37 ASIAN LEGAL BUSINESS – JANUARY-FEBRUARY 2024 WWW.LEGALBUSINESSONLINE.COM from 30 percent to 25 percent for big firms and 20 percent for small enterprises, also providing income tax holidays in some cases. The minimal capital commitment amounts have also been dropped. In the retail sector, the minimum investment requirement per store for foreign-owned retail enterprises has fallen from $830,000 to $200,000. Foreign retailers, which were previously operating under the franchise model in the Philippines, are now looking to set up their own stores, allowing the retail market to grow exponentially in the country, Cua says. Tightly controlled public infrastructure sectors have also been opened to full ownership, driving international infrastructure and banking to the islands. Jacinto-Barrientos at PJS Law says the government’s push to announce a large number of infrastructure projects has generated enormous interest from domestic and international players looking to bid on these projects. The renewable energy sector has also been opened to 100 percent foreign ownership, which has the country’s M&A lawyers excited. Jacinto-Barrientos expects a lot more work from the renewable space as companies look to obtain licenses, project financing, M&A activity, and raise capital through IPOs. But that’s not the only exciting sector at the moment. The demand for legal services will particularly increase in the real estate, energy and infrastructure, financial services, semiconductors, e-commerce, retail and data centres sectors, says Olivia Seet, a partner at recruiting consultancy Major, Lindsey & Africa. As a result, Seet anticipates the market getting hotter. “Given the increase in foreign investments, there has been an increase in the presence of international law firms, which include strategic alliances in the Philippines. These firms often specialise in areas such as corporate law, mergers and acquisitions, and cross-border transactions. Their involvement has contributed to a more competitive landscape in the legal market,” she explains. Lawyers in the country are keeping an open mind when it comes to foreign collaborations, subject to international players fulfilling regulatory compliances, says Cua. Globalisation also affects the legal industry, and as more money pours into the market, it is natural that law firms will follow, she adds. The coming of foreign law firms will not disrupt the entire legal market in the country, but only the top few law firms that compete for cross-border work, explains Cua. There are about 15 big firms in the Philippines, with 50-100 lawyers, handling international mandates, which will have to now compete with global players, but the majority of the legal industry comprises small firms and a growing number of independent practitioners, who handle domestic disputes, criminal and M&A work, she adds. LOOKING IN-HOUSE Increasing foreign investment and globalisation have also led to the growth and sophistication of in-house legal teams. Previously, companies in the Philippines tended to have one legal counsel. But as businesses look to align with global practices, more companies are investing in in-house legal capabilities and hiring compliance and regulatory specialists, explains Cua. The demand for more in-house lawyers is also driven by many roles no longer needing to be based at APAC headquarters, given more flexible working arrangements and greater scrutiny on salaries, says Seet. “In the past, in-house lawyers in the Philippines were primarily focused on domestic matters. However, there’s a notable shift as their roles now extend to cover additional Southeast Asian countries and various Asia-Pacific regions, contingent upon the company structure and the lawyer’s skill set,” Seet explains. “We have also seen some Philippines nationals returning to the Philippines to take on higher level roles given their experience overseas,” Seet adds. Romulo’s Cua also says that the growth of in-house salaries and roles has led to many law firm practitioners moving to corporations, and law firms are having to do a lot more to protect their talent. TALENT WAR With more specialised legal work coming in over the last few years and the growing sophistication of in-house roles, the Philippines legal market is also seeing increasing demand for local lawyers, and firms are offering higher salaries, flexible work structures and employee counselling programs to retain the best talent. Dentons’ Portnoy says the firm’s new combination with PJS is also generating interest in the law firm recruitment market, with lawyers attracted to a firm with global exposure, competitive salaries and an international working culture. This sentiment is also echoed by recruitment specialist Seet, who anticipates an increase in lawyer salaries as firms compete not only with each other but with top corporations for the best talent. “With more multinational companies growing their in-house legal capability in the Philippines, whether through direct employee hire or through BPO, the demand for good talent remains strong,” she adds. Cua says that young lawyers in the Philippines are increasingly looking to gain international exposure with large firms and move their practice overseas. They are also increasingly looking to set up their own practices, with smaller clients and a lower price point. This forces law firms to go above and beyond to retain good lawyers, in a market that sees a lot of lateral movement, Cua explains. At Romulo, weekly and monthly mental wellbeing check-ins, flexible working hours and work-from-home policies have helped keep the lawyer turnover in check, Cua says. This talent war, coupled with domestic businesses looking to cut legal costs, is a challenge to the law firm market in the country, explains Jacinto-Barrientos. “Philippine businesses are still not as mature as the businesses in the U.S. or in Europe, so there is still that concept of price sensitivities. Price sensitivity is also a balance of how we’re able to manage costs, so. Just be wise in your business judgement and your business model,” she says. PHILIPPINE REPORT