Almost every major cross-border transaction has an offshore component. More and more of those deals are originating in Asia.
It's not hard to figure out where offshore law firms have been heading.
In the past year, as the print edition of The Asian Lawyer has reported, Ogier and Appleby became the first offshore firms to open representative offices in Shanghai, Collas Crill joined two competitors in Singapore, and Mourant Ozannes made its Asian debut in Hong Kong, where seven other offshore firms already have offices.
These firms and others like Maples and Calder, Conyers Dill & Pearlman, and Walkers hail from locales like Bermuda, the Cayman Islands and the British Virgin Islands in the Caribbean and Jersey and Guernsey in the English Channel -- all of which offer low or zero taxation, reliable U.K.-based legal systems, and flexible regulatory regimes.
Foreign companies eyeing the market in China have long favored offshore entities as investment vehicles, but the offshore firms are now banking on a rising tide of offshore registrations by Asian companies. According to a recent report by the company formation firm of Offshore Incorporations Ltd., they are already starting to dominate. An estimated half of the 800,000 companies incorporated in the British Virgin Islands (BVI) -- the most common offshore destination globally -- are now based in Asia, while Cayman Islands and Bermuda have also been popular with Asian businesses.
"More and more of our clients are from China. It just made sense," says Appleby Hong Kong partner Frances Woo of his firm's new Shanghai outpost, which will initially be used only for business development.
That business is usually developed among other law firms, the "onshore" ones.
"The way it works in almost every case is that offshore firms are retained by onshore counsel," says Greg Knowles, the head of the Hong Kong corporate practice for Maples and Calder. "They will lead on the transaction and we will slot in on the Cayman or BVI advice."
In that regard, offshore firms expanding in Asia have truly been following their "clients" -- the major international firms that have also greatly enlarged their presence in Asia in recent years.
The offshore piece of major deals is usually fairly modest, and fees tend to be in the $10,000-$15,000 range. At such fee levels, price is not usually the major factor in choosing an offshore firm, says Yash Rana, the Hong Kong-based Asia chair for Goodwin Procter. Responsiveness is.