The Asian market has been through a tumultuous few years, with pandemic-related disruptions, inflation and geopolitical conflicts breaking economic momentum - and the legal industry has not been spared. Chief executives of global law firms with a strong Asian presence share how firms have diversified client bases, responded to fast-changing client demands and explored new Asian markets to continue growth during this period.
ALB: The last two years have seen global issues like the Russia-Ukraine conflict, inflation, and pandemic-induced market and supply chain disruptions. How have these factors impacted your firm operations in Asian markets?
Justin D’Agostino, chief executive officer, Herbert Smith Freehills: No market has been immune to uncertainty and disruption in the past three years – it’s perhaps become the “new abnormal” for all of us, and shows no sign of abating.
Asian markets are diverse, and we’ve seen an uptick in client activity that reflects that diversity. Private capital and energy transition investment has continued in Asia with fewer concerns than in other global markets. The ease with which hybrid financing is available from both private, public and government sources in Asia further strengthens that activity.
Where trouble has arisen, our firm’s global and Asia strength in dispute resolution provides a valuable hedge, and we are only now seeing the first sizable pandemic-linked disputes coming to formal arbitration.
Geographically, Indonesia is a hotspot, feeding into an overall positive market across Southeast Asia nations for the firm. Japan has also been strong for us, particularly in energy transition and new technologies.
China is only six months into its post-pandemic recovery, and predictions right now are premature, but we are already seeing an uptick in deals across certain corridors – China/Middle East, for instance, and renewed activity in the Greater Bay Area.
Paul Jenkins, chief executive officer, Ashurst: High inflation, supply chain disruptions and geopolitical concerns are continuing to feed into softer economic conditions both in Asian markets and across each of the global jurisdictions in which we operate. There is naturally increasing caution for some of our clients, but this also means businesses need quality legal advice.
As a firm, we are not immune from short-term economic challenges, but we have a well-hedged, diversified global business model and plan to continue growing our presence in Asia. For example, we have seen our revenue grow by 4 percent in Asia in the last financial year, and average growth of nearly 10 percent year-on-year over the last five years. The strongest markets for growth in the previous financial year were mainland China, Hong Kong and Indonesia, with significant growth occurring in our Singapore office over the last three years.
Steven Sieker, chief executive, Asia, Baker McKenzie: The last two years have certainly been challenging, but we were able to adapt to fast-changing client demands and reorient our business to counter-cyclical practice areas and higher growth markets where needed to stay resilient.
Persistently high inflation, interest rates and market volatility have weighed on dealmaking globally. That said, this challenging environment has spurred more companies to shed noncore assets, and we have seen an uptick in the number of sale processes and private equity-related deals across Asia.
The increased regulatory scrutiny around deals, including antitrust, foreign investment rules and ESG requirements, has also given rise to more regulatory compliance and disputes work for our firm. Our funds, debt restructuring, and employment teams also remain busy.
Margaret Robertson, CEO, Withers: These global issues have created uncertainty for private clients and private capital investing globally, resulting in cooling-off for investment activity, but with a simultaneous increase in cross-border disputes.
We are focused on future-proofing our business by focusing on opportunities arising from the new economy, such as increasing investment in life sciences businesses, the fluctuating fortunes of crypto investment, or advising our clients on how best to hold and pass on digital assets.
ALB: Client needs have changed a lot recently regarding fee and payment arrangements. Law firms have also been looking closely at costs and growing sustainably. What do you think are the fundamentals of a strong financial model in the legal industry, especially in Asia?
D’Agostino: Our clients demand a very specific blend of local and global talent and services, and a more flexible and responsive pricing model. We are seeing and embracing the growing use of innovative fee structures.
Jenkins: We find clients weigh a number of considerations regarding legal advice, including quality of the advice, reputation, timeliness and value for money. In uncertain times, more than ever, businesses look to legal advisers who are responsive to their needs. As a global firm that continues to grow and strengthen our relationships in Asian markets, we place strong emphasis on listening to client concerns and are confident in our ability to help our clients navigate challenging environments.
Sieker: Fee competition has intensified, and firms are getting more creative with their pricing strategies. While billing based on hours is still mainstream practice, alternative fee arrangements have gained popularity. We are seeing greater use of project, fixed, and retainer fees. At the same time, there has also been a push for pricing that emphasises value. Meanwhile, contingency fee arrangements have become an attractive option to control costs, particularly in China.
