As Asia-Pacific companies increasingly look abroad for fresh opportunities, law firms are expanding their footprints in response. George W Russell discovers that the region’s legal businesses are crossing borders through a range of strategies, from direct ownership to network affiliations.
hile the coronavirus pandemic has restricted movements across the world for the past two years, law firms in Asia have been quietly expanding. Some have executed plans held in abeyance by covid-19, while for others the deal boom sparked by the pandemic has accelerated growth.
Asia Business Law Journal looks at several firms and their efforts to attract more cross-border business by opening new offices in neighbouring countries or faraway continents, as well as their more adventurous clientele seeking post-pandemic bargains in new territories.
With a shrinking domestic market, Japanese corporations must expand internationally to grow, even in the teeth of a global pandemic, and their law firms must follow. Nishimura & Asahi, for example, has been steadily growing a Southeast Asia practice, but in the past two years the firm has expanded further afield.
Two years ago, a New York office was opened, while last year the firm inaugurated an outpost in Frankfurt. “It was very simple – client needs,” says Tokyo-based partner and co-head of international, Daisuke Morimoto. “Japanese companies’ business activities have become more global.”
While Japanese clients going abroad are the prime reason for the expansion, Morimoto says international customers also find the new offices convenient. Masaki Noda, also co-head of international in Tokyo, also notes: “US and European clients ask us to handle Japanese legal matters. Multiple offices give us better capability to handle Asian investment matters.”
Nishimura & Asahi has pursued different methods of expansion. “We have alliances with local law firms, joint ventures with local firms but mostly we are setting up our own offices,” says Morimoto. “In Bangkok, we merged with a Thai law firm and we have a lot of Thai lawyers. In Singapore, we cannot practice by ourselves, so we made a foreign law alliance.”
One benefit is better integration of practice groups, according to Noda. “During a transaction in which a Japanese company was to acquire an Australian company, we found just before execution that significant issues needed attention in Indonesia, China and Singapore. We could handle the matter easily by accessing our colleagues.”
The law firm has watched a dramatic evolution among Japanese corporations. Twenty years ago, it was mainly heavy industrial groups, trading companies and banks that did business internationally. “Recently, a lot of Japanese companies have expanded, especially new economy companies, into Souftheast Asia,” says Morimoto, citing e-commerce giant Rakuten as an example. Noda points to healthcare groups as another active sector.
Morimoto adds that smaller Japanese companies are now eager to grow their international businesses. “The size of the companies has changed,” he says. “Two decades ago, most going overseas were huge, with market caps of more than USD1 billion. Recently, medium to smaller companies have tried to expand.”
Moving for difference
Another Japanese firm, Atsumi & Sakai, has taken a different approach from the beginning. “Most of the Japanese law firms are looking into Southeast Asia, and sometimes the Middle East, but we are focused on London, Frankfurt and New York,” says Bonnie Dixon, the firm’s New York managing partner. “That reflects our historical strength in financial services and regulatory.”
Dixon believes the firm should have offices where it can make a difference. “We have a relationship with a Vietnam firm, but US and UK firms dominate so much there. It makes no sense for us to just hold the hands of Japanese clients. We are in jurisdictions where we can play to our historical strengths.”
The firm’s current strengths have evolved out of financial services into M&A and litigation. “Ten years ago, there was no opportunity for inbound litigation, but we’ve been involved in some huge litigation cases,” says Dixon. “If we are based in London, Frankfurt and New York, foreign activist shareholders can more easily access those clients.”
Atsumi & Sakai has managed to expand despite the global spread of covid-19. “It was absolutely a source of delay – we formed the New York entity in 2020 and the pandemic had made it difficult to get visas for our team,” says Dixon, who was not in New York but in Michigan, “hiding from the virus”. She says the firm had a “very conservative” attitude towards the omicron variant. “The fundamental theory is that we are teleworking.”
One smooth pathway to opening the new offices was that Atsumi & Sakai appointed staff who were keen to move. Dixon is a US citizen, while the Frankfurt office is headed by a German lawyer with a Japanese wife. “In each case, we did it with people who wanted to be there.”
