First-mover advantage has long been recognised as being of paramount importance in legal markets across the Asia-Pacific region.
This has historically benefited UK-headquartered firms. With the weight of history behind them, they have had a stronghold in financial markets such as Hong Kong. More recently, when it came to the great rush to tie up with Australian-headquartered law firms over the past few years – rationalised by those seeking closer links with China and lucrative instructions on natural-resources deals – it was no surprise that UK firms led the charge.
Change is afoot, however. It should be no surprise that the real drivers of innovation are firms that are having to challenge incumbents in the region. Our rankings are dominated by US-headquartered firms that perhaps do not have the long and illustrious history in the region enjoyed by their UK or Australian counterparts.
There are exceptions. Allen & Overy (A&O), which has operated in the region for more than 25 years, has won its top billing because it understands that first-mover advantage still counts: its Myanmar office, which launched in early May, is the first from among the “magic circle”, the elite cadre of London-headquartered international firms.
More importantly, the office ties into A&O’s strategy for its wider network across southeast Asia, including Thailand and Singapore: Singapore remains a nexus, with pipelines of work running up to Myanmar, then down to Indonesia. Proof, if any was needed, that having a strategy for the Asia- Pacific region means more than thinking about China and Japan.
Not that managing partners can forget those markets. China in particular must play a key part in any international firm’s strategy as it takes an increasingly important role in clients’ global business decisions.
Take Pfizer’s recent unsuccessful £69.4bn bid for AstraZeneca. A key question for the deal’s advisers and the wider market was whether such a combination would pass muster with the antitrust authorities – and how long such approval might take.
These days, it is regulators in Beijing as much as their counterparts in Brussels or Washington DC that are key concerns.
Skadden, Arps, Slate Meagher & Flom, which incidentally advised Pfizer on the bid, is investing in its antitrust and regulatory team in China – part of the reason it is building up a successful corporate practice in the region. Unlike many firms, its balance of advice to domestic Chinese clients compared with advice to foreign clients investing in China is an even one. This will be critical for the future as those Chinese clients become even more influential on the world stage, and domestic Chinese law firms also become increasingly assertive internationally.
Pfizer’s bid is by no means the only one in the sector of late. The link between China and life-sciences work is plain for some firms. CMS Cameron McKenna has taken its homegrown strength in the sector and transferred it to China, one of the reasons for a growth spurt across its China offices. The firm has recognised that big pharma has the Chinese market in its crosshairs as western drugs companies try to ride out a wave of patent expirations. Like A&O, however, it also recognises that intra-regional work is essential and has consolidated instructions between China and southeast Asian markets.
If the drugs companies have China very much in their sights, the reverse is also true: Chinese authorities’ formal allegations in May of bribery levelled at GSK and its senior employees highlighted the importance of advice on regulatory matters and criminal investigations in the region.
The UK-headquartered pharmaceutical company has previously disclosed that Ropes & Gray is preparing a report following an inquiry into the allegations. The US-headquartered law firm – which is a relative newcomer in the region since its Tokyo debut in 2007 – has scored a standout ranking for its work building a life-sciences practice that offers regulatory, intellectual property and transactional advice.
Allegations of bribery are not just a concern of regional authorities, however. The extra-jurisdictional sweep of the US Foreign and Corrupt Practices Act – which was also the paradigm for the UK’s relatively recent Bribery Act – highlights just how long the arm of US justice really is.
This is a point not lost on firms such as Davis Polk & Wardwell, which has made real strides in the region by exploiting its homegrown reputation for excellence in contentious regulatory matters and Department of Justice FCPA probes. Freshfields Bruckhaus Deringer has also recognised that its hefty investigations practice could be expanded and deployed in the region to great effect.
More widely, general counsel throughout the region have noted co-ordination among local regulators, where once there was competition and one-upmanship. This will have a particular bearing on global investigations such as those into the alleged rigging of Libor, foreign exchange and other key financial market benchmarks.
It is only natural that firms which are just as internationally aligned will dominate advice on such matters. As one regionally based general counsel at a bank says: “One of the things that has changed since Libor is for lawyers to really have a global co-ordination, which we really didn’t worry about before.”