Australia and China dominate the legal profession in Asia. At least that’s the impression given by the inaugural Asian Lawyer survey of the 50 largest law firms based in the region, as calculated by head count. Of the top 20 firms on the list, only three—Korea’s 614-lawyer Kim & Chang, India’s 550-lawyer Amarchand & Mangaldas & Suresh A. Shroff, and Japan’s 490-lawyer Nishimura & Asahi—do not hail from China or Australia. Indeed, Chinese firms account for 17 out of 50 slots on the list; Australian firms, 12 out of 50 [see "Stars in the East"].

Nor would the top 20 look very different if the Asia-Pacific offices of U.S. and European firms operating in the region were included. Of those firms, only global giants Baker & McKenzie, with 1,054 lawyers in its Asia-Pacific offices, and Norton Rose, with 806 lawyers in Asia and Australia, would be able to muscle their way onto the list [see "Biggest Footprints"].

Our survey encompasses three different data sets. First, we surveyed a range of firms based in Asia to obtain each firm’s total head count of qualified lawyers, excluding trainees and contract attorneys. Then we drew on the data collected by our sibling publication The National Law Journal for its NLJ 350 survey in order to pull together a list of the U.S. firms with the largest head counts in the Asia-Pacific region [see "The American Presence"]. Finally, we asked non–U.S. firms with Asia-Pacific offices for the number of qualified lawyers in those offices [see "International Players"]. To ensure an apples-to-apples comparison, we specified that all numbers should represent 2011 full-time-equivalent (FTE) head counts, to match the NLJ 350 data.

This means that many of the big mergers and combinations that took place in 2012 are not reflected in our charts. Obviously the King & Wood Mallesons combination happened in that period. Also, the mergers last year that created Herbert Smith Freehills and that turned Blake Dawson into Ashurst Australia mean that two of the biggest Australian firms in our survey are no longer entirely based in Australia. Instead, they will become among the largest international firms operating in the region.

The preponderance of Chinese and Australian firms on the Asia 50 chart reflects—in very different ways—the circumstances facing each country’s legal profession. It’s not surprising that China would have the largest law firms in Asia. It is the biggest country in terms of population and also the largest economy in the region. But the Chinese firms that top the chart—2,027-lawyer Dacheng Law Offices and 1,593-lawyer Yingke Law Firm—and many others on the list are also quite different from large firms elsewhere in the world. They are mainly loose agglomerations of smaller firms and solo practitioners operating under a common brand but with relatively little in the way of shared infrastructure or client base. Dacheng and Yingke have both taken this model overseas, teaming up with small firms in unlikely locations such as Verona, Italy, and Budapest. “Dacheng is an international brand, and we want to provide a network whereby smaller law firms can join us and be part of our brand,” Wang Zhongde, the firm’s managing partner, told The Asian Lawyer in an interview last year.

Not all of China’s large firms follow this model, however. The Three Musketeers of the Chinese profession—King & Wood (now King & Wood Mallesons), Jun He Law Offices, and Zhong Lun Law Firm—are arguably the most similar in China to Western law firms, with partners and offices working in a more integrated fashion, and they are certainly the best-known in Western legal circles.

India, with a population that nearly matches China’s and a rising class of acquisitive corporate giants, might seem to be fertile ground for large firms to develop. Yet its economy lags far behind China’s—and more important, regulatory restrictions curb the growth of Indian firms. Technically, partnerships are capped at 20 equity partners; limited liability partnerships are not permitted, meaning that equity partners can face personal liability for the firm’s debts; and lawyer advertising is not permitted. Some larger firms get around the ceiling on partnership size by setting up multiple partnerships. Still, “the expansionist approach you see in global firms has severe limitations in the context of India,” Shardul Shroff, co–managing partner of Amarchand & Mangaldas & Suresh A. Shroff & Co., told us last year ["Not Just a Family Matter," Summer 2012]. “That you can grow in the Indian market is in some sense a miracle.”