For our firm, we are in constant discussion with our clients around how to best deliver value. This could mean leveraging our legal project management capabilities, which are some of the most extensive and advanced in the industry, or employing various tech platforms to automate elements of the work.
As business and law become more value-driven, clients are looking to get the most “bang for the buck,” not just the lowest prices. Firms that are able to produce high-quality work in efficient and cost-effective ways are more likely to capture and maintain an edge in today’s highly competitive legal market.
ALB: We frequently speak to lawyers who look at factors beyond compensation, such as hybrid work models, mentorship and mental wellbeing as important criteria in choosing a workplace. How do you balance culture and compensation with additional benefits in your talent engagement and retention strategy?
D’Agostino: Our three values – human, bold and outstanding – are now recognised as the essential mix that makes our firm a place where our people can grow and attain their ambitions.
We’ve also clearly articulated the Herbert Smith Freehills “deal,” stating what the firm provides for our people, from professional development and opportunities, through support for wellbeing, to creating an entrepreneurial and flexible environment. In return, we ask our people to excel, to go above and beyond, all within a culture which is inclusive, caring and respectful.
That’s not just a plan on paper– it’s a reflection of who we are, and how we work. But it’s created a clearer framework of values and ambitions that also allows us to flex for local preferences and market norms and needs. That’s really important in Asia.
Jenkins: Attracting and keeping the best people is about us getting three things right: quality of pay, quality of work, and quality of life.
We will continue to offer competitive remuneration packages to staff as a centrepiece of this strategy. But we also offer generous lifestyle, wellbeing and career opportunities to support our staff. These include flexible working arrangements, such as hybrid work, a market-leading global 26-week paid parental leave scheme and subsidised health and wellbeing programmes.
Most importantly, we have a long-term focus on building a leading global platform that allows our lawyers to develop fulfilling careers and do their best work at the firm. This includes making sure our people have the ability to work on market-leading matters. We also have a global mobility policy that helps lawyers transfer between jurisdictions for both short- and long-term work in other offices as well as overseas client secondments.
Sieker: We recognise that people’s demands have changed drastically, and have responded with our “People Deal” strategy, where building and maintaining a strong culture and developing our people remain key focus areas for us.
We offer training sessions and career development initiatives to support our people’s professional growth, and we reward exceptional performance with attractive compensation and benefit packages that we regularly benchmark against industry standards.
With mental wellbeing increasingly being recognised as a crucial aspect of employee satisfaction, we have put in place a flexible work program dubbed “bAgile” to provide our people with more flexibility in managing their work-life priorities and mental wellbeing.
Meanwhile, we continue to place heavy emphasis on frequent and transparent communication to keep our people feeling connected with our shared purposes and goals. At the same time, we make a conscious effort to better understand our people’s needs and concerns through regular conversations and surveys.
Firms that can balance what is best for their people with what is best for their clients and their organisation will likely emerge as competitive employers.
Robertson: Whilst we compensate our people competitively, we understand that compensation is not the only factor lawyers and other legal sector professionals consider.
We have a mobile working policy that allows lawyers to work from home or the office, depending on client needs and the needs of our business, which gives our people flexibility. We also provide a strong mentorship program that pairs junior lawyers with experienced lawyers.
In addition, as part of our benefits programme, we offer several mental wellbeing support resources, including access to counselling and mental health services, meditation and stress management workshops.
ALB: Legal tech has been critical for law firm growth recently, but AI appears to have really changed the game. How would you describe your firm’s tech investments at the moment, and what role will AI play in your growth going forward?
D’Agostino: Generative AI presents capabilities that will more than likely have a huge impact on the practice of law. It’s essential that we become comfortable with its use to open up opportunities, and while staying conscious of its risks and limitations.
It’s clear, also, that the market is moving rapidly. Suppliers are ‘GenAI-ing’ their products while, on the risk side, noise continues around IP concerns, in particular copyright and the safe use of any generated text.
We assembled a GenAI Evaluation Team earlier this year to rapidly survey, evaluate and safely test GenAI products emerging in the market that are suitable for legal work.
Jenkins: Ashurst already uses AI tools in our NewLaw digital and data solutions, including scanning documents and filtering content.