Dixon says the firm was unique in Japanese legal circles in that it put foreigners in charge of foreign offices. “Internationalisation was just obvious from the start. I’d like to see more Japanese law firms doing this. I think they’ve been watching us – we are definitely
Catching M&A boom
One of South Korea’s larger law firms, Bae Kim & Lee, recently added Singapore and Beijing to a network that already included Shanghai, Hong Kong, Hanoi, Ho Chi Minh City, Yangon, Jakarta and Dubai. “We will focus on settling in Singapore and managing our Beijing office, which relocated and expanded,” says Eric Yang, a Singapore-based partner in the corporate, mergers and acquisitions practice group.
“We also expect there will be increasing demand for legal service in relation to many cross-border transactions and dispute resolution in markets abroad,” adds Yang. “Also, there has been increasing volume of foreign investment into Korea, so we have added our footprints to provide on-the-ground services to those based overseas investing in Korea.”
As with many other jurisdictions, Korea has seen an M&A boom during the pandemic. “Due to the growth of contactless technology driven by the covid-19 pandemic, the number of cross-border transactions is increasing faster than expected, and 2021 became the biggest year for global M&A ever,” notes Yang. However, the pandemic pushed back the opening of Bae Kim & Lee’s Singapore office, from late 2021 to early this year.
“Also, we find regulatory and contentious related advice to be helpful for foreign companies. Especially, we have seen a high demand for international arbitration practice areas as most cross-border commercial disputes choose arbitration as their dispute resolution mechanism.”
One change is the increasing willingness of South Korean companies to enter foreign markets, especially in new technology. In the semiconductor, and electric and hydrogen vehicle sectors, large Korean companies have made or are considering joint ventures, investment in foreign companies, and the establishment of offshore production facilities. “Bae Kim & Lee also has been active in making inroads into foreign markets in order to meet clients’ needs in the areas of deal advisory services and dispute resolution,” says Yang.
Adventurous clients have also been responsible for the expansion of Kim & Chang, the largest firm in South Korea with more than 1,200 lawyers. “We continue to see many Korean companies looking to find new growth opportunities through overseas M&A’s and investments.
To meet these client’ demands, Kim & Chang is expanding into emerging markets, particularly in Southeast Asia, says Chung Kye Sung, senior partner and chair of the firm’s finance practice in Seoul. “Our greatest strength is that our clients can receive instant support from top experts who are familiar with the laws, regulations and industries of any field.
“The opening of our Vietnam office this year is one such effort,” he adds. “Recently, we worked on an acquisition of a Vietnamese bank by a Korean bank, and an investment in a Vietnamese solar power project by a Korean company, as well as the financing of a real estate project and dispute settlements for Korean companies in Vietnam.”
Kim & Chang’s size means it can bring full services to bear in its overseas offices, says Chung. “For example, in Hong Kong, with co-operation from the Seoul headquarters, we advised on regulatory matters related to: Investment in Korea for clients in Hong Kong, China and Southeast Asia, such as Singapore; investment in Hong Kong, China and other parts of Asia by Korean clients; and labour-related issues and demands for compliance, litigation and arbitration for global clients with a regional office in Hong Kong or Korea.”
While the pandemic has created uncertainties – although the firm opened its new office in Singapore in February 2021 – Chung says the firm’s operation and communications system was already well set out to allow cross-border collaborations through virtual connections. “We adopted a solid video communications system following the pandemic,” he says.
Ownership v association
It is not just large full-service firms that have embraced internationalisation. JTJB is a Singapore-based maritime specialist firm with direct ownership of firms in Malaysia, Thailand, Myanmar and Taiwan. The firm also covers dispute resolution, regulatory and compliance, IP, insurance and other practice areas.
The law firm, formally known as Joseph Tan Jude Benny, also has associate firms in several other jurisdictions such as Indonesia, the US and Greece. “We have no ownership of control – they are separate firms completely – but they have an identity within our network,” says Murali Pany, managing partner in Singapore.
“We needed someone we could turn to reliably when we first branched out, but then we opened ownership models in countries with close links and a lot of business – that was Kuala Lumpur and Bangkok,” he says.
Direct control of an office in Piraeus, the European shipping hub in Greece, says Pany, was not practicable. “It was far away and civil law, a different continent. But we wanted a go-to person because we had a lot of shipping work and we needed a liaison.”
Even with limited control, Pany believes the network is an advantage. “It does give us an option for cross-border corporate work,” he says. “Reliability is the key, and clients have come to us because of the network. It’s a service that we offer that is attractive. In the business of law there is a pressure to internationalise.”
