Rapid change sees law firms rise to fresh challenges across jurisdictions

Are lawyers in the Asia-Pacific region more innovative than their peers in the US or Europe? The first FT report into legal innovation in the region, complete with rankings, indicates that, in many ways, they are. But this is in a context where the roles of lawyer and legal frameworks are changing rapidly.

Attempting to survey innovative lawyers in a report that covers multiple Asia-Pacific jurisdictions was always going to be a challenge. The region contains a number of legal markets at different stages of development. Australia, for example, is advanced and is host to the first law firm in the world to float, whereas Japan is only now beginning to broaden the role of lawyers working within companies.

However, this FT report does reveal some common features between the jurisdictions. It shows how important lawyers are to business and economic development in the region and the rapid maturing of many of the markets in which they operate.

The role of lawyers in India, Singapore, China and Malaysia has changed over the past 10 years. No longer seen as commercial scribes, their status has grown in business. In India, for example, the law used to be an underpaid profession of small, family-dominated firms. Over the past decade, Indian firms have developed a more institutional approach and the inclusion of six of them in the top 25 firms with headquarters in the Asia-Pacific region shows their commitment to modernising.

Similarly in Singapore, the law used to be a low-status profession. Now Singapore is crowded with modern business lawyers. It is host to more than 100 foreign law firms, including the four largest Japanese firms plus sophisticated local law firms such as WongPartnership, Drew & Napier, Allen & Gledhill and Rajah & Tann, all of which feature in the FT Law 25 ranking for Asia Pacific-headquartered firms. Singaporean lawyers now jostle for regional market share as much as their international counterparts. In Myanmar they are in competition with the Japanese law firms over which will write the country’s new laws.

The thinking of regional Asia-Pacific lawyers is sometimes ahead of the international firms. Chew Seng-Kok, the managing partner of Zicolaw, created a network across members of the Association of South East Asian Nations (Asean) in just eight years and has now created a multidisciplinary professional practice that includes law, trusts and sharia advice. In many ways, he has achieved what the 2008 Legal Services Act of the UK – widely seen as the most groundbreaking piece of legislation in international legal services – is just beginning to engender.

The top Chinese law firms are also increasingly outward-looking. They are no longer happy to lose the international segment of their country-originated deals to UK or US firms. The merger of one of the largest, King & Wood, with Australian lawyers Mallesons is not only affecting the region but also Europe via its 2013 merger with SJ Berwin, the London firm.

Although the combined firm dominates the FT Law 25 for Asia Pacific-headquartered firms this year, its first-mover advantage will not remain indefinitely. Two of the top Chinese law firms, Zhong Lun and Jun He, are reported to be in merger talks.

The tough nature of competition in the region is nowhere more clearly revealed than in South Korea, where in the past two years more than 20 international law firms have opened shop. The question is whether the South Korean market has enough legal instruction to service the lawyers’ investment

Marc Harvey, the new managing partner of Linklaters, is acutely aware of the rivalry with other international and indigenous firms: “Most law firms are on an even playing field for the same deal in Asia.”

A litigator, Mr Harvey is bucking the trend where international firms appoint “deal” lawyers as managing partners. His appointment reflects another regional trend – the development of regulation, compliance and the threat of prosecution as burning issues in corporate boardrooms.

Asia-Pacific jurisdictions provide a bonanza for legal innovation. The FT rankings are full of legal firsts or novel commercial situations. The opportunity to develop new instruments, create new structures, write new legislation and work with different types of businesses mean lawyers are doing some of the most creative work of their lives.

“In the US, you have precedents and there is an expectation of how you perform.” says Howard Zhang, partner at Davis Polk. “On the other hand, in the Asian market, things are evolving too quickly to feel bound by precedent.”

The FT Law 25 for international law firms shows the battle for market share between the UK and US firms. While the top three slots are occupied by British firms, the Americans are right behind. In a tough competition, Freshfields took the top slot this year for inspiring the best and most spontaneous client commendations for work that spanned the whole of Asia.

Many of its partners tend to straddle jurisdictions and practice areas, as rounded adviser rather than technical specialist. Lawyers’ ability to take a holistic view of a company’s risk exposure is critical to helping their clients do business in Asia.