Bright Spots
There are a number of areas that are already changing the landscape within Singapore’s legal market as law firms look to boost, maintain or revive their business in the coming years.
“Despite the continuing slump of distress situations, Singapore stands formidable as opportunities from distress can be turned to value if you know what to watch out for,” says Keen.
While there might be a slowdown in asset financing and real estate work, practice areas such as private wealth, family law, tax, corporate and insurance are projected steady growth due to their resilience to market conditions. A number of other sectors are also poised to thrive in the coming years.
For one, Singapore is seen as an almost ideal jurisdiction for financial technology (fintech) startups, thanks to a supportive regulatory environment and its position as a regional leader in financial services. The growth of consumer demand for financial services and investment in the sector in ASEAN will continue to grow and Singapore is well‑placed to capitalise on this fintech revolution.
Then, there is a growing need to understand the parameters of data protection laws and how these may impact a company’s operations. Singapore’s data protection law is just one example of several recently enacted laws in the region that will, no doubt, become more sophisticated and restrictive over time, says Keen.
Additionally, the economic slowdown is driving growth in mandates in sectors like disputes, insolvency and restructuring. Already a regional dispute resolution hub, Singapore has now firmly secured its spot as a leading arbitration jurisdiction through a number of initiatives over the past decade, including various updates to Singapore’s International Arbitration Act, the promotion of the Singapore International Arbitration Center as a leading arbitral institution and the liberalization of local legal market to allow foreign lawyers to advise on arbitration matters in the jurisdiction. The launch of the Singapore International Commercial Court (SICC) last year adds more weight to Singapore’s position of an international center for dispute resolution.
“It remains to be seen whether these initiatives will emulate Singapore’s success in the arbitration space, but we expect to see continued growth in the local disputes market in coming years,” says Keen. “We are also facing a number of disrupters – whether it is the accountancy firms trying to get back into the legal market or from smaller firms that are after the more commoditised work, at least initially as well as the local firms strengthening and expanding their horizons.”
And restructuring is booming. “While there may be a decline in some areas of corporate legal work, our insolvency, restructuring and litigation practice has been very busy,” says Ang of Rajah & Tann Singapore. “Due to the economic slowdown, contracting parties are finding reasons to delay or deny payment, especially for variation orders. We expect more disputes around this issue.”
According to Ang, Rajah & Tann alone has had 20 to 30 percent more work in the insolvency and restructuring area over the past two years.
NewLaw Rising
Law firms in Singapore are exploring innovative ways to provide more than just legal services to their clients. Some, like Eversheds and Rajah & Tann, are offering short-term contract lawyers to be placed with companies, following the path blazed by “NewLaw” outfits like Axiom and AdventBalance, which recently merged with Lawyers on Demand.Rajah & Tann launched R&T Asia Resources as a wholly owned subsidiary of Rajah & Tann Singapore last year. The new unit acts as a contract legal service for clients seeking in-house freelance lawyers to help them through peak periods or when short-term assistance is needed.
“This service helps clients contain costs and as freelance lawyers are screened by R&T Asia Resources, clients are assured of their professionalism,” says Ang. “The traditional way of operating a law firm may no longer work in today’s environment. We have to be nimble and consider new business streams to remain relevant.”
Last year the headlines in Singapore’s legal industry were made by a number of mergers and alliances , and that looks set to continue into 2016.
“Around the world, the legal market is changing because our clients’ business needs have changed. Other professions changed and adapted to globalization years or even decades ago but the legal profession stands out as being a profession that has changed little over the years,” said a spokesperson with Dentons, an international law firm that combined with local firm Rodyk & Davidson last year. “So what is happening now is really a symptom of the legal profession catching up to its clients.”
Through these combinations, the Singapore firm gains access to the international firm’s wider client base and infrastructure while the international firms gains a strong Singapore presence and regional capability with limited additional investment, says Tony Williams, principal at international legal management consultancy Jomati Consultants.