Pany acknowledges that there are difficulties in managing such a network – especially during the pandemic. “We were OK for work, expanding and growing the network, but [covid-19] really limited and reduced the interaction between offices,” he says. “It became a bit of a remote-control relationship in terms of management.”
Although the network has been neglected and further expansion is on hold, Pany has re-emphasised the importance of the global connections. “Late in December 2021, we had our first virtual network meeting, including Los Angeles at an ungodly hour, and the consensus was to do more of it. It’s based on relationships.”
One trend that Pany sees emerging in 2022 is “a sense of movement out of Hong Kong” as long-running travel and social restrictions have made the Chinese territory less accessible and less attractive to international business. “When Hong Kong was reverting to China in 1997, we were waiting for the windfall that didn’t actually happen. A number of people stayed put. Now we’re advising people on moving out of Hong Kong.”
Consolidation during pandemic
For some law firms, the events of the past two years have been a time for consolidation. Southeast Asia-focused DFDL expanded rapidly in the early 2000s, and now covers most of the Asean region with its nine offices in Bangladesh, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
For Audray Souche, DFDL’s managing partner in Bangkok, the priority is cementing the firm’s strength as a regional resource. “We have invested in our strategic business development,” says Souche. “We have made very nice progress in attracting business advisory and corporate advisory, and working hand in hand with our lawyers to source business opportunities. Other firms are doing it in each jurisdiction, but we do it at a regional level.”
Mobility of staff is another key to the firm’s goal to better integrate its expertise to move up the value chain. “Our people in our Thailand and Laos offices have moved from one office to the other, bringing the benefits of cross-jurisdictional experience,” says Souche. “We have created regional advisers through this, and the key people in our practice group are seen as regional experts based on their experience.”
The firm’s client portfolio has also evolved. “Historically, we were seen as an expatriate firm with Western clients, but that has changed a lot,” says Souche. “Now we have a balanced portfolio with those regional clients driving outbound investment, such as strong local conglomerates investing in neighbouring economies.”
One emerging practice group is dispute resolution. “We feel this has potential,” says Souche. “Previously, we have been very timid because of the nature of our market and low reliability of the judiciary systems. But that has evolved with the development of local arbitration.” For example, DFDL has developed partnerships in Vietnam and Thailand with local litigation firms.
“We have established where there are gaps in services offered and our conclusion is there is a potential to offer to clients a consistent approach to dispute resolution,” she adds. “There is a growing number of mid-sized disputes, and international firms are not matching client needs. We can bring in a regional approach.”
Singapore’s Drew & Napier also believes in a regional approach and has sought to expand its footprint through Drew Network Asia (DNA), a network of firms launched in March 2020 that includes Makarim & Taira S in Indonesia and Shearn Delamore & Co in Malaysia. DNA expanded more recently in October 2021 with the addition of Manila-based Martinez Vergara Gonzalez & Serrano.
“Increasingly, more and more clients have stated that having a one-stop regional service is important to them,” says Sushil Nair, Drew & Napier’s deputy chief executive officer and co-head, corporate restructuring and workouts in Singapore. “DNA is a cohesive and integrated team operating as ‘a firm of firms’ with international perspective and strong local expertise.”
Nair says the partners of DNA collaborate to actively pitch for cross-border work, host regional seminars and webinars, and embark on other joint marketing activities. “We have the capability to help clients across the region,” he adds. “We do not intend to stop here. We are selective of the firms we approach, and will grow the network into other regions as our clients’ needs develop.”
For clients, Nair says DNA excels at cross-border transactions. “The clients are looking for the best, most commercially sensible advice to be provided in the most user-friendly and cost-effective manner,” he says. “Expanding internationally allows the clients to deal with a completely cohesive and integrated network through one point of contact, while having the assurance that the team dealing with their cross-border issues are made up of the best lawyers in various jurisdictions.”
As an example, Nair cites a shipping business restructuring that requires resources in Indonesia and Malaysia across various practice areas. “Despite the pandemic, we have grown the network and benefitted from it,” he says. “The DNA firms and lawyers also benefit from collaboration and joint activities such as secondments, training, overall development in technical know-how, business development and other soft skills.”
There is also a human aspect to the network, he adds. “We have been able to learn much from each other through the alliance, and been in a position to share our know-how and experience, be it strategy, recruitment or business development,” says Nair . “We encounter the same kinds of challenges and even triumphs, albeit at different times. Having friends to share, brainstorm and commiserate with has been very beneficial.”