shepherd.
Law firms across the region have recently cited a massive increase in litigation and dispute work arising from the crisis-addled construction sector. Shepherd agreed that Herbert Smith was dealing with similar volumes. “There are now more disputes related to the suspension or termination of projects, or shareholder disputes in relation to project funding,” he said.
While the law firm had always planned to augment their Middle East Practice, this was accelerated to meet recent demand. “The original plan was to have a litigation partner in the second half of 2011,” - said Shepherd.
Law firms across the region have recently cited a massive increase in litigation and dispute work arising from the crisis-addled construction sector. Shepherd agreed that Herbert Smith was dealing with similar volumes. “There are now more disputes related to the suspension or termination of projects, or shareholder disputes in relation to project funding,” he said.
July 22, 2010
India pressed by UK in liberalisation talks
The United Kingdom says it welcomes more Indian law firms to its legal industry.
As part of broader lobbying efforts towards the liberalisation of the Indian legal market, the British Minister of Justice, Lord Bach, met with Veerappa Moily, the Indian Minister for Law and Justice, in August. As part of the visit, Bach also met with local lawyers in a forum to explain that Indian law firms are allowed to work in Britain. FoxMandal Little and ALMT Legal are among the select few Indian law firms who have now set up there.
Local lawyers, who are largely opposed to liberalisation, have previously raised the lack of reciprocity to allow them to practice in the UK as a major impediment towards the liberalisation process.
“We welcome Indian lawyers,” said Bach, in his speech to the UK trade and investment workshop, held in Chennai. “We allow virtually unrestricted access for foreign firms. It doesn’t mean that the UK lawyers have to compete with them for work. On the contrary, the foreign firms present extra work opportunities for English lawyers.”
In an earlier meeting with the Indian Minister, Bach argued that foreign lawyers should be allowed to advise local clients, but not to stand in court. However, the Minister said any decision on liberalisation would depend on the opinions of local lawyers, which further delays any decisive steps towards this happening soon.
As part of broader lobbying efforts towards the liberalisation of the Indian legal market, the British Minister of Justice, Lord Bach, met with Veerappa Moily, the Indian Minister for Law and Justice, in August. As part of the visit, Bach also met with local lawyers in a forum to explain that Indian law firms are allowed to work in Britain. FoxMandal Little and ALMT Legal are among the select few Indian law firms who have now set up there.
Local lawyers, who are largely opposed to liberalisation, have previously raised the lack of reciprocity to allow them to practice in the UK as a major impediment towards the liberalisation process.
“We welcome Indian lawyers,” said Bach, in his speech to the UK trade and investment workshop, held in Chennai. “We allow virtually unrestricted access for foreign firms. It doesn’t mean that the UK lawyers have to compete with them for work. On the contrary, the foreign firms present extra work opportunities for English lawyers.”
In an earlier meeting with the Indian Minister, Bach argued that foreign lawyers should be allowed to advise local clients, but not to stand in court. However, the Minister said any decision on liberalisation would depend on the opinions of local lawyers, which further delays any decisive steps towards this happening soon.
Arrested Rio Tinto employees find legal representation
Four Rio Tinto employees who stand accused by the government of bribery and industrial espionage have been granted legal representation. While the four will have individual lawyers they will all be tried collectively, and they have all chosen renowned PRC lawyers.
Australian citizen Stern Hu, general manager of the Rio Tinto sales team in Shanghai, is represented by Charles Duan, the managing partner of Shanghai-based Duan & Duan. Three Chinese nationals, Liu Caikui, Ge Minqiang and Wang Yong, have engaged legal representation through Shanghai-based criminal lawyers. Liu, who was the manager of the Rio sales team, will be represented by Tao Wuping from Shenda Partners, who has previously acted for Shanghai property tycoon Zhou Zhengyi in the stock manipulation case in 2003.
Criminal defence lawyer Zhai Jian, who founded Zhai Jian law firm and gained national fame for defending a Beijing resident who killed six police officers last July, will defend Ge, an employee of the company. Zhang Peihong, also from Zhai Jian, will act for Wang, also an employee.
“There is no reason for me to not accept this case. It’s like operating a hospital – you can’t turn away patients,” said Zhai. “[It] has been receiving an overload of media attention, but I am not pressured and will try it as any other litigation case.”
China announced the formal arrest of the Rio employees on 12 August 2009; and their lawyers have filed for permission to see their clients. Chinese law does not require the defendants to have access to their lawyers until after the current stage of investigation.
“At this stage, all lawyers still do not know the detailed facts of the case and [I] am unable to comment further,” Zhai added. Although the four Rio employees were detained weeks ago the allegations against them have now been amended: from stealing state secrets, which is punishable by execution, to bribery and theft of commercial secrets.
The accused face up to seven years imprisonment if found guilty. The matter has affected tensions somewhat between China and Australia, as the “Rio Four” case has been mentioned when Australian firms report their major transaction and investments dealings from China.
The recent arrests have also kept China-based Western companies on their toes. Many companies are seeking legal advice on how to prevent similar accusations happening to their employees. The case also questions the boundaries of acceptable commercial behaviour in China and the cost of overstepping the line.
Australian citizen Stern Hu, general manager of the Rio Tinto sales team in Shanghai, is represented by Charles Duan, the managing partner of Shanghai-based Duan & Duan. Three Chinese nationals, Liu Caikui, Ge Minqiang and Wang Yong, have engaged legal representation through Shanghai-based criminal lawyers. Liu, who was the manager of the Rio sales team, will be represented by Tao Wuping from Shenda Partners, who has previously acted for Shanghai property tycoon Zhou Zhengyi in the stock manipulation case in 2003.
Criminal defence lawyer Zhai Jian, who founded Zhai Jian law firm and gained national fame for defending a Beijing resident who killed six police officers last July, will defend Ge, an employee of the company. Zhang Peihong, also from Zhai Jian, will act for Wang, also an employee.
“There is no reason for me to not accept this case. It’s like operating a hospital – you can’t turn away patients,” said Zhai. “[It] has been receiving an overload of media attention, but I am not pressured and will try it as any other litigation case.”
China announced the formal arrest of the Rio employees on 12 August 2009; and their lawyers have filed for permission to see their clients. Chinese law does not require the defendants to have access to their lawyers until after the current stage of investigation.
“At this stage, all lawyers still do not know the detailed facts of the case and [I] am unable to comment further,” Zhai added. Although the four Rio employees were detained weeks ago the allegations against them have now been amended: from stealing state secrets, which is punishable by execution, to bribery and theft of commercial secrets.
The accused face up to seven years imprisonment if found guilty. The matter has affected tensions somewhat between China and Australia, as the “Rio Four” case has been mentioned when Australian firms report their major transaction and investments dealings from China.
The recent arrests have also kept China-based Western companies on their toes. Many companies are seeking legal advice on how to prevent similar accusations happening to their employees. The case also questions the boundaries of acceptable commercial behaviour in China and the cost of overstepping the line.
Heading south — industry looks to Australia
Australia’s stock exchange can be an attractive place to list – as three Chinese companies have recently discovered.
“There is every reason why Australia should be a regional financial hub, continuing to engage with greater vigour in the global marketplace,” said Senator Nick Sherry, the Australian Minister for Superannuation and Corporate Law, last year. The Australian Securities Exchange hoped to become a financial hub in the Asia-Pacific; a dream which was quickly derailed by the deepening of the global economic downturn.
Yet the delay may have only been temporary, if the recent interest by Chinese companies in the ASX is an indicator. This year alone has seen three manufacturers from the mainland launch IPOs in Australia.
The ASX has been identified as an ideal listing environment for Chinese companies, in comparison to the options available in Hong Kong, Shanghai and New York. “The relatively straightforward ASX listing requirements makes it an attractive proposition for smaller Chinese companies, as in this aspect it represents a lower barrier of entry to listing,” said Pierre Lau, a senior associate at Chambers & Co.
In order to list on the ASX, the threshold for market capitalisation is a mere A$10m. In contrast, the HKSE requires approximately three times that amount (HK$200m). Similarly, the HKSE requires aggregated profits of HK$50m in the three financial years before listing, whereas the ASX only requires A$1m.
The listing rules of the Nasdaq are even more onerous, requiring up to US$11m in aggregated profits over three years.
Track record counts
The reputation of the Australian market is also appealing to Chinese companies, especially those that are not state-owned. “Australia presents a politically stable and relatively lowcost environment in which to base a corporate headquarter for Chinese companies wishing to operate internationally,” says Fai-Peng Chen, a partner at Minter Ellison’s Adelaide office. “Australia is also recognised for its strong corporate governance and has a transparent listing process.”
This compares to the SSE, where a listing halt was in place between September 2008 and July 2009. “Our sources tell us that there are currently more than 300 companies on the waiting list in China, which has created a backlog that could take up to two years or more to clear,” says Lau.
Similarly, the Chinese government has discretion as who is able to list on the SSE. “There is no level playing field since the government decides when you list, whether there has been enough companies from a certain province or a certain industry,” says Brendan Connell, a partner in South Australian firm Tindall Gask Bentley.
The reputation of the ASX market also precedes itself, and has excellent connotations in the Chinese economy. “The ASX has a reputation for honesty and reliability, and so there is significant kudos for a PRC company to say it is ASX listed – the inference is that it must be good,” Connell adds. However, although the opportunities may be ripe, there are still relatively few Chinese companies that have opted for an ASX listing.
“It is hard to say if there is a window of opportunity – everyone is probably waiting on more positive and consistent signals coming from the equities market in general,” says Jonathan Murray, a partner at Steinepreis Paganin.
Existing referral networks have played a role in Australian firms gaining Chinese work. Shenhua were referred to Chambers & Co for their IPO by AllBright Law Firm in Shanghai, as a result of the memorandum of understanding between the firms.
AllBright has also shortlisted another three Chinese enterprises interested in the ASX, which bodes well for the Exchange becoming a regional hub in Asia-Pacific.
“There is every reason why Australia should be a regional financial hub, continuing to engage with greater vigour in the global marketplace,” said Senator Nick Sherry, the Australian Minister for Superannuation and Corporate Law, last year. The Australian Securities Exchange hoped to become a financial hub in the Asia-Pacific; a dream which was quickly derailed by the deepening of the global economic downturn.
Yet the delay may have only been temporary, if the recent interest by Chinese companies in the ASX is an indicator. This year alone has seen three manufacturers from the mainland launch IPOs in Australia.
The ASX has been identified as an ideal listing environment for Chinese companies, in comparison to the options available in Hong Kong, Shanghai and New York. “The relatively straightforward ASX listing requirements makes it an attractive proposition for smaller Chinese companies, as in this aspect it represents a lower barrier of entry to listing,” said Pierre Lau, a senior associate at Chambers & Co.
In order to list on the ASX, the threshold for market capitalisation is a mere A$10m. In contrast, the HKSE requires approximately three times that amount (HK$200m). Similarly, the HKSE requires aggregated profits of HK$50m in the three financial years before listing, whereas the ASX only requires A$1m.
The listing rules of the Nasdaq are even more onerous, requiring up to US$11m in aggregated profits over three years.
Track record counts
The reputation of the Australian market is also appealing to Chinese companies, especially those that are not state-owned. “Australia presents a politically stable and relatively lowcost environment in which to base a corporate headquarter for Chinese companies wishing to operate internationally,” says Fai-Peng Chen, a partner at Minter Ellison’s Adelaide office. “Australia is also recognised for its strong corporate governance and has a transparent listing process.”
This compares to the SSE, where a listing halt was in place between September 2008 and July 2009. “Our sources tell us that there are currently more than 300 companies on the waiting list in China, which has created a backlog that could take up to two years or more to clear,” says Lau.
Similarly, the Chinese government has discretion as who is able to list on the SSE. “There is no level playing field since the government decides when you list, whether there has been enough companies from a certain province or a certain industry,” says Brendan Connell, a partner in South Australian firm Tindall Gask Bentley.
The reputation of the ASX market also precedes itself, and has excellent connotations in the Chinese economy. “The ASX has a reputation for honesty and reliability, and so there is significant kudos for a PRC company to say it is ASX listed – the inference is that it must be good,” Connell adds. However, although the opportunities may be ripe, there are still relatively few Chinese companies that have opted for an ASX listing.
“It is hard to say if there is a window of opportunity – everyone is probably waiting on more positive and consistent signals coming from the equities market in general,” says Jonathan Murray, a partner at Steinepreis Paganin.
Existing referral networks have played a role in Australian firms gaining Chinese work. Shenhua were referred to Chambers & Co for their IPO by AllBright Law Firm in Shanghai, as a result of the memorandum of understanding between the firms.
AllBright has also shortlisted another three Chinese enterprises interested in the ASX, which bodes well for the Exchange becoming a regional hub in Asia-Pacific.
“Australia represents a politically stable and relatively low-cost environment in which to base a corporate headquarters for Chinese companies wishing to operate internationally”Fai-Peng Chen, Minter Ellison (Adelaide)
July 3, 2010
Greener is the future for firms. Go green for business
A number of companies have raised capital through an IPO or private placement, while some have completed M&A deals. Another Chinese-based clean-energy company, Amber Energy, recently completed its public offering and share placement in Hong Kong. The IPO was hugely oversubscribed, being the fourth-most oversubscribed offering in the history of the HKSE.
“The success of this IPO is another stride towards a thriving clean energy market, a priority sector with vast opportunities for many investors in China today,” says head of DLA Piper’s capital markets practice, Liu Wei.
In July, Hong Kong-listed GCL-Poly Energy, a leading integrated green energy company, acquired Jiangsu Zhongneng Polysilicon Technology Development, one of the world’s leading suppliers of polysilicon and wafers to companies operating in the solar industry. Upon completion of the acquisition, valued at US$3.4bn, GCL-Poly will become the first Hong Kong-listed large-scale polysilicon manufacturer and one of the world’s five largest polysilicon suppliers.
Shanghai-based Comtec, a leading solar silicon material manufacturer, is reported to be raising US$150m from its IPO, scheduled for the end of 2009. “There is no question that there will be a consolidation in the Chinese solar power industry generally, “ said partner and head of Milbank’s global securities group, Douglas Tanner. “In addition to M&A, we would expect there will be issues of intellectual property and lots of finance work as the industry expands.” Tanner led the legal team that represented the target company in the GCL-Poly deal.
Leading Chinese domestic firms have also recognised the opportunities in the green energy market, particularly those who have worked closely with investment banks, PE and venture capital funds. Zhong Lun recently teamed up with Baker & McKenzie to advise Zhaoheng Hydropower in its US$57.5m capital raising, led by Olympus Capital Holdings Asia. The firm has gained tremendous exposure by simply following the footprint of its investment bank and PE clients.
“Affected by the global financial crisis, private equity investors are more cautious in doing deals. However, we have seen an increase in investor activities and deal flows in recent months. [The] green energy sector has certainly been gaining lots of attention,” said Zhong Lun partner, Gong Lefan.