Generative AI tools like ChatGPT have the potential to influence the way lawyers work in the future significantly. We recently ran an “AI Challenge” to engage staff across our global network to come up with innovative ideas for the use of AI tools, offering a cash prize for the winning entry. We received a great response, with close to 200 sub-missions across the firm. Three short-listed participants from around the world have been chosen to work with Ashurst’s digitisation experts to prepare a business case and short presentation for the firm’s executive team for consideration.
Sieker: Innovation has always been an integral part of Baker McKenzie’s DNA. As the original legal disruptor, we have been piloting OpenAI’s GPT series and other large language or foundation models since well before the release of ChatGPT when other firms and industry players started to take notice.
There is no doubt that AI will have a transformative impact on the legal industry. In our view, the real opportunity is to combine machine learning with other things like prompt engineering, enterprise data, web data mining and expert validation, and to join all these things up in a workflow focused on generating solutions for clients.
Robertson: We recognise that technology is essential for our firm’s growth and have been investing heavily in legal technology for the past few years to enable our people to work flexibly, with the right tools to support their needs. For instance, we partnered earlier this year with the digital estate planning platform Zenplans to offer our clients a secure place to hold their digital information and share it with family members and executors as needed. We are currently piloting the use of this system in the UK, aiming to make it available across other offices in the future.
We believe that AI will play a critical role in the legal sector, and we are looking closely at the needs of our clients and how the current generation of AI tools might help us meet them more efficiently. Equally importantly, we recognise that there are risks to consider and mitigate when adopting AI, including data privacy and security (especially with sensitive client information), bias (if the data the AI tool uses is biased/inaccurate), and overreliance on AI.
ALB: What is the firm’s growth strategy for the Asian market in the next five years? Are their sectors/practice areas that are of particular interest?
D’Agostino: Our Asia practice has achieved a great deal in the past three years – through talent development and key hires and strengthening our highly valued associate firm network. We’re now well-placed for further growth, and our ambition is for the region to contribute to 20 percent of the firm’s revenue by 2027.
From here, that means investing smartly but boldly in people and practices – in Southeast Asia and Japan to match our China presence, and our priority areas of private capital, energy transition and tech.
Jenkins: While we anticipate growth across the globe, Asia has been identified as a priority region for investment. We have grown our revenue in Asia by nearly 10 percent year-on-year over the last five years, and are planning to see this type of growth continue. Strengthening our platform in Asia and expanding in line with client demand will be a continued focus in the year ahead.
Sieker: Asia continues to be a bright spot amid the economic slowdown in the West. The region’s role as a manufacturing powerhouse has benefited ASEAN, particularly markets such as Vietnam, Indonesia and Thailand, which businesses see as alternative manufacturing hubs as they gravitate toward a “China plus One” diversification strategy.
We foresee that Southeast Asia will continue to be a key investment destination, not only for ASEAN countries but also for other economies such as the U.S., Japan and China.
We expect that China and the Greater Bay Area (GBA) will continue to be a major area of focus for many businesses, particularly those in the financial services, technology, healthcare and real estate sectors. We have reorientated our firm to ensure we are supporting businesses as they seek opportunities across this vast area.
The fintech and energy transition momentum continues to pick up pace in Asia, benefiting our financial services, funds/investment management, pro-jects and sustainability practices.
Another growth area for our firm is regulatory compliance, where rising regulatory enforcement and increased demand from consumers and investors to focus on related issues are propelling companies to seek outside counsel to help them comply with changing requirements and disclosure obligations.
Robertson: Our aim is to grow our Asia revenues from currently over a 1/5th of total global revenues and profits to around a 1/3rd of total global revenues and profits. Hence, our focus in Asia is to grow our existing offices in Hong Kong, Singapore, and Tokyo with a focus on hiring lawyers for private capital and serving families, family offices, funds, founders and fiduciaries in the digital and physical worlds.
Key sectors in the Asian market, such as technology, real estate, international litigation and arbitration, as well as restructuring and insolvency, will remain front and centre on Withers’ radar.
Withers is also focused on Withers tech, our global venture capital and technology legal practice serving disruptors and innovators in the technology and life sciences sectors.
The firm will bank on its expertise in domestic and international tax. Over 40 percent of our partners (over 220 globally) are international tax specialists.
