Herbert Smith Freehills, which recently announced its plan to open an office in Kuala Lumpur after receiving its qualified foreign law firm (QFLF) licence from Bar Council Malaysia, has called the licence the “right solution” for its growth plans for Malaysia.

Only one other foreign law firm is reported to have received a QFLF till date – UK law firm Trowers & Hamlins, which received it in April 2015. A number of other international law firms carry out their Malaysia work from offices in places like Singapore.

However, Justin D’Agostino, HSF’s managing partner for Asia and Australia, said the scale of the firm’s Malaysian business warranted a “physical presence” in the country. “The QFLF was the right solution to build our practice from here,” he said. “We intend to continue to work closely with the many Malaysian law firms with whom we already have strong connections.”

The new office, set to open in mid-2017, will have six lawyers, including at least two partners. "While we don't expect huge growth in those numbers over the first three years of our licence, we intend to steadily increase the ratio of Malaysian lawyers and staff,” he explained.

Additionally, Islamic finance partners from HSF’s Middle East offices will work in Kuala Lumpur on a temporary basis, while lawyers from other offices like Singapore will provide support.

The firm’s other Southeast Asia offices are in Singapore and Bangkok. In Indonesia, it has an alliance with local firm Hiswara Bunjamin & Tandjung.

HSF’s move comes at a time when the Malaysian economy faces increasing headwinds, especially from the commodities downturn and a weak currency. These challenges, however, have not deterred the firm.

In a cross-border M&A survey conducted in April last year by HSF, global buyers told the firm that Southeast Asia was third on their target list, right behind Western Europe and North America, and Malaysia is a key market in those plans.

“Malaysian companies are stronger than ever and are looking at regional and global expansion, while inbound investment into the country hit record levels last year. Add that to our strong existing business and the office is a sensible investment not only for Malaysia but also as part of our wider Southeast Asia expansion,” D’Agostino said.