He attributes the investment momentum in the sector to recent government policy initiatives and the stimulus package, as well as the rise of Chinese domestic clean-energy and technology companies. “Investment in this sector not only makes [a] positive impact on the environment and economy, but also makes perfect business sense,” Lefan said. “Not surprisingly, PE and venture capitalist investors and investment banks have tremendous interest in it.”
Global Law Office is another Chinese firm that has experienced a sharp increase in the volume of investment in this area. The firm has represented CDH in its investment in LDK Solar, which completed its IPO on the New York Stock Exchange. It also acted for New Horizon in its investment in Gold Wind Technology, completing its IPO on the Shenzhen Stock Exchange.
Global Law Office is currently involved with ET Solar’s IPO plan. “Green energy projects are very popular in the capital markets, and we expect related work to become a more important part of our firm’s practice,” said Beijing-based partner, George Niu.
The Chinese government reaffirmed its commitment to create a green energy path to prosperity. It announced in May that it will invest more than RMB2 trillion in renewable energy sources, as part of its new energy industry stimulus plan. Consequently, the demand for legal expertise in relevant areas will definitely rise.
“The success of this IPO is another stride towards a thriving clean energy market, a priority sector with vast opportunities for many investors in China today,” says head of DLA Piper’s capital markets practice, Liu Wei.
In July, Hong Kong-listed GCL-Poly Energy, a leading integrated green energy company, acquired Jiangsu Zhongneng Polysilicon Technology Development, one of the world’s leading suppliers of polysilicon and wafers to companies operating in the solar industry. Upon completion of the acquisition, valued at US$3.4bn, GCL-Poly will become the first Hong Kong-listed large-scale polysilicon manufacturer and one of the world’s five largest polysilicon suppliers.
Shanghai-based Comtec, a leading solar silicon material manufacturer, is reported to be raising US$150m from its IPO, scheduled for the end of 2009. “There is no question that there will be a consolidation in the Chinese solar power industry generally, “ said partner and head of Milbank’s global securities group, Douglas Tanner. “In addition to M&A, we would expect there will be issues of intellectual property and lots of finance work as the industry expands.” Tanner led the legal team that represented the target company in the GCL-Poly deal.
Leading Chinese domestic firms have also recognised the opportunities in the green energy market, particularly those who have worked closely with investment banks, PE and venture capital funds. Zhong Lun recently teamed up with Baker & McKenzie to advise Zhaoheng Hydropower in its US$57.5m capital raising, led by Olympus Capital Holdings Asia. The firm has gained tremendous exposure by simply following the footprint of its investment bank and PE clients.
“Affected by the global financial crisis, private equity investors are more cautious in doing deals. However, we have seen an increase in investor activities and deal flows in recent months. [The] green energy sector has certainly been gaining lots of attention,” said Zhong Lun partner, Gong Lefan.
“There is definitely an increase in renewable energy investment, mostly driven by the government being very pro-active in this area”Sarah Stokoe, Gide Loyrette Nouel
He attributes the investment momentum in the sector to recent government policy initiatives and the stimulus package, as well as the rise of Chinese domestic clean-energy and technology companies. “Investment in this sector not only makes [a] positive impact on the environment and economy, but also makes perfect business sense,” Lefan said. “Not surprisingly, PE and venture capitalist investors and investment banks have tremendous interest in it.”
Global Law Office is another Chinese firm that has experienced a sharp increase in the volume of investment in this area. The firm has represented CDH in its investment in LDK Solar, which completed its IPO on the New York Stock Exchange. It also acted for New Horizon in its investment in Gold Wind Technology, completing its IPO on the Shenzhen Stock Exchange.
Global Law Office is currently involved with ET Solar’s IPO plan. “Green energy projects are very popular in the capital markets, and we expect related work to become a more important part of our firm’s practice,” said Beijing-based partner, George Niu.
The Chinese government reaffirmed its commitment to create a green energy path to prosperity. It announced in May that it will invest more than RMB2 trillion in renewable energy sources, as part of its new energy industry stimulus plan. Consequently, the demand for legal expertise in relevant areas will definitely rise.
Greener is the future for firms. Develop good practices
Driven by government policies to tackle climate change, the green technology industry is burgeoning, attracting billions of dollars of investments. Law firms have been increasingly busy with projects and transactions in this sector.
They have become part of a driving force in making the green energy revolution happen. Over the past 18 months, a majority of the leading transactional firms have reported a significant increase in instructions related to green energy, ranging from solar power, wind farm and hydroelectric to clean development mechanism (CDM) projects, and nowhere more so than in China.
“There is definitely an increase in renewable energy investment, mostly driven by the government being very pro-active in this area,” said Gide Loyrette Nouel’s Beijing senior associate, Sarah Stokoe. “Part of the US$586bn economic stimulus plan announced last year will be directed at renewable energy projects including wind and solar power, so it’s an exciting time for those involved in the sector.”
Baker’s Schaffrath has acted on many green energy sector projects and transactions, and holds a more measured perspective on development of the practices. “Investor interest in the sector has been high, but those investors are often challenged by the ROI aspects of the green energy projects they are considering,” Schaffrath says.
“In the past we have seen a steady and progressive increase in investor interest, driven in large part by the enhanced financial prospects of a project which is, or has the potential to be, a project certified pursuant to the CDM under the Kyoto Protocol.”
In recent months, China-based cleanenergy companies have been the shining lights in a relatively quieter market, compared to a year ago.
They have become part of a driving force in making the green energy revolution happen. Over the past 18 months, a majority of the leading transactional firms have reported a significant increase in instructions related to green energy, ranging from solar power, wind farm and hydroelectric to clean development mechanism (CDM) projects, and nowhere more so than in China.
“There is definitely an increase in renewable energy investment, mostly driven by the government being very pro-active in this area,” said Gide Loyrette Nouel’s Beijing senior associate, Sarah Stokoe. “Part of the US$586bn economic stimulus plan announced last year will be directed at renewable energy projects including wind and solar power, so it’s an exciting time for those involved in the sector.”
Baker’s Schaffrath has acted on many green energy sector projects and transactions, and holds a more measured perspective on development of the practices. “Investor interest in the sector has been high, but those investors are often challenged by the ROI aspects of the green energy projects they are considering,” Schaffrath says.
“In the past we have seen a steady and progressive increase in investor interest, driven in large part by the enhanced financial prospects of a project which is, or has the potential to be, a project certified pursuant to the CDM under the Kyoto Protocol.”
In recent months, China-based cleanenergy companies have been the shining lights in a relatively quieter market, compared to a year ago.
Greener is the future for firms
Pioneering the way to a low-carbon economy, environmental lawyers and climate-change practices are the latest “must have” for any future-facing, self-respecting modern law firm.
In a world that has never been more aware of climate change, law firms are taking steps to reduce their carbon footprint and minimise environmental impacts, as part of their corporate social responsibility initiatives.
“There has been a sharp increase in public awareness and interest in the green energy sector,” said Baker & McKenzie partner, Beatrice Schaffrath, co-head of the firm’s environmental and climate change practice. “Law firms are increasingly aware of climate-change issues, both from a business perspective as well as from a day-to-day operational perspective.”
Baker & McKenzie’s offices have undertaken a number of environmentally focused initiatives, including recycling measures like the increased use and collection of recycled materials. There is also an energy-efficiency program in operation, with a focus on energy conservation and smarter use of electricity and equipment; and participation in environmental conservation activities like a tree-planting day.
“Another substantive impact that law firms can have is in using their legal skills to assist with the development of best practices globally, in policy formation, in the establishment and framing of regulatory responses, and in establishing market mechanisms,” Schaffrath said.
In a world that has never been more aware of climate change, law firms are taking steps to reduce their carbon footprint and minimise environmental impacts, as part of their corporate social responsibility initiatives.
“There has been a sharp increase in public awareness and interest in the green energy sector,” said Baker & McKenzie partner, Beatrice Schaffrath, co-head of the firm’s environmental and climate change practice. “Law firms are increasingly aware of climate-change issues, both from a business perspective as well as from a day-to-day operational perspective.”
Baker & McKenzie’s offices have undertaken a number of environmentally focused initiatives, including recycling measures like the increased use and collection of recycled materials. There is also an energy-efficiency program in operation, with a focus on energy conservation and smarter use of electricity and equipment; and participation in environmental conservation activities like a tree-planting day.
“Another substantive impact that law firms can have is in using their legal skills to assist with the development of best practices globally, in policy formation, in the establishment and framing of regulatory responses, and in establishing market mechanisms,” Schaffrath said.
June 21, 2010
Principles before profit. Distinguishing factors
The concept of a Shariah-compliant law firm is still in its infancy. Agha & Shamsi is filling a gap in the market, and for law firms around the world struggling with competitors popping up around them, it’s clear that the firm has been able to distinguish itself.
It may also demonstrate that although firms with clients in the conventional banking and financial sectors have seen steady growth rates, their larger exposure to the economic downturn can also lead to their demise – as was the case with Heller Ehrman.
Agha says that the financial crisis has led to a positive outlook for work. “A lot of the problems in leverage, collateral debt obligations, hedge funds and the issues that have plagued the conventional banking system are largely not tolerated in the Islamic system,” he said. “I think that’s resulted in the implicit endorsement of the Islamic system, as it hasn’t been as affected.”
There’s also much benefit in being surrounded by a large base of the right clientele and resources in the Middle East. As the understanding of Islamic finance practices grows, it will become more accepted as an important and alternative method of financing.
Successful or not, it’s clear that Agha remains steadfast in his pursuit, with the concept of the wholly profit-driven law firm having to take a backseat. “We are confident that the firm will be successful; however it matters more to us that our success is rooted in doing this correctly,” he said.
“We don’t compromise on our principles or integrity.”
“I was very interested in setting up a law firm with an express ethical mandate, which serves the law ... and a higher spiritual purpose”Oliver Ahga, Agha & Shamsi
It may also demonstrate that although firms with clients in the conventional banking and financial sectors have seen steady growth rates, their larger exposure to the economic downturn can also lead to their demise – as was the case with Heller Ehrman.
Agha says that the financial crisis has led to a positive outlook for work. “A lot of the problems in leverage, collateral debt obligations, hedge funds and the issues that have plagued the conventional banking system are largely not tolerated in the Islamic system,” he said. “I think that’s resulted in the implicit endorsement of the Islamic system, as it hasn’t been as affected.”
There’s also much benefit in being surrounded by a large base of the right clientele and resources in the Middle East. As the understanding of Islamic finance practices grows, it will become more accepted as an important and alternative method of financing.
Successful or not, it’s clear that Agha remains steadfast in his pursuit, with the concept of the wholly profit-driven law firm having to take a backseat. “We are confident that the firm will be successful; however it matters more to us that our success is rooted in doing this correctly,” he said.
“We don’t compromise on our principles or integrity.”
Principles before profit. International links
Having spearheaded DLA Piper’s global Islamic finance practice and its Saudi office, Agha left that firm in October 2008 [with colleague Peter Hodgins, following management differences within the Saudi office] with a view to establishing his firm alongside noted Emirati figurehead Dr Saeed Mohammed Al-Shamsi. In only a few months the firm secured an affiliation with Pillsbury Winthrop, putting to rest any thoughts that a Shariah law firm is less appealing for international clientele.
Although Pillsbury is unlike Agha & Shamsi’s offering, using a conventional business model, Agha says there is no conflict of interest in aligning with a non-Shariah compliant firm. “This is simply an arrangement between two law firms who have affiliated on a non-exclusive basis, and when it makes sense we co-operate on matters,” Agha explained. “We don’t share systems, client bases, staff or resources.”
Inevitably, questions arise on how the firms work together – how Agha & Shamsi maintains its Shariah compliance working alongside its affiliate on a contentious and potentially ribawi (interest-bearing) matter?
“While the firm could not work on an interest-bearing transaction – for example the documentation of a conventional loan – if we’re working on a large project in the UAE or the Kingdom of Saudi Arabia that had a conventional finance tranche, then subject to review and approval of our board we may be able to work on the permissible parts of the project. We would have to be mindful, of course, not to share in any fees from the impermissible representation – this would need to be clearly marked and delineated so there’s no issue,” Agha said.
“The whole reason we’ve set up the firm is to take a position and endeavour to develop a genuine Islamic finance practice. It would be hypocritical if we were to set up an ownership structure with an international firm and have that kind of financial backing from them where we’d be able to enjoy the revenues that effectively came from interest-bearing transactions.”
Although Pillsbury is unlike Agha & Shamsi’s offering, using a conventional business model, Agha says there is no conflict of interest in aligning with a non-Shariah compliant firm. “This is simply an arrangement between two law firms who have affiliated on a non-exclusive basis, and when it makes sense we co-operate on matters,” Agha explained. “We don’t share systems, client bases, staff or resources.”
Inevitably, questions arise on how the firms work together – how Agha & Shamsi maintains its Shariah compliance working alongside its affiliate on a contentious and potentially ribawi (interest-bearing) matter?
“While the firm could not work on an interest-bearing transaction – for example the documentation of a conventional loan – if we’re working on a large project in the UAE or the Kingdom of Saudi Arabia that had a conventional finance tranche, then subject to review and approval of our board we may be able to work on the permissible parts of the project. We would have to be mindful, of course, not to share in any fees from the impermissible representation – this would need to be clearly marked and delineated so there’s no issue,” Agha said.
“The whole reason we’ve set up the firm is to take a position and endeavour to develop a genuine Islamic finance practice. It would be hypocritical if we were to set up an ownership structure with an international firm and have that kind of financial backing from them where we’d be able to enjoy the revenues that effectively came from interest-bearing transactions.”
Principles before profit. Model of business
The law firm’s business model is unique, and to some it would seem to limit the firm’s chances of corporate success. By Shariah law, it cannot invest in funds linked to – or that bear – interest. It also maintains a Shariah board of scholars who provide rulings on the firm’s constitution, structure, deals and transactions, not unlike a corporate board, but un-secular.
Where most other firms are locked in decades-long competition around league table rankings to judge the number of deals closed, the Shariah-compliant firm may not be as competitive as its international counterparts. Agha’s firm cannot welcome every potential client; it must turn away those from certain businesses – including ‘conventional’ international banks, insurance companies, and clients linked to gambling and alcohol, and others from Islamically impermissible areas.
“We’ve had to turn away a fair degree of business that is by mandate, proscribed for us,” Agha said. “It’s a significant carve out, and the kind of work and clients we can work with are limited. That hasn’t been an easy decision because in this market it’s obviously helpful not to have to turn work away.”
Conventional work and clients are largely behind the success of the world’s biggest law firms. Global law firms are arguably dependant on these clients to survive. So can a new-model law firm thrive on its principles? The managing partner of Malaysian firm, Azmi & Associates, said that although Agha & Shamsi may have carved out a large portion of high-value work, there is enough business and global clientele to sustain it.