“It is still quite early to say how the recent combinations are working but the current level of stability of the firms is an encouraging sign. The key to their success will be the level of work the Singaporean practice can do for clients of the firm referred to it from the firm’s platform and the clients the Singapore office can refer to other parts of the firm,” he notes. “We are seeing the emergence of regional firms with a strong ASEAN footprint such as Rajah & Tann and Zico Law who will aim to provide a one stop legal offering across the ASEAN and regionally,” says Williams.
Today’s clients want to work with law firms that are proactive and act as a business partner to help them become the business they want to be tomorrow, rather than a firm that simply helps them address the challenges of today. The uptick in mergers and alliances are, in part, a reflection of that changed client demand.
“The biggest winner or beneficiary of law firm alliances in Singapore is the client,” says Ang. “Clients are now presented with a choice of law firm offerings and being savvy users of legal services, they are in an ideal position to select firms that best suit their business needs.”
Many other leading law firms are also keeping an eye out for partnerships with local firms. “International firms continue to consider whether local tie-ups are appropriate and beneficial,” says Keen from Hogan Lovells Lee & Lee. “We remain alert to what our competitors are doing and the opening of the legal market.”
But this could all change as Singapore’s legal market liberalises further. The problem with Singapore’s legal market is that it’s still not properly open – the work of international law firms is very restricted. International firms are starting to realise, particularly in a closed market like Singapore, that it’s hard to compete for big portions of work, so they look at linkups with local firms.”
“Until Singapore truly opens its market which probably will happen in the next decade, this trend will continue,” he adds. “When the legal market in Singapore opens up at some point, there will be true competition there and competition produces quality.”
Tie-Ups Abound
The year 2015 was an eventful year for Singapore’s legal market with international law firms forming alliances or merging with local partners, including three notable ones: Morgan Lewis & Bockius and Stamford Law Corporation, Dentons and Rodyk & Davidson and Withers and KhattarWong.
Singapore law firms that have merged or formed alliances with international firms are often able to offer integrated, specialised and comprehensive advice across a wide variety of disciplines, often using sophisticated multi-office teams.
“From the perspective of Singapore law firms, with liberalisation of the profession, and the forces of globalization, the pressure continues to provide Singapore clients with sophisticated and specialist cross-border advice,” says Suet-Fern Lee, managing partner of Morgan Lewis Stamford. “Singapore businesses want legal advisors who understand their businesses, their industries and their legal issues, wherever they seek to operate on the planet.”
On top of a client base of Fortune 100 companies that comes with the combination of the two firms, Stamford has also gained specialist know-how in many areas, presence in multiple jurisdictions, IT support, knowledge management as well as technology knowhow from the deal. Morgan Lewis in turn acquired highly established local full service capabilities, which greatly enhanced its offerings in Asia. “We operate on a fully integrated basis and collaborate closely,” says Lee.
Meanwhile, “the creation of Withers KhattarWong has meant that clients are now offered legal services around the world, within one organisation,” says Gerallt Owen, head of international regulatory and corporate crime at Withers KhattarWong. “Particularly valuable in this regard are Withers’ immigration, corporate and wealth planning practices, which can help clients with extending their international reach and activity.”
Withers has also gained a significant expansion of its legal capabilities and headcount in Singapore, with the addition of corporate, banking, property, tax and expanded litigation practices.The link between Dentons and Rodyk & Davidson is more on the talentacquisition side. “This combination is about capturing talent and quality for the benefit of our clients,” says a Dentons spokesperson. “Rodyk’s significant practice experience and longstanding, leading position in Singapore allows us to connect the top talent in Singapore to unique client challenges that exist in Singapore and around the world.” With its arrangements around the globe, Dentons can now boast access to more than 7,300 lawyers.
The agreement between Dentons and Rodyk & Davidson allows the combination to share marketing and branding, but profits and finances remain separate.