Given the size of their economies and their populations, Japan and Korea seem underrepresented in our survey. But then lawyers are underrepresented in the workforces of both countries. In both nations, bar exams are traditionally very difficult to pass, and lawyers have a more limited role in business and society. That may be changing. Both Korea and Japan governments have moved in recent years to increase the number of lawyers by more than doubling bar exam pass rates. The full impact of that decision has yet to be seen; it could mean bigger firms or, as many fear, more underemployed lawyers.

Australia is quite a different story. Though it’s physically large, its population of 22 million is less than 2 percent that of China or India and also far smaller than that of other Asian markets like Japan or Korea. But it is perhaps the most mature legal market in the region, with waves of consolidations over the past two decades producing several very large national firms. Three of the country’s Big Six firms—Mallesons Stephen Jaques, Freehills, and Blake Dawson—have now gone international in the last year via mergers with overseas firms. Allens Arthur Robinson (now Allens) has also entered into an alliance with Magic Circle firm Linklaters, leaving Clayton Utz and Minter Ellison the last of the very largest Aussie firms to be wholly independent.

What’s striking, though, is how large some of Australia’s so-called midsize firms have become. Gadens now has over 550 lawyers, with Corrs Chambers Westgarth not too far behind. Maddocks, HWL Ebsworth, and Middlestons (at press time discussing a merger with K&L Gates) are some of the other midsize Australian firms that rank among Asia’s 50 largest. Many of these firms have grown recently in part as the larger firms cull lower-yielding practices in preparation for international mergers and tie-ups [see "What's a Mid-Tier Firm to Do?"].

Australia was, of course, once part of the British Empire, whose economic and legal legacy is clearly visible in the distribution of lawyers across Asia. Along with Australia, former colony Singapore is exceptionally well represented in our survey, with almost as many large firms as Japan, despite a much smaller population. Though it has few large domestic firms now, Hong Kong is perhaps the region’s most well-lawyered market thanks to its role as the most common base for international firms in Asia.

And British firms account for many of the largest of the international firms operating in Asia. Like Norton Rose, Allen & Overy, Clifford Chance, and Linklaters each reported more than 300 lawyers in their Asia-Pacific offices; only Baker & McKenzie and DLA Piper reached that level among American firms. By and large, the British firms have been in the market for somewhat longer than their U.S. counterparts. Moreover, the British have been far more active than the Americans on the merger front so far—which is likely to ensure that they will dominate in head count for years to come. Norton Rose owes most of its 790 lawyers in the region to its acquisition of Deacons Australia in 2010. As noted earlier, Herbert Smith’s merger with Freehills and Ashurst’s combination with Blake Dawson will also give those firms a much bigger footprint in the region.

It’s a familiar pattern: In Asia, as in many European markets, the largest British firms field substantial teams, while the Americans tend to have smaller offices focused on fewer practice areas. The discrepancy reflects the resolutely international strategy adopted two decades ago by U.K. firms aiming to grow beyond the bounds of their domestic market. Still, many U.S. firms have expanded enormously in the Asia-Pacific region in recent years. Wall Street firms such as Shearman & Sterling, Simpson Thacher & Bartlett, Sullivan & Cromwell, and Davis Polk & Wardwell have all made big investments in Hong Kong law practices. Others have grown by merger: Mayer Brown combined with Hong Kong’s biggest firm, Johnson Stokes & Master, in 2007. Twelve U.S. firms report 100 or more lawyers in their Asia-Pacific offices, compared with just eight U.K. firms.

Further down the list of American firms, though, the size of their Asia-Pacific cohorts drops off drastically. The Asian growth story is quite an uneven one. Baker & McKenzie may have over 1,000 lawyers in Asia, but more than half of the U.S. firms we surveyed have fewer than 40 lawyers in the region. Almost a third have fewer than 20.

That so many large firms still have such a modest presence in Asia suggests that the market is still widely viewed with caution. A relative handful have decided to expand aggressively, but many more international firms are so far still on the fence. With giants now looming into view, it’s probably not a comfortable place to be sitting. •