“The pool of clients might be limited, but on the other hand in a globalised world the market is huge. There should be plenty of opportunities for a Shariah-compliant law firm in crossborder transactions,” said Azmi Mohd Ali. “If a Shariah-compliant law firm has skill-sets needed by clients, then those firms will remain sought-after within those bounds.”
Agha & Shamsi’s clientele includes members of the royal family, Islamic mortgage financing companies, highnet- worth individuals, and of course, Islamic banks and entities. If client feedback is any marker, it seems the firm’s ‘niche’ status has been welcomed.
“The reaction from clients has been very favourable. They are generally pleased and intrigued by the concept of a Shariah-compliant law firm and have a very positive view of the firm’s ethical mandate,” Agha said. “We’ve had considered growth at our firm.”
Whether the rest of the legal industry follow in Agha’s pioneering footsteps remains to be seen. Azmi & Associates for one, welcomes the move, but did not say whether it would consider something similar. “We congratulate Agha & Shamsi on the achievement of their new business model, and look forward to working with them on cross-border deals between Malaysia and the Middle East,” said its managing partner.
Where most other firms are locked in decades-long competition around league table rankings to judge the number of deals closed, the Shariah-compliant firm may not be as competitive as its international counterparts. Agha’s firm cannot welcome every potential client; it must turn away those from certain businesses – including ‘conventional’ international banks, insurance companies, and clients linked to gambling and alcohol, and others from Islamically impermissible areas.
“We’ve had to turn away a fair degree of business that is by mandate, proscribed for us,” Agha said. “It’s a significant carve out, and the kind of work and clients we can work with are limited. That hasn’t been an easy decision because in this market it’s obviously helpful not to have to turn work away.”
Conventional work and clients are largely behind the success of the world’s biggest law firms. Global law firms are arguably dependant on these clients to survive. So can a new-model law firm thrive on its principles? The managing partner of Malaysian firm, Azmi & Associates, said that although Agha & Shamsi may have carved out a large portion of high-value work, there is enough business and global clientele to sustain it.
“The pool of clients might be limited, but on the other hand in a globalised world the market is huge. There should be plenty of opportunities for a Shariah-compliant law firm in crossborder transactions,” said Azmi Mohd Ali. “If a Shariah-compliant law firm has skill-sets needed by clients, then those firms will remain sought-after within those bounds.”
Agha & Shamsi’s clientele includes members of the royal family, Islamic mortgage financing companies, highnet- worth individuals, and of course, Islamic banks and entities. If client feedback is any marker, it seems the firm’s ‘niche’ status has been welcomed.
“The reaction from clients has been very favourable. They are generally pleased and intrigued by the concept of a Shariah-compliant law firm and have a very positive view of the firm’s ethical mandate,” Agha said. “We’ve had considered growth at our firm.”
Whether the rest of the legal industry follow in Agha’s pioneering footsteps remains to be seen. Azmi & Associates for one, welcomes the move, but did not say whether it would consider something similar. “We congratulate Agha & Shamsi on the achievement of their new business model, and look forward to working with them on cross-border deals between Malaysia and the Middle East,” said its managing partner.
Principles before profit
Meet the man behind the world’s first Shariah-compliant law firm who thinks this is the start of a new business model.
Moving from a high-profile position as the global head of DLA Piper’s Islamic finance practice, Oliver Agha went it alone earlier this year to launch the world’s first Shariah-compliant law firm in the UAE, Agha & Shamsi, a move which stunned and intrigued many in the legal industry.
The firm’s mantra is ‘Principle before Profit,’ and its founding partner is certainly principled. So much so, in fact, that early this year he went where others wouldn’t dare, at a time when the world’s economy was in turmoil from the first wave of the financial crisis. By going fully Shariah lawcompliant, Agha & Shamsi would be turning away many ‘conventional’ clients and big-ticket legal work, which is the foundation behind many of the world’s most successful law firms. What led to this sudden breakthrough and why, more importantly, the timing?
Agha says he’d been contemplating the idea for a number of years, and it was in fact, the perfect time, considering the growing number of clients in the Islamic banking sector. “There were a number of triggers for this, but overall, it was the right climate,” Agha said. “There are many Islamic banks and Islamic insurance companies who feel comfortable with a service provider with a similar mindset. I believe some clients would be best served if they had an independent base of lawyers that practiced their own conduct in accordance with Shariah, as well as offering Shariah services.”
The other ‘trigger’ was spiritual. Following Agha’s high-ranking corporate positions in the world’s biggest law firms (Clifford Chance’s Saudi affiliated firm and Fulbright), the independence that opening up a niche firm offered was highly attractive. “Having worked at large law firms my entire professional career, I was very interested in setting up a law firm with an express ethical mandate, which serves the law and … a higher spiritual purpose,” he explained.
“Of course it also means you can chart your own course – there’s a lot of independence in being a farmer waiting for the rain to come, rather than working on someone else’s land.”
Moving from a high-profile position as the global head of DLA Piper’s Islamic finance practice, Oliver Agha went it alone earlier this year to launch the world’s first Shariah-compliant law firm in the UAE, Agha & Shamsi, a move which stunned and intrigued many in the legal industry.
The firm’s mantra is ‘Principle before Profit,’ and its founding partner is certainly principled. So much so, in fact, that early this year he went where others wouldn’t dare, at a time when the world’s economy was in turmoil from the first wave of the financial crisis. By going fully Shariah lawcompliant, Agha & Shamsi would be turning away many ‘conventional’ clients and big-ticket legal work, which is the foundation behind many of the world’s most successful law firms. What led to this sudden breakthrough and why, more importantly, the timing?
Agha says he’d been contemplating the idea for a number of years, and it was in fact, the perfect time, considering the growing number of clients in the Islamic banking sector. “There were a number of triggers for this, but overall, it was the right climate,” Agha said. “There are many Islamic banks and Islamic insurance companies who feel comfortable with a service provider with a similar mindset. I believe some clients would be best served if they had an independent base of lawyers that practiced their own conduct in accordance with Shariah, as well as offering Shariah services.”
The other ‘trigger’ was spiritual. Following Agha’s high-ranking corporate positions in the world’s biggest law firms (Clifford Chance’s Saudi affiliated firm and Fulbright), the independence that opening up a niche firm offered was highly attractive. “Having worked at large law firms my entire professional career, I was very interested in setting up a law firm with an express ethical mandate, which serves the law and … a higher spiritual purpose,” he explained.
“Of course it also means you can chart your own course – there’s a lot of independence in being a farmer waiting for the rain to come, rather than working on someone else’s land.”
The deal-blocker is dead: long live the deal-maker
The misperception of in-house lawyers and their legal teams as ‘business prevention units’, as one business leader refered to them earlier this year, must now surely have been corrected. A look at this issue’s ALB/Jun He Inhouse Top 25, a snapshot of the region’s most dynamic corporate counsel, provides ample proof that the role successful in-house lawyers play today is as commercial as it is legal.
The modern in-house legal department – taking regulatory, compliance and purely legal matters in its stride – acts as a business facilitation unit, helping its company bring complex transactions to completion with all the right boxes ticked. But while the new-look in-house legal team boasts a relevance and value to the business that many chief executive officers would argue has increased exponentially, the fact that things have changed so much, in many cases over just 10 or 15 years, means it also faces a unique set of challenges.
As corporate lawyers get ever closer to the executive, and many sit on boards and share the performance-based incentives of their fellow board members, the chances grow of the profession’s most important weapon – independence – being compromised. The 25 corporate counsel profiled in this issue of ALB have all developed programs to address this fundamental challenge as well as the many others they face.
The message for law firms is clear. They need to be acutely aware of the rarefied, prickly, exacting new atmosphere in which their clients operate, and should adjust the nature of their counsel accordingly.
As one of the featured GCs noted, external lawyers must work “as if they were in-house counsel.”
***
The modern in-house legal department – taking regulatory, compliance and purely legal matters in its stride – acts as a business facilitation unit, helping its company bring complex transactions to completion with all the right boxes ticked
The modern in-house legal department – taking regulatory, compliance and purely legal matters in its stride – acts as a business facilitation unit, helping its company bring complex transactions to completion with all the right boxes ticked. But while the new-look in-house legal team boasts a relevance and value to the business that many chief executive officers would argue has increased exponentially, the fact that things have changed so much, in many cases over just 10 or 15 years, means it also faces a unique set of challenges.
As corporate lawyers get ever closer to the executive, and many sit on boards and share the performance-based incentives of their fellow board members, the chances grow of the profession’s most important weapon – independence – being compromised. The 25 corporate counsel profiled in this issue of ALB have all developed programs to address this fundamental challenge as well as the many others they face.
The message for law firms is clear. They need to be acutely aware of the rarefied, prickly, exacting new atmosphere in which their clients operate, and should adjust the nature of their counsel accordingly.
As one of the featured GCs noted, external lawyers must work “as if they were in-house counsel.”
***
The modern in-house legal department – taking regulatory, compliance and purely legal matters in its stride – acts as a business facilitation unit, helping its company bring complex transactions to completion with all the right boxes ticked
June 14, 2010
Now everyone can own a law firm
Different types of lawyers and non-lawyers will now be able to jointly own legal firms, thanks to the introduction of Legal Disciplinary Practices (LDPs) in the UK – an effort by The Solicitors Regulation Authority to encourage more effective competition and increase access to justice.
The introduction of LDPs will allow law firms to be owned by different types of lawyers and a proportion of non-lawyers – a milestone on the journey to alternative business structures, which will allow for full non-lawyer ownership and for law firms to be listed on the stock exchange.
The introduction of LDPs will allow law firms to be owned by different types of lawyers and a proportion of non-lawyers – a milestone on the journey to alternative business structures, which will allow for full non-lawyer ownership and for law firms to be listed on the stock exchange.
Weil Gotshal cancels NY jaunt
Graduates of Weil Gotshal & Manges hoping to tour the Big Apple this year are set to be disappointed after the US firm confirmed recently that they will be scrapping their New York vacation scheme in light of the economic crisis.
The firm – whose New York vacation scheme was launched just one year ago – joins a string of firms, including Norton Rose and Field Fisher Waterhouse, who have recently cut back their summer vacation scheme programmes due to the economic downturn.
Hill Dickinson, however, has bucked the trend by reportedly almost doubling its vacation schemes.
The firm – whose New York vacation scheme was launched just one year ago – joins a string of firms, including Norton Rose and Field Fisher Waterhouse, who have recently cut back their summer vacation scheme programmes due to the economic downturn.
Hill Dickinson, however, has bucked the trend by reportedly almost doubling its vacation schemes.
Blake Dawson Wiki-peed off after web revelations
Australian firm Blake Dawson, recently discovered that its Wikipedia page had been hijacked by an unknown contributor, liberally disclosing details of the firm’s alleged job and cost cuts on the online encyclopedia.
The additional information to the reader-written webpage included information on alleged staff cuts to come, mentioned Allens Arthur Robinson and Freehills and even disclosed salary details for the firm’s partners. “The firm’s partners receive an average of A$850,000 each per annum,” the mystery scribe reported. The firm had not yet confirmed the accuracy of the reports at the time of going to press.
The additional information to the reader-written webpage included information on alleged staff cuts to come, mentioned Allens Arthur Robinson and Freehills and even disclosed salary details for the firm’s partners. “The firm’s partners receive an average of A$850,000 each per annum,” the mystery scribe reported. The firm had not yet confirmed the accuracy of the reports at the time of going to press.
Einfeld still undecided
Speeding kills – as many Australian billboards tell you – and it turns out it can also mangle your career.
It was believed that Marcus Einfeld, the former Australian Federal Court judge who was recently jailed for a minimum of two years for lying on statements to avoid a speeding fine, would agree to the NSW Bar Association declaring him not a fit and proper person to remain on the roll of legal practitioners. Thus having his name removed from the roll.
However, reports now suggest Einfeld may seek a six-week adjournment to decide whether to lodge a guilty plea for professional misconduct.
The matter is due to return to the Supreme Court next month and the NSW Bar Association will call witnesses, and ask for the matter to go to a hearing if Einfeld decides to dispute the point.
It was believed that Marcus Einfeld, the former Australian Federal Court judge who was recently jailed for a minimum of two years for lying on statements to avoid a speeding fine, would agree to the NSW Bar Association declaring him not a fit and proper person to remain on the roll of legal practitioners. Thus having his name removed from the roll.
However, reports now suggest Einfeld may seek a six-week adjournment to decide whether to lodge a guilty plea for professional misconduct.
The matter is due to return to the Supreme Court next month and the NSW Bar Association will call witnesses, and ask for the matter to go to a hearing if Einfeld decides to dispute the point.
Robert Milliner, Mallesons. Tomorrow, the world…
Is one of the legal industry’s biggest names about to get even bigger? Chief executive partner Robert Milliner gives insight on the road ahead for Mallesons Stephen Jaques.
"Mallesons chief names Bhutan in three-year forward strategy.” It would make a great headline – despite being nothing to do with the firm. Robert Milliner is a trekking enthusiast and has his trips planned for the next three years – including a journey to the tiny Kingdom of Bhutan. Meanwhile, another kind of forward strategy is keeping him occupied. Recently reappointed as chief executive partner for a tenure extending through to 2011, he has been charged with the task of protecting Mallesons’ position as one of the genuine heavyweights of the Asia-Pacific legal service. However, the firm has ambitions beyond merely consolidating its achievements to date.
Merger ambitions
Last year, Mallesons revisited the idea of a merger with Magic Circle firm Clifford Chance, but talks were thwarted by the deepening economic downturn. However, Milliner does not rule out the possibility of reviving the idea. “We have a view that there are certain trends driving the legal profession – globalisation of business, the war for talent, the kind of career opportunities that talented people are seeking, further market segmentation – and, in light of this, the preferred option for the firm is more likely than not to be part of a global one. I doubt we’re alone in that view,” he says.
The global economic downturn has, of course, put a new complexion on these developments, but Milliner says that when positive times return “the planets may align” once again in favour of a merger. But there is no guarantee that the partner firm will be Clifford Chance; there is no exclusive understanding between them.
“Our [merger] criteria are clear,” Milliner says. “We are motivated by how we can better service clients, how we can offer our people better career opportunities and how we can best leverage the firm’s legacy and history. We are looking at firms and asking the questions: ‘What makes you successful? Will that still be there if we were to come together – and would it be enhanced?’ It’s about compatible cultures and clients.”
All this raises other questions. As Clifford Chance was considered a compatible partner in 2008, would it not presumably remain so in 2010? Wouldn’t Clifford Chance remain the forerunner? But this is speculation on which Milliner will not be drawn. “We aren’t going to try and second guess the future,” he states. “Our criteria are clear and we will maintain dialogue with a whole range of firms.”
And this “whole range” of firms is not necessarily limited to the Magic Circle. Milliner has been travelling regularly to the UK and the US to meet with his counterparts in top firms there. Some of these discussions take place at formal conferences, while others are meetings arranged privately. The objective, however, is the same – to share ideas, with an open mind as to where the dialogue might lead.
