The firms that have resulted from big transatlantic mergers can often have their cake and eat it too. In the United States, they’re the same American firm they always were. But when it comes to the United Kingdom and the rest of Europe, they’re British to the bone.
But what about Asia?
Until recently, DLA Piper, the result of the 2005 merger between U.K. firm DLA and U.S. firm Piper Rudnick Gray Cary, followed the model of many British firms in Asia, entrusting management of its offices there to a Hong Kong–based regional managing partner relocated from London. But late last year, following a strategic review, the firm decided to shift overall responsibility for Asia to a U.S.–led three-partner committee.
San Diego–based co–chief executive officer Terry O’Malley, who sits on the new committee with fellow San Diego partner Jay Rains and Sydney partner Andrew Darwin, says the change was driven by the firm’s recognition that U.S.–related work had become the single largest component of the firm’s business in Asia.
“The advantage of British firms in Asia has decreased as more U.S.–Asia trade has developed and more U.S. firms have come into these markets,” O’Malley says.
So firms like DLA Piper, Hogan Lovells, Dentons and Norton Rose Fulbright that can choose between British and American identities in Asia now have more incentive to opt for the latter.
The U.S. Brand
For many years, the opposite was true. Owing in large part to the U.K.’s long colonial history in the region, British firms generally had a presence in Asia much earlier than their American counterparts. Hong Kong, the region’s main financial hub, was a colony until 1997, and its legal system is still based on England’s, as is that of Singapore and a number of other economies in the region.
In all of the major Anglo-American mergers, the British side has contributed far more of the combined firm’s Asian lawyers. At the time of its merger with DLA, Piper Rudnick had none of its own offices in Asia, while its British partner already had several. Norton Rose had over 800 lawyers in Asia and Australia when it merged with Fulbright & Jaworski in 2012; the Texas firm had roughly a dozen. Given such disparities, it’s easy to understand why the reins in Asia have largely stayed in British hands, even when those leading the overall firm have changed.
Hogan Lovells recently named Washington, D.C.–based partner Steve Immelt as sole chief executive officer, replacing American and British co–CEOs Warren Gorrell and David Harris. But the firm’s Asia regional managing partner Patrick Sherrington is a Brit who relocated to Hong Kong from London last May. His predecessor as Asia head, Crispin Rapinet, was actually based in London.
While Sherrington admits that there is certainly significant deal flow between Asia and the United States, he doesn’t think the firm would be helped by trying to give off more of an impression that it is American.
“I don’t think there’s any overall perception in Asia that it’s better to be a U.S. firm or a U.K. firm,” he says.
He notes that there is also a significant amount of Asian money moving into Latin America, Africa and other places besides the U.S. “So if you’re a global law firm, it’s not really a case of looking to one particular jurisdiction” to give a firm an advantage in capturing business, he says.
But other partners say the United States’ status as the world’s largest and most advanced economy does rub off a little on American law firms.
“[Chinese business people] always think America is larger, more advanced, more open, freer and easier to do business in,” says Seyfarth Shaw Shanghai partner Wan Li, who previously worked for DLA Piper. “So certainly U.S. firms are the natural go-to firms to handle this work.”
One former Hogan Lovells partner said: “I think there is more to be had if you have a U.S. brand. That plays out better. In terms of the size of deals, the companies, the opportunities to take work out of Asia is better with a U.S. firm rather than a U.K. one.”
That seems to be the case with Chinese companies. According to Mergermarket figures, total Chinese investment into the U.S. in 2013 was almost $12 billion, more than double the $5.5 billion that flowed into the European Union.
Ashurst Hong Kong managing partner Robert Ogilvy Watson says that while U.S. firms definitely have an advantage, given that they serve clients from the world’s largest economy, he says English law is still more prevalent in international commercial contracts and in cross-border M&A transactions not involving U.S. parties.
“English law is a much more international product than New York law,” he says, and “English law is used more for transactions than New York law.”
A Local Face
But a former Asia-based partner with DLA Piper says it seems like more and more of the biggest-ticket deals in region revolve around U.S. law. Chinese e-commerce giant Alibaba Group Holdings Ltd. has recently decided to have its initial public offering, expected to the biggest since Facebook Inc.’s $16 billion listing, in New York instead of Hong Kong. The past year also saw the $4.72 billion acquisition of Smithfield Foods Inc. by Chinese pork processor Shuanghui International Holdings Ltd.
“Maybe the overall idea is that the East is tilted more toward the U.S. than Europe,” the partner says. “Maybe it’s just a question of perception, but it feels that way a little bit to me. And that naturally flows down to the legal market.”
Matthew Bersani, Hong Kong–based Asia managing partner for Shearman & Sterling, agrees.
“If you look at the [Hong Kong] market compared to five years ago,” he says, “it’s completely different. I would say U.S. firms collectively play a bigger role, at least in the capital markets and M&A areas, than English firms do.”
Bersani also says U.S. firms have, by and large, been more successful integrating English law capability than U.K. firms have been building U.S. law practices.
Most lawyers agree that the advantages of firm nationality should not be overstated though.
“[Firms] need to demonstrate they can do the work,” says Seyfarth’s Wan. And, in Asia, that work is often best performed by local lawyers, rather than British or American expatriates.
“If you don’t have a local face, it’s going to be difficult going forward to capture business,” says another former DLA Piper partner, expressing skepticism about that firm’s new Asia committee being based 10,000 miles away in California.
One former Hogan & Hartson Asia partner says the fact that Lovells ran Asia from London was one of the major considerations in his choosing to leave at the time of the merger. “I didn’t know how [Rapinet], who was a litigator, would manage a transaction practice in Asia,” he says. “It didn’t make a lot of sense to me.”
O’Malley says he understands such criticism, and he hopes he’s only temporarily head of the firm’s Asia offices.
“An important goal for me is to develop the next generation of leaders in Asia,” he says. “My expectation is that in a couple of years, when I’m not in this role anymore, the next managing director in Asia will be an active, practicing lawyer in Asia.”