This story originally appeared in sister publication The Asian Lawyer.
When Ashurst announced last week that it was recruiting two Singapore-based partners and a counsel from O’Melveny & Myers, it was the latest in a series of departures from the Los Angeles-based firm’s office in the city-state.
Over the past nine months, O’Melveny has seen no fewer than 14 lawyers exit the Singapore office, including three of its five partners there. The departures leave the office with about eight lawyers, according to its website. (The firm declined to offer an official head count.) O’Melveny now has one of the smaller international law offices in a market where some of the largest global players include Magic Circle firm Allen & Overy (60 lawyers) and U.S. firms White & Case (36 lawyers), Latham & Watkins (33 lawyers) and Jones Day (26 lawyers).
Despite the losses, O’Melveny insists that it is still committed to Singapore and its Asia practice overall, saying they are an important strategic priority for the firm.
“After 20 years in Asia we have tremendous brand equity and take a long-term perspective,” a spokesperson for the firm says. “Our core strengths in Asia, which include capital markets, mergers and acquisitions, private equity, fund formation and dispute resolution, are not impacted by these departures.”
O’Melveny wouldn’t name specific clients or matters on which it was working in Singapore or the rest of Southeast Asia. Menlo Park partner David Makarechian, who relocated from Singapore 18 months ago and splits time between the two offices, says only that they involve advising multinational industrial conglomerates and U.S.- and U.K.-based financial institutions on a range of matters including antitrust issues, intellectual property, mergers and acquisitions and disputes.
But the firm faces stiff competition from U.S. rivals such as Latham and Jones Day, to say nothing of U.K. firms Allen & Overy, Clifford Chance and Linklaters. These other firms continue to capture major work in the very practices that O’Melveny cites as its strengths, as well as in key jurisdictions, such as Indonesia, the Philippines and Malaysia in the growing Southeast Asian market.
Last week, O’Melveny lost restructuring partner Bertie Mehigan, mergers and acquisitions partner Joel Hogarth and counsel Ratih Nawangsari to U.K. firm Ashurst. Mehigan, who had joined O’Melveny from White & Case six years ago to launch the firm’s Singapore office, is relocating to Hong Kong, while Nawangsari is getting a bump up to partner. The exits are particularly notable because of Hogarth’s and Mehigan’s extensive work in all-important Indonesia, a bellwether emerging market and key foreign investment destination, as part of the firm’s alliance with Indonesian firm Tumbuan & Partners. When their notice period ends on Sept. 15, they’ll be taking Jakarta-based restructuring lawyer Debby Sulaiman and a still-unknown number of associates with them to Ashurst, which means O’Melveny’s head count in Singapore could shrink even further.
This year O’Melveny has also seen a partner and three counsel leave its Singapore office for rival firms. Earlier this summer, private equity partner Dean Collins moved over to Dechert to launch its new Singapore office. In January, restructuring counsel Ashley Bell and Timothy Tan moved to DLA Piper, the former as of counsel in Hong Kong and the latter as a Bangkok partner. Also in January, funds counsel Siew Kam Boon joined K&L Gates as a partner in Shanghai. Six associates have also left O’Melveny’s Singapore office since last December.
“There have been different circumstances around these departures,” says a spokesperson for the firm, who declined to comment further.
According to sources familiar with the matter, Timothy Tan and Siew Kam Boon made their moves—to Bangkok and Shanghai, respectively—at least in part for personal reasons. Still, some former O’Melveny lawyers were frustrated by what has been described as U.S. management’s lack of understanding of and commitment to Asia. According to a source familiar with the matter, Mehigan, Hogarth and Collins had been looking to leave for the past year, and had discussions with DLA Piper and Mayer Brown about joining those firms as a team. DLA Piper and Mayer Brown declined to comment on whether the discussions took place.
Three former Asia-based O’Melveny lawyers claim that U.S. management does not seem to understand that many Asian clients require different handling than American clients, from the alternative fee arrangements often needed to secure work in the region to the patience needed when collecting fees. The firm pushed back on this assumption, however, with O’Melveny chairman Brad Butwin saying that the majority of the firm’s matters in Asia are based on such arrangements.
“We work with our clients in each of our locations to come up with flexible fee arrangements that meet our clients’ needs and enhance trust and communication,” Butwin says. “This is the case regardless of where the client is located.”
Another issue, cited by six former Asia-based partners, is O’Melveny’s strong emphasis on its well-known and highly profitable U.S. litigation practice, compared with the transactional work that is the bread and butter of its Asia partners. While O’Melveny’s transactional lawyers may fare well enough in bringing in business, former O’Melveny lawyers say those revenues pale in comparison to the firm’s disputes work.
Meanwhile, the firm is feeling pressure to improve its financial performance. O’Melveny’s revenue and profits in 2013 slipped nine places to number 40 in The American Lawyer’s annual rankings, with total revenues falling 7 percent, to $733 million, and profits per equity partner dropping 16 percent, to $1.73 million.
“The management is not wrong,” says one former Asia-based partner. “When you look at O’Melveny in the States, they make so much money. Asia will never be able to give them the same return as they get in the States. So why bother having exposure or offices in Asia if you’re not going to get that type of return? I can’t blame them.”
Moreover, Makarechian says that O’Melveny’s management has put its full weight behind its transactions lawyers in Asia. “Asia is in the DNA of this law firm and has been since I walked in the door in 2003,” he says. “And I have found, really, for whatever we’ve been trying to do, a very, very high level of support in the law firm.”
Once Mehigan, Hogarth and their team are gone in September, Andrew Hutton will be the only Singapore partner to have worked in the office longer than a year. Hutton, who does capital markets work, arrived at O’Melveny as a counsel in 2010 and was promoted to partner in 2012. He’ll share leadership duties with Nathan Bush, a former Beijing partner who relocated earlier this year but spends at least part of his time in the Chinese capital. Beyond those two, O’Melveny’s Singapore team consists of a few remaining counsel and associates, some of whom will leave with Mehigan and Hogarth. The firm said that Makarechian also would also spend a significant amount of time in the Singapore office and help to manage the team there.
O’Melveny is currently in the process of recruiting laterals to join its Singapore team, according to Butwin. He says the firm is looking for partners in the energy and infrastructure sectors, as well as in capital markets, dispute resolution and M&A and private equity. Butwin also notes that O’Melveny is more concerned with strategic and cultural fit than the total number of lawyers in any given office, and that the goal is to better connect its Asia practice with that of the U.S. Rather than thinking of clients as Singapore or Beijing clients, they’re seen as firm clients and are served from any of O’Melveny’s 15 offices on various transactions and disputes.
“Our core clients and colleagues on the ground know that we are deeply committed to the region, and we expect to have some announcements about additional partners that will become part of our Asia team soon,” Butwin says. The firm declined to say whether those new hires would be in Singapore.
Makarechian says the firm’s two-decade history in Asia has seen periods of both rapid growth and readjustment, such as the one the Singapore office is going through now. The goal, he says, is to maintain a long-term view and keep focused on the firm’s plan to serve global clients out of Asia as outlined by Butwin.
“We’re not going to abandon that long-term strategy we’ve had over these departures,” he says.