Best of friends
While Mallesons has built up a strong presence in China and Hong Kong, it is absent from other Asia-Pacific markets, eg, Singapore, Tokyo and New Zealand.
Firms Mallesons has worked with in these jurisdictions include Allen & Gledhill and Wong Partnership in Singapore; and Russell McVeagh, Chapman Tripp and Bell Gully in New Zealand. Milliner says it would be difficult to have exclusive relationships in each jurisdiction. “Some clients, particularly general counsel, will have views about who should be used in a particular market. In the smaller markets, you get conflict and alignment issues. Exclusive referral relationships do have their merits, but there are also issues around ensuring the same culture and approach,” he adds.
Mallesons and Minter Ellison are the only top-tier Australian firms with London offices and Mallesons recently secured Minters’ London managing partner, Robert Hanley. Milliner describes the London office as an important feature that distinguishes the firm from other Australian competitors operating in Asia. “The predominance of London as a financial centre has seen the dominance of English law. Many Asian transactions are subject to English law and we need to be able to practise it. So the London market is a critical part of being in the market and picking up changes in it,” he says. The office also advises on the ‘kangaroo bond’ market and Australian clients investing in the UK or Europe.
Market share growth
Evidence of a recent flight to quality is currently largely anecdotal – but there, nevertheless. For example, 2008 M&A statistics saw Mallesons and AAR increase market share. Milliner says there has been a discernible trend over the past 12 months, and not just in M&A. “Insolvency and work related to it is more sophisticated than before. The underlying financial structures are more complex – you’ve got boards needing detailed governance advice. And all this plays to our strengths,” he says.
The other factor is that Mallesons’ depth of talent means work can be undertaken reliably but at speed. Milliner says the firm advised on more than 10 equity capital raisings in the flurry between December 2008 and January 2009.
The firm is on track to record revenue results this year similar to those of 2007 and 2008, although Milliner says that this result will have been assisted by a strong performance in the latter half of 2008, when the full effects of the downturn were yet to be felt. The Asia part of the operation, which contributes 10–15% of Mallesons’ revenue, is following a growth pattern similar to that of the rest of the firm.
The firm is not planning any redundancies, although Milliner is not ruling this out down the track. “We have to be realistic; we are in uncharted economic times which may cause structural adjustment and certain types of work may contract,” he admits.
Historical ties
When NAB (National Australia Bank) recently celebrated 150 years of business, it acknowledged its longstanding relationship with Mallesons, which dates back to 1858. It was a salient reminder of the role that the past has to play in building the future. “Most businesses are proud of their legacy and, if you’ve been able to grow alongside that business, it reinforces the relationship,” Milliner says. “However, we never take that relationship for granted.”
Whether Mallesons continues as a stand-alone firm, or whether its name becomes part of a double-barrelled brand in the future, Milliner is keen to see that culture continue. “We have a long-term commitment to our clients. It’s a firm that is client relationship focused.”
"Mallesons chief names Bhutan in three-year forward strategy.” It would make a great headline – despite being nothing to do with the firm. Robert Milliner is a trekking enthusiast and has his trips planned for the next three years – including a journey to the tiny Kingdom of Bhutan. Meanwhile, another kind of forward strategy is keeping him occupied. Recently reappointed as chief executive partner for a tenure extending through to 2011, he has been charged with the task of protecting Mallesons’ position as one of the genuine heavyweights of the Asia-Pacific legal service. However, the firm has ambitions beyond merely consolidating its achievements to date.
Merger ambitions
Last year, Mallesons revisited the idea of a merger with Magic Circle firm Clifford Chance, but talks were thwarted by the deepening economic downturn. However, Milliner does not rule out the possibility of reviving the idea. “We have a view that there are certain trends driving the legal profession – globalisation of business, the war for talent, the kind of career opportunities that talented people are seeking, further market segmentation – and, in light of this, the preferred option for the firm is more likely than not to be part of a global one. I doubt we’re alone in that view,” he says.
The global economic downturn has, of course, put a new complexion on these developments, but Milliner says that when positive times return “the planets may align” once again in favour of a merger. But there is no guarantee that the partner firm will be Clifford Chance; there is no exclusive understanding between them.
“Our [merger] criteria are clear,” Milliner says. “We are motivated by how we can better service clients, how we can offer our people better career opportunities and how we can best leverage the firm’s legacy and history. We are looking at firms and asking the questions: ‘What makes you successful? Will that still be there if we were to come together – and would it be enhanced?’ It’s about compatible cultures and clients.”
All this raises other questions. As Clifford Chance was considered a compatible partner in 2008, would it not presumably remain so in 2010? Wouldn’t Clifford Chance remain the forerunner? But this is speculation on which Milliner will not be drawn. “We aren’t going to try and second guess the future,” he states. “Our criteria are clear and we will maintain dialogue with a whole range of firms.”
And this “whole range” of firms is not necessarily limited to the Magic Circle. Milliner has been travelling regularly to the UK and the US to meet with his counterparts in top firms there. Some of these discussions take place at formal conferences, while others are meetings arranged privately. The objective, however, is the same – to share ideas, with an open mind as to where the dialogue might lead.
Best of friends
While Mallesons has built up a strong presence in China and Hong Kong, it is absent from other Asia-Pacific markets, eg, Singapore, Tokyo and New Zealand.
Firms Mallesons has worked with in these jurisdictions include Allen & Gledhill and Wong Partnership in Singapore; and Russell McVeagh, Chapman Tripp and Bell Gully in New Zealand. Milliner says it would be difficult to have exclusive relationships in each jurisdiction. “Some clients, particularly general counsel, will have views about who should be used in a particular market. In the smaller markets, you get conflict and alignment issues. Exclusive referral relationships do have their merits, but there are also issues around ensuring the same culture and approach,” he adds.
Mallesons and Minter Ellison are the only top-tier Australian firms with London offices and Mallesons recently secured Minters’ London managing partner, Robert Hanley. Milliner describes the London office as an important feature that distinguishes the firm from other Australian competitors operating in Asia. “The predominance of London as a financial centre has seen the dominance of English law. Many Asian transactions are subject to English law and we need to be able to practise it. So the London market is a critical part of being in the market and picking up changes in it,” he says. The office also advises on the ‘kangaroo bond’ market and Australian clients investing in the UK or Europe.
Market share growth
Evidence of a recent flight to quality is currently largely anecdotal – but there, nevertheless. For example, 2008 M&A statistics saw Mallesons and AAR increase market share. Milliner says there has been a discernible trend over the past 12 months, and not just in M&A. “Insolvency and work related to it is more sophisticated than before. The underlying financial structures are more complex – you’ve got boards needing detailed governance advice. And all this plays to our strengths,” he says.
The other factor is that Mallesons’ depth of talent means work can be undertaken reliably but at speed. Milliner says the firm advised on more than 10 equity capital raisings in the flurry between December 2008 and January 2009.
The firm is on track to record revenue results this year similar to those of 2007 and 2008, although Milliner says that this result will have been assisted by a strong performance in the latter half of 2008, when the full effects of the downturn were yet to be felt. The Asia part of the operation, which contributes 10–15% of Mallesons’ revenue, is following a growth pattern similar to that of the rest of the firm.
The firm is not planning any redundancies, although Milliner is not ruling this out down the track. “We have to be realistic; we are in uncharted economic times which may cause structural adjustment and certain types of work may contract,” he admits.
“We have a view that there are certain trends driving the legal profession… and, in light of this, the preferred option for the firm is more likely than not to be part of a global one. I doubt we’re alone in that view”
Historical ties
When NAB (National Australia Bank) recently celebrated 150 years of business, it acknowledged its longstanding relationship with Mallesons, which dates back to 1858. It was a salient reminder of the role that the past has to play in building the future. “Most businesses are proud of their legacy and, if you’ve been able to grow alongside that business, it reinforces the relationship,” Milliner says. “However, we never take that relationship for granted.”
Whether Mallesons continues as a stand-alone firm, or whether its name becomes part of a double-barrelled brand in the future, Milliner is keen to see that culture continue. “We have a long-term commitment to our clients. It’s a firm that is client relationship focused.”
June 10, 2010
Relocation: The Gulf is where it’s all happening. Weigh up your options
Exorbitant rent is one thing, but there are a number of other factors that anyone thinking of moving has to take into account. The largely work-in-progress road infrastructure often results in long hours stuck in traffic and those with children may also want to pay attention to the long waiting lists for international schools, as well as the high fees. “The community here is a large expatriate one so it is easy to assimilate. However, finding the right schools and then planning how to get your children to them is another matter,” says McDonald, who has a five-year-old daughter.
Career-wise, try not to buy into the hype. Many lawyers in the US and UK who are worried about the future of their jobs may consider moving to Dubai a lateral move to maintain or advance their careers. Given the heightened levels of activity in M&A work, the boom in the construction as well as banking & finance industries, among others, the temptation to grab-first-think-later is strong. But lawyers should not substitute due diligence with desperation.
“We are seeing more and higher quality resumes from lawyers worldwide in the last year. Some are from lawyers who have moved to Dubai, but have not been able to find quality or quantity in the kind of work they have been looking for,” says Jennifer Bibbings, a partner in Trowers & Hamlin’s Dubai office who has been in the Middle East for the past 15 years.
Career-wise, try not to buy into the hype. Many lawyers in the US and UK who are worried about the future of their jobs may consider moving to Dubai a lateral move to maintain or advance their careers. Given the heightened levels of activity in M&A work, the boom in the construction as well as banking & finance industries, among others, the temptation to grab-first-think-later is strong. But lawyers should not substitute due diligence with desperation.
“We are seeing more and higher quality resumes from lawyers worldwide in the last year. Some are from lawyers who have moved to Dubai, but have not been able to find quality or quantity in the kind of work they have been looking for,” says Jennifer Bibbings, a partner in Trowers & Hamlin’s Dubai office who has been in the Middle East for the past 15 years.
Relocation: The Gulf is where it’s all happening. Benefits and drawbacks
According to Abernethy, one of the biggest selling points that firms use to attract lawyers is tax-free income. UK firms generally pay salaries that are equivalent to the UK rate, which for an associate would amount to a significant increase in their after-tax income.
According to Hays’ Guide to Salaries, most lawyers with at least seven to eight years’ experience can expect a monthly net salary ranging from US$11,600–13,369 at UK firms, and at least US$19,000 at US firms.
However, Coombe says the recruitment process for partners or managing partners has become quite complex, especially for candidates located overseas. Generally, senior level candidates must have Middle Eastern experience, a broad knowledge of the market or a portable client base.
However, the cost of living in Dubai is high and the 2008 Xpatulator international cost of living comparison revealed that Dubai was the most expensive city for restaurant dining and hotel accommodation. It was also the fourth most expensive city for clothing and fifth most expensive for rented accommodation.
Brimson agrees that the cost of living is expensive and the tax break is to some extent neutralised by high prices. Even living in an apartment can be extremely expensive, he says, and rates are equivalent to those seen in downtown London or Paris.
According to Hays’ Guide to Salaries, most lawyers with at least seven to eight years’ experience can expect a monthly net salary ranging from US$11,600–13,369 at UK firms, and at least US$19,000 at US firms.
However, Coombe says the recruitment process for partners or managing partners has become quite complex, especially for candidates located overseas. Generally, senior level candidates must have Middle Eastern experience, a broad knowledge of the market or a portable client base.
However, the cost of living in Dubai is high and the 2008 Xpatulator international cost of living comparison revealed that Dubai was the most expensive city for restaurant dining and hotel accommodation. It was also the fourth most expensive city for clothing and fifth most expensive for rented accommodation.
Brimson agrees that the cost of living is expensive and the tax break is to some extent neutralised by high prices. Even living in an apartment can be extremely expensive, he says, and rates are equivalent to those seen in downtown London or Paris.
Relocation: The Gulf is where it’s all happening. Foreign invasion
The London and New York markets are currently “very quiet” for pure M&A, corporate and PE work, says Abernethy. Meanwhile, the UAE has not been so hard-hit by the economic slump and more large foreign firms have realised this and begun opening new offices. This year alone has seen DLA Piper and Gide Loyrette expand their practises in the Gulf with the addition of new offices, and Jones Day and Malaysian firm Zaid Ibrahim enter the region for the first time.
Brimson believes there will also be plenty of work in Abu Dhabi, since it is tipped to grow dramatically as a legal centre. He says that development plans for the city, the capital of the UAE, are extremely “ambitious”, particularly in the energy and infrastructure sectors.
Abernethy agrees, adding that Abu Dhabi and Dubai will provide “massive” and “unrivalled” work opportunities for at least a decade. “I am doing crossborder deals into India, Turkey the UK, Kuwait and Bahrain. A lot of the outbound investment is going to India. What we are working on is going into India, South Asia, Syria, Jordan and North Africa. Turkey is also a very popular destination,” he says.
Maria Coombe, manager of Hays Recruitment in Dubai, says that UAE law firms are looking to fill vacancies in practices such as corporate, banking, real estate, construction, projects, energy, oil, gas, shipping, IT and telecommunications. However, candidates must have a genuine reason for coming to the UAE.
“It is not enough to be interested because there is strong economic growth… Organising a visit to Dubai under your own steam and looking around is really valuable in deciding whether it is what you are looking for. It definitely adds weight to an application,” she says.
Brimson believes there will also be plenty of work in Abu Dhabi, since it is tipped to grow dramatically as a legal centre. He says that development plans for the city, the capital of the UAE, are extremely “ambitious”, particularly in the energy and infrastructure sectors.
Abernethy agrees, adding that Abu Dhabi and Dubai will provide “massive” and “unrivalled” work opportunities for at least a decade. “I am doing crossborder deals into India, Turkey the UK, Kuwait and Bahrain. A lot of the outbound investment is going to India. What we are working on is going into India, South Asia, Syria, Jordan and North Africa. Turkey is also a very popular destination,” he says.
Maria Coombe, manager of Hays Recruitment in Dubai, says that UAE law firms are looking to fill vacancies in practices such as corporate, banking, real estate, construction, projects, energy, oil, gas, shipping, IT and telecommunications. However, candidates must have a genuine reason for coming to the UAE.
“It is not enough to be interested because there is strong economic growth… Organising a visit to Dubai under your own steam and looking around is really valuable in deciding whether it is what you are looking for. It definitely adds weight to an application,” she says.
Relocation: The Gulf is where it’s all happening
The heat in the UAE may be off-putting, but lawyers are increasingly finding its business climate highly appealing. ALB discovers what practitioners can expect if they make the dash to the desert.
When Herbert Smith senior associate Jessie McDonald decided to move to Dubai two years ago, her intention was simply to join her husband who was stationed there and to stay in practice. But since arriving in the United Arab Emirates, the former university inhouse counsel has been excited by what her job Ц and the city Ц has had to offer.
The work here is of top quality, involving a lot of international work. The variety of work makes the job challenging as well as stimulating. I was also lucky enough to have colleagues from Australia who helped me to assimilate,Ф she says.
