Law firms challenged to take political stance on clients
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For law firm leaders in Asia-Pacific, the past 12 months, commercially, have provided an “embarrassment of riches”, says Danny Gilbert, chief executive of Australian lawyers Gilbert + Tobin. Leading firms, generally, have achieved record revenues, thanks to clients’ increased need for advice, as well as record profits — helped by their expenses being driven down by Covid.
But few law firm leaders are complacent. Sue Kench, global chief executive of King & Wood Mallesons, an Australian-Chinese law firm, says: “The world is in a strange place . . . Revenues are off the charts, expenses are at an all-time low, but I still ask myself ‘what next?’”
Vicki Liu, managing partner for Allen & Overy (Hong Kong), says: “There is nervousness about events out of our control.” Russia’s invasion of Ukraine, US-China trade tensions, and a growing need to be on the right side of environmental, social and governance questions mean law firm leaders face geopolitical and social challenges.
Traditionally, big commercial law firms are apolitical. Justin D’Agostino, chief executive of international law firm Herbert Smith Freehills, sums it up: “Big law firms are there to help clients navigate the legal landscape.”
But they are increasingly called on to take a stance. Nearly all withdrew swiftly from Russia after its invasion of Ukraine. And they were responding not only to sanctions, but also to strong sentiment among their staff and clients that they must cease operations there.
“Being neutral now means something,” says Liu. “Clients are looking to us and asking . . . Who are your [other] clients and what do you do for them?
“If you want to play on the global stage, you have to articulate what you stand for.”
This notion of choosing which clients you represent — beyond conflict-of-interest considerations — potentially marks a change of mindset for commercial law firms. Lawyers are taught in law school that everyone is entitled to a defence. “It is difficult to sit there and say ‘everyone deserves a right to be represented, [and] therefore this is my job’,” says Liu. “Who we act for matters to our people, who want to be in a firm that acts on the values they have.”
Paul Jenkins, global chief executive of Ashurst, also says law firms may be unable to remain neutral. “We have been clear on our purpose and business ethics as a firm and made sure our decisions are aligned with that purpose and our values. If you don’t do this, it is a decision in itself.”
Despite news reports and analyses signalling that globalisation is being rolled back, leaders of international and local law firms in Asia-Pacific also report signs of buoyant and interconnected global trade. “The market is shifting,” admits Stephen Kitts, Asia managing partner of Eversheds Sutherland. “But it will still be international.” He points to a substantial increase in US-China trade last year, even after recent tensions.
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The consensus among leading Asia-Pacific law firm leaders is seemingly to take a long view, both on Hong Kong’s position as a financial centre and on the stability and growth of trade in the region.
In Singapore, the global upheavals represent an opportunity to some. “For law firms in Singapore, the Ukraine crisis has given us more work. Clients are coming for advice on different strategic plans to deglobalise,” says Patrick Ang, managing partner of Singapore-based law firm Rajah & Tann.
However, like his peers, Ang is kept awake at night by a struggle to retain and hire talent, which is affecting everyone globally. In spite of a flow of professionals from Hong Kong to Singapore, the influx of Chinese tech companies “has swept up legal talent in a big way”, he says.
Partly because of Covid-19 and the impact of the “great resignation”, the changing compact between a law firm and its employees weighs heavily on leaders’ minds. “The relationship has fundamentally shifted and few law firm leaders can confidently articulate yet what is driving people in their organisations,” says D’Agostino.
The top-ranked law firms in the FT’s annual listing of the most innovative in the region (see table) are Ashurst for firms with HQs outside the region, and King & Wood Mallesons for firms headquartered in the region. Both firms have committed to being forward-thinking, inclusive and innovative.
For Ashurst, the growth and integration of its legal-led consulting arm is gathering praise from clients, which compare it favourably with the Big Four audit firms. For King & Wood Mallesons, its talent strategies are improving the digital literacy of its people. Both firms are starting to show what it means for a legal business to be purpose-driven, digital and multidisciplinary — all traits required to help clients navigate the complex challenges of a changing world.
Research methodology: Asia-Pacific 2022
RSGI researchers on this report were: Reena SenGupta, Yasmin Lambert, Tom Saunders, Mary Ormerod, Chris Sharp, and Alex Volkers.
FT Innovative Lawyers Asia-Pacific 2022 is a ranking, report and awards scheme for lawyers based in the region.
The Financial Times and its research partner, RSGI, have devised a unique methodology to rank lawyers on innovation. Law firms and in-house legal teams were invited to make submissions.
The law firm categories cover legal practice, the business of law, and inclusion and social justice. The categories and examples featured in the report are drawn from submissions from law firms, and submissions and nominations from in-house legal teams. Each submission is researched and scored out of 10 for originality, leadership and impact, giving a maximum score of 30 (scores for each entry are not shown in the report).
Law firms also completed a questionnaire on their use of data and technology. Each of the 12 questions was scored out of five and benchmarked against peers in the region.
Top-ranked submissions in each category are featured as mini case studies and shortlisted for the FT Innovative Lawyers Asia-Pacific 2022 awards. Some 320 submissions and nominations were received from 55 law firms and 70 in-house legal teams. RSGI researchers assessed them and interviewed clients, senior lawyers, executives, and experts between February and April 2022.
Most innovative law firms in Asia-Pacific 2022
The ranking showing the “most innovative law firms in Asia-Pacific 2022” is based on each firm’s aggregated scores for its top three submissions (out of a maximum of 90 points), plus the score for the firm’s use of data and technology (out of a maximum of 60 points). Separate awards were given to law firms headquartered in Asia-Pacific, and those headquartered outside Asia-Pacific. Global law firms without a single headquarters, or those with dual headquarters in and outside Asia-Pacific, are included in the latter category.
Most innovative in-house legal teams in Asia-Pacific 2022
Research focused on four areas where corporate legal departments are innovating and delivering value: business leadership, ESG leadership, operations, and talent management. The list of eight outstanding
in-house legal teams is a selection based on each team’s performance in the report and is based on the sum of scores for all submissions ranked in the report.
RSGI has a record of devising ranking methodologies for professional services firms.