Law firms interviewed: JTJB, PDLegal

Law firms mentioned: Allen & Gledhill, Rajah & Tann, Drew & Napier, Tilleke & Gibbins, Kelvin Chia Partnership, AWP & Alliance

With the Asian region continuing to remain a hotspot for trade and investment, gone are the days when Singapore law firms were content simply with the domestic pie.

Singapore Big Four firm Allen & Gledhill, which already has a presence in Myanmar, Vietnam and Malaysia, recently announced the opening of an office in Shanghai – its first in China – and recently established a new alliance in Indonesia.

This development is the latest sign that homegrown Singapore firms are being projecting their vision beyond borders: Rajah & Tann has spent years cultivating its image as the “lawyers who know Asia”, and Drew & Napier’s regional law network added Thailand’s largest law firm Tilleke & Gibbins as a member last year ramping up its access to the Southeast Asian region substantially.

The trend of regionalisation is by no means exclusive to bigger players. One of the pioneers two decades ago was Kelvin Chia Partnership, which opened offices in multiple countries, becoming reportedly the first foreign law practice in North Korea. More recently, Singapore-based JTJB announced an expansion in Thailand through a merger between its Bangkok outfit and local commercial boutique AWP & Alliance, and another firm, PDLegal, launched its own foray into Thailand with its first overseas office.

“We are now seeing more regionalisation efforts by smaller or medium-sized Singapore law firms, driven by the fact that Singapore legal work is increasingly regional and international in nature as a result of the clients and businesses which lawyers support,” say John Sze, managing partner, and Ting Chi Yen, senior partner, at JTJB.

At PDLegal, Gerard Quek, deputy managing partner, says Singapore law firms now face strong and growing competition at home, especially for complex cross-border work as international law firms continue to pour in.

“Regionalisation is another way for Singapore local firms to build its reputation and revenue. Therefore, it makes commercial sense for firms to expand into countries where we are close by, familiar with the respective cultures and already have a body of clients doing business in those jurisdictions,” adds Quek.

The growing competition has prompted some firms to add on cross-jurisdictional capabilities. “Assembling a cross-jurisdictional team of law firms for a transactional matter can be challenging from the perspective of conflicts clearance, choreography, costs and commercial sensitivity,” explain Sze and Ting who add that clients would like to see a “one-stop shop” in terms of costs and time management.

But for a Singapore local outfit to actually put boots on foreign turfs, these regional outposts will need to make commercial sense in the long run.

“A new overseas office will require significant setting-up costs and will be expected to operate at a loss for a certain runway. Some foreign offices may never turn a profit or be self-sustaining,” say Sze and Ting.

Quek stresses that an important aspect of financial viability for setting up overseas lies in whether a firm already has an existing pool of clients operating in that foreign jurisdiction. Counting on only commercial potential is not enough.

“When I first started acting for Thai clients, I first started going to Thailand once a year; then the number of trips increased to four a year, then to eight a year and managed to build valuable relationships over time,” says Quek.

“Without an existing client base in Thailand, it would not have been financially viable for us to set up the Thai office.” Navigating local regulations and barriers to entry of a foreign market, as near as it maybe, is also a challenge. In the meantime, law firm management is advised to be aware of the impact at home while searching for glory farther afield.

“Many Singapore law firms are instructed by foreign law firms on Singapore-specific matters, who may not appreciate an intrusion into their jurisdiction,” say Sze and Ting. “Local law firms have the ‘home-ground’ advantage in their local business networks, understanding of local markets, language, culture, and practices. Referrals may also diminish or go to other ‘independent’ Singapore firms if the relationship with local incumbent firms is affected.”

For JTJB, staffing the firm’s overseas outpost with the right people is top of mind as “one must consider the potential implications of a difference in direction or opinions with local partners or management,” note Sze and Ting.

The pair predict the growing prominence of the pan-Asian law firms within an increasingly saturated legal marketplace like Singapore, which Sze and Tang describe as “not big enough to support ‘mega’ local firms or organic growth beyond a certain size.”

Medium-sized Singapore domestic firms, which “straddle an unenviable position between being too expensive for certain clients while too unbranded for others”, will also play a key role in driving the trend of regionalisation due to the challenges confronting the entire segment, Sze and Tang add.