The reasons for the flood of lawyer relocations to the UAE in the last year are obvious. New opportunities, overseas exposure, tax-free salaries and the largely expatriate culture are commonly cited; however, at the core of the matter, the abundance of financial and career opportunities on offer is what really matters.
УThe Middle East is an exciting growth market where there is a huge amount of M&A activity. It is a lot more attractive than our [the New Zealand] marketЕФ says Andrew Lewis, a partner with Norton Rose.
Neil Brimson, managing partner of Herbert Smith in the Middle East, says lawyers are increasingly coming to the UAE because they want to work in one of the most exciting markets in the world, adding that the region has tremendous growth, second only to China.
Norton Rose partner Andrew Abernethy agrees. УIt is all coming out of this region; it is a place to rival New York and London. This is why a lot of lawyers from New York and London are flooding in. As an M&A lawyer, you want to be closer to the action and Dubai is where the M&A is happening,Ф he says.
When Herbert Smith senior associate Jessie McDonald decided to move to Dubai two years ago, her intention was simply to join her husband who was stationed there and to stay in practice. But since arriving in the United Arab Emirates, the former university inhouse counsel has been excited by what her job Ц and the city Ц has had to offer.
The work here is of top quality, involving a lot of international work. The variety of work makes the job challenging as well as stimulating. I was also lucky enough to have colleagues from Australia who helped me to assimilate,Ф she says.
The reasons for the flood of lawyer relocations to the UAE in the last year are obvious. New opportunities, overseas exposure, tax-free salaries and the largely expatriate culture are commonly cited; however, at the core of the matter, the abundance of financial and career opportunities on offer is what really matters.
УThe Middle East is an exciting growth market where there is a huge amount of M&A activity. It is a lot more attractive than our [the New Zealand] marketЕФ says Andrew Lewis, a partner with Norton Rose.
Neil Brimson, managing partner of Herbert Smith in the Middle East, says lawyers are increasingly coming to the UAE because they want to work in one of the most exciting markets in the world, adding that the region has tremendous growth, second only to China.
Norton Rose partner Andrew Abernethy agrees. УIt is all coming out of this region; it is a place to rival New York and London. This is why a lot of lawyers from New York and London are flooding in. As an M&A lawyer, you want to be closer to the action and Dubai is where the M&A is happening,Ф he says.
KhattarWong’s Projects (Real Estate, Infrastructure and Construction). Practice Group well-placed to meet opportunities and challenges ahead
Whilst the current global economic downturn has affected real estate, infrastructure and construction in Asia, their importance has not diminished as these continue to represent pillars of growth in Asia. The Urban Land Institute and PricewaterhouseCoopers recently placed Singapore among the top five Asia Pacific cities for property investment in its 2009 regional report of Emerging Trends in Real Estate.
The Singapore Government recently announced it will invest S$18 to $20 billion in infrastructure projects this year. In the pipeline are a new International Cruise Terminal at Marina South, new roads and parks and the upgrading of schools, sports facilities and public housing estates throughout Singapore.
Other Asian countries are planning major infrastructure developments; in Vietnam, ports are being built and in the Philippines power assets are being sold. In China, work is underway on the Sino-Singapore Tianjin Ecocity, a joint development between China’s and Singapore’s governments.
KhattarWong’s Projects (REIC) Practice Group combines the experience and expertise of dedicated and trained lawyers and is well placed to handle project specific transactions for both domestic and foreign clients.
The Firm’s Partners involved in the Projects (REIC) Practice Group are Chia Ho Choon, Carla Barker and Anne Chua.
They have experience acting for infrastructure developers and contractors, business park developers, independent power producers, water treatment companies, aviation and aerospace companies, engineering companies, schools and hospitals.
“The Practice Group focuses on Project work, which enables the Firm and the Practice Group to get involved with clients from the inception of the projects to their completion. The combined expertise of our Partners enables us to assist our clients in all aspects of the project. This includes the initial formation or acquisition of the project vehicle; due diligence; the acquisition of land; liaising with regulatory bodies; advising on licensing and permits; advising on or drafting of construction and engineering contracts; dispute management; and assisting with the eventual sale or operation of the completed project.” These are the views expressed by Partner and Practice Group leader Chia Ho Choon.
With KhattarWong’s regional offices in Shanghai and Vietnam as well as the firm’s alliances with law firms in Indonesia, India, Malaysia, Thailand, Middle East, and network through Interlex, the Practice Group is well placed to assist its clients in their cross border real estate, infrastructure and construction deals.
The Practice Group’s recent assignments include acting as local counsel for the proposed construction and development of a power plant in Singapore; advising on the preparation of an EPC contract, O&M and Project Supervision Agreements for Indonesian developers of a power plant in Indonesia, which also involved Chinese contractors; advising on the Particular Conditions of Contract for use in Vietnam in conjunction with the FIDIC Conditions of Contract; advising an aviation authority on tenders and contracts for development of new facilities (including a terminal hotel), and on privatisation; and acting for developers in a mixed business park with commercial, residential and hotel components.
“Our lawyers have a clear understanding of the legal issues and commercial realities of the specific industry” says Anne Chua, whose clients include power generation, water treatment and aerospace companies.
Carla Barker adds, “The team’s ability to intertwine different spheres of practice gives us the confidence to advise clients on complex legal issues”.
The Practice Group is supported by a team of experienced and competent lawyers. The team’s attention to detail, their industry knowledge and ability to provide speedy and practical legal advice gives them an edge with clients.
The Singapore Government recently announced it will invest S$18 to $20 billion in infrastructure projects this year. In the pipeline are a new International Cruise Terminal at Marina South, new roads and parks and the upgrading of schools, sports facilities and public housing estates throughout Singapore.
Other Asian countries are planning major infrastructure developments; in Vietnam, ports are being built and in the Philippines power assets are being sold. In China, work is underway on the Sino-Singapore Tianjin Ecocity, a joint development between China’s and Singapore’s governments.
KhattarWong’s Projects (REIC) Practice Group combines the experience and expertise of dedicated and trained lawyers and is well placed to handle project specific transactions for both domestic and foreign clients.
The Firm’s Partners involved in the Projects (REIC) Practice Group are Chia Ho Choon, Carla Barker and Anne Chua.
They have experience acting for infrastructure developers and contractors, business park developers, independent power producers, water treatment companies, aviation and aerospace companies, engineering companies, schools and hospitals.
“The Practice Group focuses on Project work, which enables the Firm and the Practice Group to get involved with clients from the inception of the projects to their completion. The combined expertise of our Partners enables us to assist our clients in all aspects of the project. This includes the initial formation or acquisition of the project vehicle; due diligence; the acquisition of land; liaising with regulatory bodies; advising on licensing and permits; advising on or drafting of construction and engineering contracts; dispute management; and assisting with the eventual sale or operation of the completed project.” These are the views expressed by Partner and Practice Group leader Chia Ho Choon.
With KhattarWong’s regional offices in Shanghai and Vietnam as well as the firm’s alliances with law firms in Indonesia, India, Malaysia, Thailand, Middle East, and network through Interlex, the Practice Group is well placed to assist its clients in their cross border real estate, infrastructure and construction deals.
The Practice Group’s recent assignments include acting as local counsel for the proposed construction and development of a power plant in Singapore; advising on the preparation of an EPC contract, O&M and Project Supervision Agreements for Indonesian developers of a power plant in Indonesia, which also involved Chinese contractors; advising on the Particular Conditions of Contract for use in Vietnam in conjunction with the FIDIC Conditions of Contract; advising an aviation authority on tenders and contracts for development of new facilities (including a terminal hotel), and on privatisation; and acting for developers in a mixed business park with commercial, residential and hotel components.
“Our lawyers have a clear understanding of the legal issues and commercial realities of the specific industry” says Anne Chua, whose clients include power generation, water treatment and aerospace companies.
Carla Barker adds, “The team’s ability to intertwine different spheres of practice gives us the confidence to advise clients on complex legal issues”.
The Practice Group is supported by a team of experienced and competent lawyers. The team’s attention to detail, their industry knowledge and ability to provide speedy and practical legal advice gives them an edge with clients.
June 7, 2010
The silver bullet? Dispute resolution
Unsurprisingly, disputes and arbitration work is on the increase. “There is an increase in tensions between joint venture partners and parties to contracts,” Harris says. “There’s a lot more instances of parties trying to get out of contracts or taking a harder line as a result of the current economic situation.”
Needless to say, prevention is the best cure for disputes and Brells says it is important to implement an effective management of both contract and project. “Both sides of a project need to be aware of the ‘ins and outs’ of their contract. They need to be aware of where their particular risks lie within the contract, and to manage those risks as best as possible, and what their entitlements are under the contract. For instance, if there is a notice provision in the contract, be aware of its time limitations and your responsibilities to meet it,” he says.
“If there are project control requirements, use them and manage the project with them. They have been included for a reason. So often we see where the focus has been on getting the project built and contract administration takes a back seat.”
Needless to say, prevention is the best cure for disputes and Brells says it is important to implement an effective management of both contract and project. “Both sides of a project need to be aware of the ‘ins and outs’ of their contract. They need to be aware of where their particular risks lie within the contract, and to manage those risks as best as possible, and what their entitlements are under the contract. For instance, if there is a notice provision in the contract, be aware of its time limitations and your responsibilities to meet it,” he says.
“If there are project control requirements, use them and manage the project with them. They have been included for a reason. So often we see where the focus has been on getting the project built and contract administration takes a back seat.”
The silver bullet? Other infrastructure work
While buyers of infrastructure assets have been cautious of late, Harris says there is still a significant potential deal flow in infrastructure M&A. “In the first half of this year, buyers seem to be taking time to identify good assets and acquisition activity will likely pick up in the second half of the year,” he says, adding that China and possibly Japan are likely to be the source countries for this kind of deal activity.
Farrands, meanwhile, believes that infrastructure M&A is less buoyant than in the past. “There is a clear appetite for investment in infrastructure, but with asset prices still decreasing we do not see transactions increasing until its asset prices are seen to be at the bottom,” he says.
Another area Harris tips to pick up is the need for political risk insurance. “It’s becoming an integral part of many infrastructure projects in emerging markets such as southeast Asia,” he says. “People are looking at the risk profiles of projects, their home jurisdictions and issues such as the capacity to exchange currency freely – Indonesia and Vietnam are two countries where political risk insurers could become active again.”
Farrands, meanwhile, believes that infrastructure M&A is less buoyant than in the past. “There is a clear appetite for investment in infrastructure, but with asset prices still decreasing we do not see transactions increasing until its asset prices are seen to be at the bottom,” he says.
“There is a significant liquidity problem. A lot of the project finance banks have had to be bailed out by governments and have their own issues”James Harris, Lovells Lee & Lee
Another area Harris tips to pick up is the need for political risk insurance. “It’s becoming an integral part of many infrastructure projects in emerging markets such as southeast Asia,” he says. “People are looking at the risk profiles of projects, their home jurisdictions and issues such as the capacity to exchange currency freely – Indonesia and Vietnam are two countries where political risk insurers could become active again.”
The silver bullet? Financing
Harris states that the finance aspect of infrastructure projects has changed: “There is a significant liquidity problem. A lot of the project finance banks have had to be bailed out by governments and have their own issues,” he says. “Also, the Royal Bank of Scotland, which was involved in quite a few Asia projects, has announced that it’s closing its project finance business.”
The result, Harris says, is that it has become more challenging for lawyers to create a loan structure that will work: “The terms for credit are very different now. Previously, the tenor of a loan might have been 15 to 25 years, but now that has shrunk to typically five to seven years. Fees have increased and interest margins have shot up,” he adds.
Has the funding situation put any projects in jeopardy? Harris says he is not aware of any deals which have been cancelled as a result of a lack of liquidity, but he notes that some have been put on hold for restructuring. And while he says that recent government commitments to boost infrastructure spending will help, he believes the real key to getting banks involved again is the involvement of multilateral agencies such as ADB and IFC in transactions.
Ironically, the fact that Hong Kong has had less resort to private funding to date means that its projects are better insulated from the vagaries of the economic downturn. “The vast investments of the [announced] infrastructure projects are government funded, so there should not be a significant issue for Hong Kong,” Farrands says.
The result, Harris says, is that it has become more challenging for lawyers to create a loan structure that will work: “The terms for credit are very different now. Previously, the tenor of a loan might have been 15 to 25 years, but now that has shrunk to typically five to seven years. Fees have increased and interest margins have shot up,” he adds.
Has the funding situation put any projects in jeopardy? Harris says he is not aware of any deals which have been cancelled as a result of a lack of liquidity, but he notes that some have been put on hold for restructuring. And while he says that recent government commitments to boost infrastructure spending will help, he believes the real key to getting banks involved again is the involvement of multilateral agencies such as ADB and IFC in transactions.
Ironically, the fact that Hong Kong has had less resort to private funding to date means that its projects are better insulated from the vagaries of the economic downturn. “The vast investments of the [announced] infrastructure projects are government funded, so there should not be a significant issue for Hong Kong,” Farrands says.
The silver bullet? Local rivals
Singapore and Hong Kong are naturally better placed than their developing regional neighbours to secure funding for projects. However, Hong Kong has lagged somewhat behind Singapore. “There has been talk of projects such as hospitals, prisons, new bridges, but these have been slow to get started,” Harris says.
It is a shortcoming with which the Hong Kong government seems to have come to terms. “In its policy address in 2007, the Hong Kong Government admitted that it had neglected infrastructure development,” Brells says. “Given the huge budget surplus, the government decided to push ahead with major infrastructure development to redress this imbalance.”
He says that this commitment has been stepped up following the economic crisis, with a string of major projects such as the West Kowloon to HK Border express link and the Hong Kong-Zuhai- Macau Bridge currently under way.
And Sam Farrands, managing partner of Minter Ellison’s Hong Kong office, disagrees that Hong Kong is lagging behind Singapore in terms of infrastructure projects investment. “The only aspect [where there might be a lag] is with respect to significant private sector participation over the last five years. That lack of private sector participation is set to change with projects such as the West Kowloon Cultural District, Hong Kong-Zhuhai Macau Bridge and the Kai Tak Development, including the East Cruise Terminal,” he says.
Minter Ellison has recently enhanced its infrastructure team with the addition of Hilary Cordell and Fiona Connell, along with their team, from Hong Kong boutique firm Cordells. Minters will be particularly looking to leverage the combination of Cordells’ expertise in planning, development and environmental law with Minters’ major projects and infrastructure focus. “Planning and environmental law has not been a big practice area in its own right in HK, and there are few dedicated practitioners in these areas,” Farrands says. “The combined strengths will help secure our involvement in major development projects.”
It is a shortcoming with which the Hong Kong government seems to have come to terms. “In its policy address in 2007, the Hong Kong Government admitted that it had neglected infrastructure development,” Brells says. “Given the huge budget surplus, the government decided to push ahead with major infrastructure development to redress this imbalance.”
He says that this commitment has been stepped up following the economic crisis, with a string of major projects such as the West Kowloon to HK Border express link and the Hong Kong-Zuhai- Macau Bridge currently under way.
And Sam Farrands, managing partner of Minter Ellison’s Hong Kong office, disagrees that Hong Kong is lagging behind Singapore in terms of infrastructure projects investment. “The only aspect [where there might be a lag] is with respect to significant private sector participation over the last five years. That lack of private sector participation is set to change with projects such as the West Kowloon Cultural District, Hong Kong-Zhuhai Macau Bridge and the Kai Tak Development, including the East Cruise Terminal,” he says.
Minter Ellison has recently enhanced its infrastructure team with the addition of Hilary Cordell and Fiona Connell, along with their team, from Hong Kong boutique firm Cordells. Minters will be particularly looking to leverage the combination of Cordells’ expertise in planning, development and environmental law with Minters’ major projects and infrastructure focus. “Planning and environmental law has not been a big practice area in its own right in HK, and there are few dedicated practitioners in these areas,” Farrands says. “The combined strengths will help secure our involvement in major development projects.”
The silver bullet? Regional overview
The Singapore government put a PPP program in place in 2004 and has since been successful in getting a number of projects off the ground.
“In Singapore, the public sector construction demand is expected to increase to between S$17bn and S$19bn this year with projects slated to proceed this year such as the MRT [railway] projects, including the Downtown Line, the North-South Line Extension and Jurong East Connection,” says John Brells, Asia-Pacific managing director of Hill International.
Lovells Lee & Lee managing partner James Harris says that there has also been a reasonable amount of infrastructure activity, particularly in the transport and power sectors, in Indonesia, Vietnam and the Philippines. “In Vietnam there is a port capacity shortage, which led the government to look at ports and related infrastructure such as roads and rail. There is a strong potential for work there, however, I’m not sure that the projects proceeded as far as many would have liked before the financial crisis hit,” he says.
The financial crisis will also have an impact on attempts to raise capital to fund infrastructure in India. The India Infrastructure Finance Company, a government SPV which provides funding assistance for infrastructure projects, was recently authorised to conduct multi-billion dollar capital raisings via the issue of tax-free bonds. However, some estimate that the country faces the challenge of raising close to US$190bn over the next three years to fund key infrastructure projects – a considerable feat, particularly given the liquidity crisis.
“In Singapore, the public sector construction demand is expected to increase to between S$17bn and S$19bn this year with projects slated to proceed this year such as the MRT [railway] projects, including the Downtown Line, the North-South Line Extension and Jurong East Connection,” says John Brells, Asia-Pacific managing director of Hill International.
Lovells Lee & Lee managing partner James Harris says that there has also been a reasonable amount of infrastructure activity, particularly in the transport and power sectors, in Indonesia, Vietnam and the Philippines. “In Vietnam there is a port capacity shortage, which led the government to look at ports and related infrastructure such as roads and rail. There is a strong potential for work there, however, I’m not sure that the projects proceeded as far as many would have liked before the financial crisis hit,” he says.
The financial crisis will also have an impact on attempts to raise capital to fund infrastructure in India. The India Infrastructure Finance Company, a government SPV which provides funding assistance for infrastructure projects, was recently authorised to conduct multi-billion dollar capital raisings via the issue of tax-free bonds. However, some estimate that the country faces the challenge of raising close to US$190bn over the next three years to fund key infrastructure projects – a considerable feat, particularly given the liquidity crisis.
The silver bullet?
Infrastructure has long been touted as the cure-all sector that will spark a new period of prosperity for law firms. But are expectations now running too high?
A familiar refrain is reverberating in legal practices throughout Asia. It goes something like this: yes, the economy is in recession; yes, there may be worse to come; but help is at hand in the form of government stimulus packages. Upgraded investment in infrastructure and resultant legal work will provide a much needed boost for firms.
The optimism is to an extent well founded. With governments and their partners sinking billions into infrastructure, it is inevitable that a demand for legal services will be generated as a result of these project and firms will take their share. But some regions may benefit more than others and the inevitable question persists: where will the private sector funding come from?
A familiar refrain is reverberating in legal practices throughout Asia. It goes something like this: yes, the economy is in recession; yes, there may be worse to come; but help is at hand in the form of government stimulus packages. Upgraded investment in infrastructure and resultant legal work will provide a much needed boost for firms.
The optimism is to an extent well founded. With governments and their partners sinking billions into infrastructure, it is inevitable that a demand for legal services will be generated as a result of these project and firms will take their share. But some regions may benefit more than others and the inevitable question persists: where will the private sector funding come from?
June 3, 2010
Japan: From cooperation to competition. Part 5
The observation that foreign firms appear to have not been as successful in Japan as they have in other liberalised legal markets across the region appears to be borne out by the unusually high number of FLFs that have abandoned their offices in Tokyo, either due to economic hardship or to take up the opportunities on offer in the boom Chinese market. However, according to many lawyers at FLFs, such an assertion would be erroneous.
“There may be a perception that foreign firms have not been successful in penetrating the legal market in Japan but that is misconceived,” says Wigmore adding that those who hold such a view use size as a measure of success and operate on the assumption that FLFs and DLFs operate in the same sphere.
“Comparing international and domestic firms on the basis of the size and strength of their Japanese law practices is meaningful only if the goal if the goal is to compete head to head with Japanese domestic firms. Holstein concurs adding that this is not the strategy employed by many international firms in Japan including his own. “Many foreign law firms have made the strategic decision not to compete in the domestic law market. We and most of our peer US firms have chosen instead to focus on international law practices and play to our strengths: outbound investments, financing and high-end cross border deals where we work collaborartively with the big four domestic firms. This model has been successful for us.”
And it is not only Milbank that has a successful practice. The likes of Skadden, MoFo, Paul Hastings and Linklaters are known as firms who are making solid, profitable inroads in the market. Even so, the general market perception is that some other firms are struggling, especially the second or third tier international firms, and some lawyers believe there may be significant movement at the lower end of the market.
Siegel says that any such activity is likely to occur quietly and it is likely that even those with their ears to the ground in Tokyo won’t hear much about it.
“I don’t think there will be many new foreign firms opening offices in Japan this year, but there will almost certainly be some closures,” he says. “But we are unlikely to hear about this, these will most likely take the form of global firms ‘merging’ with small local practices – looking to pull out their ex-pat attorneys in this way to reduce costs and save face.”
“There may be a perception that foreign firms have not been successful in penetrating the legal market in Japan but that is misconceived,” says Wigmore adding that those who hold such a view use size as a measure of success and operate on the assumption that FLFs and DLFs operate in the same sphere.
“Comparing international and domestic firms on the basis of the size and strength of their Japanese law practices is meaningful only if the goal if the goal is to compete head to head with Japanese domestic firms. Holstein concurs adding that this is not the strategy employed by many international firms in Japan including his own. “Many foreign law firms have made the strategic decision not to compete in the domestic law market. We and most of our peer US firms have chosen instead to focus on international law practices and play to our strengths: outbound investments, financing and high-end cross border deals where we work collaborartively with the big four domestic firms. This model has been successful for us.”
And it is not only Milbank that has a successful practice. The likes of Skadden, MoFo, Paul Hastings and Linklaters are known as firms who are making solid, profitable inroads in the market. Even so, the general market perception is that some other firms are struggling, especially the second or third tier international firms, and some lawyers believe there may be significant movement at the lower end of the market.
Siegel says that any such activity is likely to occur quietly and it is likely that even those with their ears to the ground in Tokyo won’t hear much about it.
“I don’t think there will be many new foreign firms opening offices in Japan this year, but there will almost certainly be some closures,” he says. “But we are unlikely to hear about this, these will most likely take the form of global firms ‘merging’ with small local practices – looking to pull out their ex-pat attorneys in this way to reduce costs and save face.”
Japan: A drag on foreign firms: the three-year requirement
The need for foreign lawyers employed by international law firms operating in Japan to have three years international experience under their belts prior to being registered to practice in the country is simply a “drag on foreign law firms” according to lawyers ALB spoke to.
When foreign law offices were first allowed to set up shop in Japan some 22 years ago the requirement was set at five years’ international experience and in 2005 this was reduced to three – but this is still not good enough, say international lawyers in Japan.
“The Bar Association has insisted on making the conditions here for foreign lawyers very difficult. It has got to a stage where it impacts our ability to work, expand and essentially bring clients to the Japanese market,” says the Tokyo managing partner at one US-based firm.
For others it’s a move that screams protectionism, a move designed to push foreign law firms operating in the country to employ graduates of Japanese law schools instead of looking to their international offices to fill vacancies.
“This is part of broader moves to make conditions inhospitable and could well be viewed as protectionist. In some instances it’s hard to place lawyers to come to Japan and this is yet another difficulty,” says another managing partner at a US firm operating in Tokyo. “If the intention of such restrictions is to encourage us to employ Japanese graduates this is not the correct way to go about it. While graduates of Japanese law schools are of an increasingly high calibre, they often lack the technical and language skills of international lawyers.”
Indeed, the situation has got so bad that even domestic law firms are calling for an overhaul of the system. “The domestic law firms in Japan need foreign law firms to be operating optimally. It will get to a stage when domestic law firms, foreign law firms and even the economy start to suffer,” says the managing partner of one domestic firm.
Add to this other restrictions imposed on foreign law firms, for example prohibition on them opening additional branch offices in Japan, and many are crying foul. And while ALB understands that foreign law firms in the country are currently in negotiation with the authorities to relax such restrictions, the consensus is that foreign law firms shouldn’t hold their breath: the lifting of such restrictions, especially in the current economic climate, may take some time.
When foreign law offices were first allowed to set up shop in Japan some 22 years ago the requirement was set at five years’ international experience and in 2005 this was reduced to three – but this is still not good enough, say international lawyers in Japan.
“The Bar Association has insisted on making the conditions here for foreign lawyers very difficult. It has got to a stage where it impacts our ability to work, expand and essentially bring clients to the Japanese market,” says the Tokyo managing partner at one US-based firm.
For others it’s a move that screams protectionism, a move designed to push foreign law firms operating in the country to employ graduates of Japanese law schools instead of looking to their international offices to fill vacancies.
“This is part of broader moves to make conditions inhospitable and could well be viewed as protectionist. In some instances it’s hard to place lawyers to come to Japan and this is yet another difficulty,” says another managing partner at a US firm operating in Tokyo. “If the intention of such restrictions is to encourage us to employ Japanese graduates this is not the correct way to go about it. While graduates of Japanese law schools are of an increasingly high calibre, they often lack the technical and language skills of international lawyers.”
Indeed, the situation has got so bad that even domestic law firms are calling for an overhaul of the system. “The domestic law firms in Japan need foreign law firms to be operating optimally. It will get to a stage when domestic law firms, foreign law firms and even the economy start to suffer,” says the managing partner of one domestic firm.
Add to this other restrictions imposed on foreign law firms, for example prohibition on them opening additional branch offices in Japan, and many are crying foul. And while ALB understands that foreign law firms in the country are currently in negotiation with the authorities to relax such restrictions, the consensus is that foreign law firms shouldn’t hold their breath: the lifting of such restrictions, especially in the current economic climate, may take some time.
Japan: From cooperation to competition. Part 4
Notwithstanding debates regarding the business models of international firms, referral agreements and increased competition, the consensus is that DLFs still dominate the legal sector in Japan. A glance at the empirical evidence seems to support such a view. After 22 years it is DLFs who are the largest, who have the greatest pulling power for domestic clients and local graduates and, arguably, are the most profitable.
Dixon says this is due to size and age-old issues like fees and legal costs. “The bulk of international work for the last several years in Japan has been inbound; hence domestic lawyers are key to serving clients. Many transactions require large numbers of attorneys – merger due diligence, large scale securitisations; few foreign firms have sufficient numbers of Japanese attorneys in a sufficient variety of fields to provide full service for these large transactions,” she says.
A theme running through this decade has been large-scale consolidation among DLFs most of which have sought critical mass to maintain their competitive advantage over each other and the threat of foreign firms. It started with Nagashima Ohno’s merger with Tsunematsu Yanase & Sekine back in 2000, and was followed by others involving the present big four, such as Anderson Mori’s combination with Tomotsune & Kimura, and Mori Sogo’s merger with Hamada & Matsumoto. The result, when including the latest merger of Asahi Koma & Nishimura & Partners, is that each of the Big Four now boast in excess of 300 lawyers.
Fees are another area where DLFs still hold sway. “Foreign firms are rather expensive,” Dixon says, “with hourly rates for junior associates matching the hourly rates of very senior attorneys in Japanese law firms. Although some foreign firms charge a lower rate for their Japanese lawyers compared to their non-Japanese lawyers in order to remain somewhat competitive with local firms, they rarely match the market completely.”
They are also unable to match the local firms in terms of their ability to attract the nation’s best and brightest lawyers. “Japanese lawyers remain very independent,” Ishiguro says. “When they finish university, they look to come and work at one the Big Four firms – this has been a trend of the last decade and it will continue in the future, not least of all because of some of the difficulties that international firms are facing in their US and UK headquarters. Domestic firms are the preferred choice because of this and the high quality work we can offer.”
Hara also notes that despite the international appeal some FLFs operating in Tokyo may have, DLFs continue to attract young Japanese lawyers because of their ability to offer the same high calibre international work as their foreign counterparts.
“Although many Japanese law firms have been handling a lot of domestic work lately, we still offer our lawyers the ability to work on complex crossborder transactions and allow them to get the international exposure that is considered important that way,” he says. “In choosing to come to a domestic firm they can see a clear path to partnership and progression – this is not always clear in international firms.”
However, lawyers at FLFs said that even if young lawyers wanted to come on board, there would be no guarantee that international firms would employ them with one partner stating that the technical ability and English language proficiency of some Japanese graduates is not comparable to that of US or UK law school graduates.
Dixon says this is due to size and age-old issues like fees and legal costs. “The bulk of international work for the last several years in Japan has been inbound; hence domestic lawyers are key to serving clients. Many transactions require large numbers of attorneys – merger due diligence, large scale securitisations; few foreign firms have sufficient numbers of Japanese attorneys in a sufficient variety of fields to provide full service for these large transactions,” she says.
A theme running through this decade has been large-scale consolidation among DLFs most of which have sought critical mass to maintain their competitive advantage over each other and the threat of foreign firms. It started with Nagashima Ohno’s merger with Tsunematsu Yanase & Sekine back in 2000, and was followed by others involving the present big four, such as Anderson Mori’s combination with Tomotsune & Kimura, and Mori Sogo’s merger with Hamada & Matsumoto. The result, when including the latest merger of Asahi Koma & Nishimura & Partners, is that each of the Big Four now boast in excess of 300 lawyers.
Fees are another area where DLFs still hold sway. “Foreign firms are rather expensive,” Dixon says, “with hourly rates for junior associates matching the hourly rates of very senior attorneys in Japanese law firms. Although some foreign firms charge a lower rate for their Japanese lawyers compared to their non-Japanese lawyers in order to remain somewhat competitive with local firms, they rarely match the market completely.”
They are also unable to match the local firms in terms of their ability to attract the nation’s best and brightest lawyers. “Japanese lawyers remain very independent,” Ishiguro says. “When they finish university, they look to come and work at one the Big Four firms – this has been a trend of the last decade and it will continue in the future, not least of all because of some of the difficulties that international firms are facing in their US and UK headquarters. Domestic firms are the preferred choice because of this and the high quality work we can offer.”
Hara also notes that despite the international appeal some FLFs operating in Tokyo may have, DLFs continue to attract young Japanese lawyers because of their ability to offer the same high calibre international work as their foreign counterparts.
“Although many Japanese law firms have been handling a lot of domestic work lately, we still offer our lawyers the ability to work on complex crossborder transactions and allow them to get the international exposure that is considered important that way,” he says. “In choosing to come to a domestic firm they can see a clear path to partnership and progression – this is not always clear in international firms.”
However, lawyers at FLFs said that even if young lawyers wanted to come on board, there would be no guarantee that international firms would employ them with one partner stating that the technical ability and English language proficiency of some Japanese graduates is not comparable to that of US or UK law school graduates.
Japan: From cooperation to competition. Part 3
Ever since Japan opened its legal market to FLFs in 1987, relations between the domestic and international counterparts have been firmly based on cooperation. Rather than competing for each other’s market share, a clear division has existed between what belonged to each. FLFs advised on international law and their international clients on entering the Japanese market, while DLFs advised domestic clients on their operations both in Japan and overseas. If a matter called for either specialist international or domestic advice, the firm involved would refer the matter to a DLF or FLF of their choosing, thus creating intricate and lucrative networks of referral agreements.
However, regulatory change, law firm consolidation and economic shifts over the past few years have all acted to undermine this once quiet consensus. DLFs and FLFs are now beginning, ever so slightly, to encroach on each others’ turf and this is most apparent in relation to the big ticket items in Japan: transactional work and M&A.
“Domestic law firms have started to move directly into competition with foreign firms in these areas of late,” says Ken Siegel, managing partner of Morrison & Foerster’s Tokyo office. “When foreign firms entered Japan back in the late 80s these areas were almost their exclusive domain, but what we are seeing now, either through the establishment of international desks, international law departments or the hiring of gaiben [foreign attorneys] is that domestic firms are making a real end-run in this area.”
Bonnie Dixon and Daniel Hounslow of local firm Atsumi & Partners are two such gaiben – the first foreign lawyers to be elevated to partnership at a DLF in Japan. For Dixon the bubbling competition between domestic and foreign law firms has been dented somewhat by the onset of the global economic crisis. “Prior to the recent financial crisis I would have said that foreign firms are strong competitors for securitisation work, but that is not relevant now [the market for securitisation in Japan is at its lowest point in 15 years, according to the latest Thomson Reuters statistics]. Foreign firms may still maintain a competitive edge over domestic firms for private equity and fund formation work.”
But according to Darrel Holstein, Tokyo managing partner at US firm Milbank, it’s not so much a case of DLFs competing with international law firms, nor all FLFs making a charge for a greater share of the domestic market. It’s a specific type of FLF that is shaking up the status quo.
“The international firms with large numbers of bengoshi of those in joint ventures or alliances with substantial local firms present the biggest threat to large independent domestic firms because they compete directly with them for domestic law transactional work ,” he says.
However, as Holstein’s colleague and fellow partner Gary Wigmore is quick to point out, the service offered by integrated or JV firms is not always equal to that offered by independents like the Big Four.
“The large independent domestic firms offer depth and quality of service on Japanese law matters. Some of the JV firms have had success in developing domestic law practices, but most are not at the same level of the big four. I think the joint venture strategy can only work long term if you are offering something special and unique,” he says.
Holstein and Wigmore go on to note that when they need to bring a local firm on board they rarely look outside the top four or five firms in the market and even more rarely to a joint venture firm.
MoFo’s Siegel, however, disagrees with those who question the long term viability of the joint law venture model or those foreign firms who have chosen to establish a critical mass of bengoshi within their ranks.
“Our Tokyo operations have been extremely successful and if there is any sign that this model, that is, the development of Japanese law capability, is not feasible in the long run I have not seen any indication of it. We have some 110 lawyers here and all are extremely busy. We not only act for international clients but some of the largest companies in Japan are also regular clients,” he says.
And it is not only Siegel singing the praises of his firm’s model, domestic lawyers firms also single out MoFo’s Tokyo office as one of its most profitable worldwide.
However, regulatory change, law firm consolidation and economic shifts over the past few years have all acted to undermine this once quiet consensus. DLFs and FLFs are now beginning, ever so slightly, to encroach on each others’ turf and this is most apparent in relation to the big ticket items in Japan: transactional work and M&A.
“Domestic law firms have started to move directly into competition with foreign firms in these areas of late,” says Ken Siegel, managing partner of Morrison & Foerster’s Tokyo office. “When foreign firms entered Japan back in the late 80s these areas were almost their exclusive domain, but what we are seeing now, either through the establishment of international desks, international law departments or the hiring of gaiben [foreign attorneys] is that domestic firms are making a real end-run in this area.”
Bonnie Dixon and Daniel Hounslow of local firm Atsumi & Partners are two such gaiben – the first foreign lawyers to be elevated to partnership at a DLF in Japan. For Dixon the bubbling competition between domestic and foreign law firms has been dented somewhat by the onset of the global economic crisis. “Prior to the recent financial crisis I would have said that foreign firms are strong competitors for securitisation work, but that is not relevant now [the market for securitisation in Japan is at its lowest point in 15 years, according to the latest Thomson Reuters statistics]. Foreign firms may still maintain a competitive edge over domestic firms for private equity and fund formation work.”
But according to Darrel Holstein, Tokyo managing partner at US firm Milbank, it’s not so much a case of DLFs competing with international law firms, nor all FLFs making a charge for a greater share of the domestic market. It’s a specific type of FLF that is shaking up the status quo.
“The international firms with large numbers of bengoshi of those in joint ventures or alliances with substantial local firms present the biggest threat to large independent domestic firms because they compete directly with them for domestic law transactional work ,” he says.
However, as Holstein’s colleague and fellow partner Gary Wigmore is quick to point out, the service offered by integrated or JV firms is not always equal to that offered by independents like the Big Four.
“The large independent domestic firms offer depth and quality of service on Japanese law matters. Some of the JV firms have had success in developing domestic law practices, but most are not at the same level of the big four. I think the joint venture strategy can only work long term if you are offering something special and unique,” he says.
Holstein and Wigmore go on to note that when they need to bring a local firm on board they rarely look outside the top four or five firms in the market and even more rarely to a joint venture firm.
MoFo’s Siegel, however, disagrees with those who question the long term viability of the joint law venture model or those foreign firms who have chosen to establish a critical mass of bengoshi within their ranks.
“Our Tokyo operations have been extremely successful and if there is any sign that this model, that is, the development of Japanese law capability, is not feasible in the long run I have not seen any indication of it. We have some 110 lawyers here and all are extremely busy. We not only act for international clients but some of the largest companies in Japan are also regular clients,” he says.
And it is not only Siegel singing the praises of his firm’s model, domestic lawyers firms also single out MoFo’s Tokyo office as one of its most profitable worldwide.
Akai Izumi, Sullivan & Cromwell, ALB Japan Law Awards: 2008 International DealMaker of the Year
Akai Izumi, co-head of Sullivan & Cromwell’s Japan practice and the winner of the International Dealmaker of the Year award at the ALB Japan Law Awards 2008, has seen the legal market come full circle since foreign lawyers were allowed to enter the market some 22 years ago.
“The legal market has progressed from being a small community with a comparatively small number of lawyers and low demand for legal services to a very well-developed legal sector. The entry and expansion of international firms has contributed to increased competition between domestic and international firms and overall this has benefitted the legal sector, Japanese businesses and the economy as a whole,” he says.
And while the Japanese economy may be hurting at the moment, Akai believes a rebound is on the cards and that the nation’s relatively strong conglomerates will be leading the charge.
“The outbound M&A market is quite stagnant at the moment and will remain that way the first half of 2009,” he says. “The management of most companies have adopted a defensive stance at the moment and that has a lot to do with economic uncertainty. The focus has been on securing liquidity on balance sheets as opposed to looking to expand.”
Akai says that while economic certainty is the key to kick-starting the sector, the release of Q1 financial results and 2010 financial projections is likely to reveal a need to look for strategic acquisitions abroad. “The financial results and projections may affect a change in the conservative outlook adopted by some Japanese companies. What we may see is the market may pressure some of these companies into action, shifting their focus away from just liquidity concerns to taking active steps to implement strategic plans and expansion.”
Some of this market pressure is already telling on the country’s capital market. According to Thomson Reuters statistics, February was one of the busiest months for Japan’s capital markets since mid-2008. Secondary offerings increased 173% and proceeds from follow on offerings raised 183% more from the same period last year – not necessarily evidence that things have turned the corner, but positive signs nonetheless. “Capital markets have been slow and will probably remain that way for a while.” “But that is only one side of the story. The flip side is that, despite the market conditions, companies need money. They need capital to make up for poor financial performance, need shareholder equity and capital on their balance sheets. There is a strong demand for these financing transactions at the moment.
“Companies need to find a balance between confidence of the market and their own needs. This may result in some companies going out at the market more aggressively and I think this will be what happens in the second half of 2009,” he adds.
“The legal market has progressed from being a small community with a comparatively small number of lawyers and low demand for legal services to a very well-developed legal sector. The entry and expansion of international firms has contributed to increased competition between domestic and international firms and overall this has benefitted the legal sector, Japanese businesses and the economy as a whole,” he says.
And while the Japanese economy may be hurting at the moment, Akai believes a rebound is on the cards and that the nation’s relatively strong conglomerates will be leading the charge.
“The outbound M&A market is quite stagnant at the moment and will remain that way the first half of 2009,” he says. “The management of most companies have adopted a defensive stance at the moment and that has a lot to do with economic uncertainty. The focus has been on securing liquidity on balance sheets as opposed to looking to expand.”
Akai says that while economic certainty is the key to kick-starting the sector, the release of Q1 financial results and 2010 financial projections is likely to reveal a need to look for strategic acquisitions abroad. “The financial results and projections may affect a change in the conservative outlook adopted by some Japanese companies. What we may see is the market may pressure some of these companies into action, shifting their focus away from just liquidity concerns to taking active steps to implement strategic plans and expansion.”
Some of this market pressure is already telling on the country’s capital market. According to Thomson Reuters statistics, February was one of the busiest months for Japan’s capital markets since mid-2008. Secondary offerings increased 173% and proceeds from follow on offerings raised 183% more from the same period last year – not necessarily evidence that things have turned the corner, but positive signs nonetheless. “Capital markets have been slow and will probably remain that way for a while.” “But that is only one side of the story. The flip side is that, despite the market conditions, companies need money. They need capital to make up for poor financial performance, need shareholder equity and capital on their balance sheets. There is a strong demand for these financing transactions at the moment.
“Companies need to find a balance between confidence of the market and their own needs. This may result in some companies going out at the market more aggressively and I think this will be what happens in the second half of 2009,” he adds.
Japan: From cooperation to competition. Part 2
Prior to the 16-year-long slump of the Japanese economy that began in 1990, there was little call for the involvement of law firms in the business transactions of Japanese companies. With government bureaucrats heavily involved in economic development and business decision-making, and little in the way of litigation, lawyers were, according to Toru Ishiguro of Mori Hamada & Matsumoto, an “unnecessary evil”.
But things changed as the samurai nation emerged from the despairing depths of the “lost decade”. Suddenly law firms faced a different world, where businesses made their own decisions in an increasingly litigious society, forcing even the most conservative industries to become more aggressive.
As a result, law firms played a much bigger part in the domestic economy, as businesses came to realise the importance of the need for advice. Nagashima Ohno & Tsunematsu chairman Hisashi Hara estimates that in the 1980s, 80% of legal work was garnered from cross-border transactions. Compare that to the current market, where Hara says the breakdown of work handled by the top domestic firms in Japan was articulated as a clear 70:30 division. Seventy per cent was accounted for by domestic work, while 30% was supplemented by cross-border M&A and transactional type work, with FLFs attracting the lion’s share of it owing largely to their international clientele.
But even this is changing. In fact, the changes here have been one of the more noticeable trends in the market over the past 12 months. So, are Japanese lawyers coming full circle and returning to their roots as transactional lawyers?
According to Ishiguro, upping the amount of cross-border work coming into the firm is high on his firm’s agenda. “There has been a general move among all domestic players to invest more attention into cross-border elements of the market and we are now seeing the fruits of this policy pay off,” he says. Ishiguro’s firm has long had an international desk, but has recently seen its market share and that of other DLFs increase substantially in a short period of time.
Nagashima Ohno & Tsunematsu is also making in-roads, but Hara says that any increase in this area will have to preserve the amount of local law work DLFs are doing.
“All of the Big Four firms feel that domestic work has become so important and we don’t really want to harm that,” he says. “But cross-border work now is extremely lucrative, so the challenge is how to use what we have resourcefully and how to pick up this work without having to say no to local law work, which has enabled us to grow and thrive.”
One need only look at the table on p49 and see just how much of the M&A market DLFs have to realise that they may have struck this balance already – a balance that will serve them well in an economy that is once again teetering on the precipice of another lost decade.
And while there are those that say DLFs returning to their roots, coming full circle and increasing the amount of cross-border work they handle is an added bonus, to others, it is a necessity, as the cooperative status quo between DLFs and FLFs slowly but surely gives way to increased competition.
But things changed as the samurai nation emerged from the despairing depths of the “lost decade”. Suddenly law firms faced a different world, where businesses made their own decisions in an increasingly litigious society, forcing even the most conservative industries to become more aggressive.
As a result, law firms played a much bigger part in the domestic economy, as businesses came to realise the importance of the need for advice. Nagashima Ohno & Tsunematsu chairman Hisashi Hara estimates that in the 1980s, 80% of legal work was garnered from cross-border transactions. Compare that to the current market, where Hara says the breakdown of work handled by the top domestic firms in Japan was articulated as a clear 70:30 division. Seventy per cent was accounted for by domestic work, while 30% was supplemented by cross-border M&A and transactional type work, with FLFs attracting the lion’s share of it owing largely to their international clientele.
But even this is changing. In fact, the changes here have been one of the more noticeable trends in the market over the past 12 months. So, are Japanese lawyers coming full circle and returning to their roots as transactional lawyers?
According to Ishiguro, upping the amount of cross-border work coming into the firm is high on his firm’s agenda. “There has been a general move among all domestic players to invest more attention into cross-border elements of the market and we are now seeing the fruits of this policy pay off,” he says. Ishiguro’s firm has long had an international desk, but has recently seen its market share and that of other DLFs increase substantially in a short period of time.
Nagashima Ohno & Tsunematsu is also making in-roads, but Hara says that any increase in this area will have to preserve the amount of local law work DLFs are doing.
“All of the Big Four firms feel that domestic work has become so important and we don’t really want to harm that,” he says. “But cross-border work now is extremely lucrative, so the challenge is how to use what we have resourcefully and how to pick up this work without having to say no to local law work, which has enabled us to grow and thrive.”
One need only look at the table on p49 and see just how much of the M&A market DLFs have to realise that they may have struck this balance already – a balance that will serve them well in an economy that is once again teetering on the precipice of another lost decade.
And while there are those that say DLFs returning to their roots, coming full circle and increasing the amount of cross-border work they handle is an added bonus, to others, it is a necessity, as the cooperative status quo between DLFs and FLFs slowly but surely gives way to increased competition.
Japan: From cooperation to competition. Part 1
As this edition of ALB went to print, the 22nd anniversary of the enactment into law of the Special Measure Law Concerning the Handling of Legal Business by Foreign Lawyers (the law) passed without ceremony or fanfare. Proof that for many in the Japanese legal fraternity, liberalisation is an ongoing process – evidence that there is still plenty more to achieve despite an impressive evolution.
Japan’s present day legal sector is virtually unrecognisable from the one that existed prior to 1987. The presence of foreign law firms (FLFs) has irrevocably reshaped the complexion of the legal sector, lifted standards and changed the way business law is conducted in the country. Not only has their presence proved useful in helping wean Japanese business off government support and onto the welcoming bosom of business lawyers, it has also helped the development of domestic law firms (DLFs), who have gone from strength to strength.
The Japanese ‘Big Four’ (Anderson Mori & Tomotsune, Mori Hamada & Matsumoto, Nagashima Ohno & Tsunematsu, and Nishimura & Asahi) have gone from modest-sized firms to legal leviathans, casting a shadow over the legal market. After 22 years it is the DLFs who dominate the arena.
And while this is not likely to change in the foreseeable future, the cooperative consensus that has so far typified the relationship between DLFs and FLFs in Japan is set to change. In fact, the more observant may have already noticed signs of this occurring: from joint law ventures to the hiring of Japanese graduates by FLFs and gaiben by DLFs – if the past 22 years were about cooperation, it seems the next 22 will be about competition.
Japan’s present day legal sector is virtually unrecognisable from the one that existed prior to 1987. The presence of foreign law firms (FLFs) has irrevocably reshaped the complexion of the legal sector, lifted standards and changed the way business law is conducted in the country. Not only has their presence proved useful in helping wean Japanese business off government support and onto the welcoming bosom of business lawyers, it has also helped the development of domestic law firms (DLFs), who have gone from strength to strength.
The Japanese ‘Big Four’ (Anderson Mori & Tomotsune, Mori Hamada & Matsumoto, Nagashima Ohno & Tsunematsu, and Nishimura & Asahi) have gone from modest-sized firms to legal leviathans, casting a shadow over the legal market. After 22 years it is the DLFs who dominate the arena.
And while this is not likely to change in the foreseeable future, the cooperative consensus that has so far typified the relationship between DLFs and FLFs in Japan is set to change. In fact, the more observant may have already noticed signs of this occurring: from joint law ventures to the hiring of Japanese graduates by FLFs and gaiben by DLFs – if the past 22 years were about cooperation, it seems the next 22 will be about competition.
“The international law firms with large numbers of bengoshi [Japanese attorneys] or those with JVs or alliances with substantial local firms present the biggest threat to large independent local firms because they compete directly with them for domestic law transactional work.”Darrel Holstein, Milbank
May 29, 2010
ALB In-house Survey 2009. Part 5
Nevertheless, external lawyers should not be surprised if an invoice is returned to them marked with a ‘please explain’. “What irritates me the most is when I get an e-mail from a law firm and about 60 other lawyers at that firm are cc’d in. You can bet that the other 59 lawyers will charge for receiving, opening and reading the email. When I get a bill like this I send it back straight away. Firms that are not flexible here and more generally snotty about reducing fees wear my patience; we can take our work elsewhere,” says the regional general counsel of a US-based investment bank.
And the consensus is that despite the more flexible approach being adopted by firms, the charge-out rates at some international firms operating in the region remain too high, disproportionately so according to Flavell.
“The fees being charged in Hong Kong and China are still excessive. Just because a firm is a ‘Magic Circle/ Wall Street’ firm in the UK or US does not mean they justify the same fees in HK and China. Some firms and lawyers are excellent and may justify these fees, but many of these firms significant amounts of the time cannot,” he says.
Is this the window through which those firms outside the Magic Circle may attract more work from the region’s largest multi-nationals? The consensus is that this is a distinct possibility.
“There are various second-tier UK and US firms or first-tier Australian firms with offices of similar size to Magic Circle firms in the various parts of the region with experienced partners who have been working in the region for long periods and offer much cheaper rates. If I can obtain the services of a very good partner at the same rate as a mid-experienced associate from a Magic Circle firm, why use the more expensive firm?” Flavell asks.
His question is one currently being asked by in-house teams across the region. All of the lawyers ALB spoke to agreed that the answer isn’t likely to result in legal departments cutting the number of external firms they use or – as is the case in the US – see the end of the legal panel.
“The very point of the legal panel is that it offers companies who have operations in different locations around the globe access to knowledgeable local legal advice,” says Ingram, who uses one US-based international firm for most of his external legal counsel.
It seems that many companies are likely to retain their legal panels in the near future, if for no other reason than the size of the region means limiting external counsel to one or two firms is not practicable. Nevertheless, as the ALB In-house survey 2009 indicates, there is no guarantee that the size or composition of such panels will remain the same.
“I think it is fair to say that we are looking at the number of firms we use in the APAC region and looking to reduce the number and build stronger relationships with a smaller number of firms. Of course the size of the region means it is impossible to use the same one or two firms across the region,” Flavell says.
And the consensus is that despite the more flexible approach being adopted by firms, the charge-out rates at some international firms operating in the region remain too high, disproportionately so according to Flavell.
“The fees being charged in Hong Kong and China are still excessive. Just because a firm is a ‘Magic Circle/ Wall Street’ firm in the UK or US does not mean they justify the same fees in HK and China. Some firms and lawyers are excellent and may justify these fees, but many of these firms significant amounts of the time cannot,” he says.
Is this the window through which those firms outside the Magic Circle may attract more work from the region’s largest multi-nationals? The consensus is that this is a distinct possibility.
“There are various second-tier UK and US firms or first-tier Australian firms with offices of similar size to Magic Circle firms in the various parts of the region with experienced partners who have been working in the region for long periods and offer much cheaper rates. If I can obtain the services of a very good partner at the same rate as a mid-experienced associate from a Magic Circle firm, why use the more expensive firm?” Flavell asks.
His question is one currently being asked by in-house teams across the region. All of the lawyers ALB spoke to agreed that the answer isn’t likely to result in legal departments cutting the number of external firms they use or – as is the case in the US – see the end of the legal panel.
“The very point of the legal panel is that it offers companies who have operations in different locations around the globe access to knowledgeable local legal advice,” says Ingram, who uses one US-based international firm for most of his external legal counsel.
It seems that many companies are likely to retain their legal panels in the near future, if for no other reason than the size of the region means limiting external counsel to one or two firms is not practicable. Nevertheless, as the ALB In-house survey 2009 indicates, there is no guarantee that the size or composition of such panels will remain the same.
“I think it is fair to say that we are looking at the number of firms we use in the APAC region and looking to reduce the number and build stronger relationships with a smaller number of firms. Of course the size of the region means it is impossible to use the same one or two firms across the region,” Flavell says.
ALB In-house Survey 2009. Part 4
Good news for law firms, perhaps. But as always, a review of the relationships between in-house departments and external counsel is a process likely to dredge up ageold issues. These issues, according to many of the region’s top in-house lawyers, are yet to be to satisfactorily addressed by law firms, with legal fees (or, more accurately, billing practices) top of the agenda.
Failure to be clear and concise
All the in-house lawyers interviewed by ALB note that it is the ability of firms to offer quality and commercial results that will dictate who gets legal work from companies. The survey reveals that firms who can guarantee high quality work, meet deadlines and be proactive in the running of projects have a good chance of continuing to receive work from in-house clients.
Nonetheless, the consensus opinion is that most law firms struggle to deliver these apparently basic demands. “What law firms need to understand is, compared to when I was a partner at a law firm, I now receive 10 times more e-mails, am looking after 10 times more matters and can be working on projects in four or five different countries at the same time with only a small in-house team. I do not appreciate having to proof read documents and correct typos, major drafting mistakes – this happens all too often,” Flavell says.
Elliot cites similar experiences and notes that some of his external lawyers never fail to disappoint. “Some of them have problems with the basics. I don’t want my external counsel to just play lawyers. I give them work and I get the impression that they give me advice with one eye on their cost agreement. I don’t want wishy-washy advice; I can’t take that to my board.”
In essence, in-house lawyers are looking for their external lawyers to be proactive, to be a step (or two) ahead of the game – but not too far ahead.
“The APAC region can be very difficult and the legal position is often unclear. However, a lawyer who gives me advice along those lines is of no use. I expect firms to give me their ‘best call’ on how they think we should proceed and give me reasons to back up their view – I’m sorry to say this does not happen very often,” Flavell says. “On major projects I want my lawyers to be three or four steps ahead of us taking charge to ensure we get where we need to be. I have found only a couple of lawyers that do this.”
But external advisors need to find the balance between being proactive and doing more than was asked, explains the general counsel at the US-based investment bank. “I really just want lawyers we use to do what we ask – nothing more, nothing less. They shouldn’t do work we haven’t briefed them on, they should just provide the advice.”
Be flexible
The efforts of law firms that have been trying hard in this area have not gone unnoticed. One area in which this is most apparent is in relation to fee arrangements where flexibility has become the order of the day. Having said that, all in-house lawyers ALB interviewed noted that there is still some way to go but this does not necessarily mean a massive reduction in fees. Rather, it is the little things that count.
In-house lawyers want some uniformity. “Our external lawyers have been very flexible in terms of offering fee reductions, extended payment terms and holding back on some work,” Ingram says. “They have shown they are willing to be flexible and – this is perhaps most important – they have an understanding that we must work together through this difficult time.”
Failure to be clear and concise
All the in-house lawyers interviewed by ALB note that it is the ability of firms to offer quality and commercial results that will dictate who gets legal work from companies. The survey reveals that firms who can guarantee high quality work, meet deadlines and be proactive in the running of projects have a good chance of continuing to receive work from in-house clients.
Nonetheless, the consensus opinion is that most law firms struggle to deliver these apparently basic demands. “What law firms need to understand is, compared to when I was a partner at a law firm, I now receive 10 times more e-mails, am looking after 10 times more matters and can be working on projects in four or five different countries at the same time with only a small in-house team. I do not appreciate having to proof read documents and correct typos, major drafting mistakes – this happens all too often,” Flavell says.
Elliot cites similar experiences and notes that some of his external lawyers never fail to disappoint. “Some of them have problems with the basics. I don’t want my external counsel to just play lawyers. I give them work and I get the impression that they give me advice with one eye on their cost agreement. I don’t want wishy-washy advice; I can’t take that to my board.”
In essence, in-house lawyers are looking for their external lawyers to be proactive, to be a step (or two) ahead of the game – but not too far ahead.
“The APAC region can be very difficult and the legal position is often unclear. However, a lawyer who gives me advice along those lines is of no use. I expect firms to give me their ‘best call’ on how they think we should proceed and give me reasons to back up their view – I’m sorry to say this does not happen very often,” Flavell says. “On major projects I want my lawyers to be three or four steps ahead of us taking charge to ensure we get where we need to be. I have found only a couple of lawyers that do this.”
But external advisors need to find the balance between being proactive and doing more than was asked, explains the general counsel at the US-based investment bank. “I really just want lawyers we use to do what we ask – nothing more, nothing less. They shouldn’t do work we haven’t briefed them on, they should just provide the advice.”
“I think it is fair to say that we are looking to reduce the number of firms we use in the APAC region and build stronger relationships with a smaller number of firms”David Flavell, Danone Asia
Be flexible
The efforts of law firms that have been trying hard in this area have not gone unnoticed. One area in which this is most apparent is in relation to fee arrangements where flexibility has become the order of the day. Having said that, all in-house lawyers ALB interviewed noted that there is still some way to go but this does not necessarily mean a massive reduction in fees. Rather, it is the little things that count.
In-house lawyers want some uniformity. “Our external lawyers have been very flexible in terms of offering fee reductions, extended payment terms and holding back on some work,” Ingram says. “They have shown they are willing to be flexible and – this is perhaps most important – they have an understanding that we must work together through this difficult time.”
ALB In-house Survey 2009. Part 3
“What irritates me most is when I get an e-mail from a law firm and about 60 other lawyers are cc’d in. You can bet the other 59 lawyers will charge for receiving, opening and reading the e-mail. When I get a bill like this, I send it back straight away”US-based investment bank regional general counsel
The extent to which these issues are wholly new is a different question. In-house lawyers across the region readily admit that increasing the amount of work handled in-house, slashing internal and external budgets, and squeezing more out of inhouse teams have been goals towards which they have been working for the best part of 20 years. It has only been the recent onset of the global economic crisis that has made attaining these goals more pressing. “Maximising efficiency, reducing costs and better serving broader company objectives are things that many in-house departments have been trying to do for the last 20 years,” Ingram says. “But now the economic climate has added urgency to this goal.”
But just how is this being achieved?
Slash and burn
As the results of the ALB In-house Survey 2009 indicate, when in-house teams look to minimise costs they do not only look to pare their teams or cut travel budgets; they also look long and hard at their largest liability – the amount of money spent on retaining outside counsel. “Companies across the region are looking to do this now more than ever,” Elliot says. “Some, I hear, are slashing the amount by ridiculous amounts and really concentrating their efforts on keeping the figure as close to zero as possible, but there are other things that will come out of this process.”
The “other things” to which Elliot refers involve analysing spending patterns for outside counsel, the frequency with which they are used and the typical matters on which their advice is sought. In addition, internal reviews are now under way at many of the region’s top companies which seek to “streamline” (read: centralise) the decision-making process. “We have just updated our guidelines for retaining in-house counsel. And we uncovered a number of things. Firstly, we have found that we use them on some matters for which we don’t need them and, secondly, that the decision to use them is sometimes a little all over the place. We have now put measures in place to reduce costs here and make sure we can monitor what stays inhouse and what goes out more closely,” says the general counsel at the USbased investment bank.
The same general counsel goes on to note that he had heard of similar companies undertaking the same task and coming to similar conclusions, but was quick to point out that the exercise need not only result in the cutting of external budgets or a decrease in the amount of work sent outside. “Such reviews are about setting up legal departments postglobal financial crisis and normalising relationships with external legal providers. The latter especially may have become a little too fluid to manage of late.”
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