At a time when many global law firms are still grappling with their Asian market strategy, the Asia practice of CMS has tripled in size in just over 15 months.
And this growth looks set to continue, with former CMS Cameron McKenna managing partner Duncan Weston—now executive partner for global development—leading the firm’s search for a tie-up in China.
The firm has identified China as a key target for expansion in the wake of its U.K. merger with Nabarro and Olswang. And Weston, whose role focuses on targeting new markets for the global firm, was in the country this fall to scout for potential targets to join the CMS brand.
“If we want to become [as strong] a firm in China as we are in Europe, we have to [form a tie-up] in China,” said Weston. “In a very short space of time, we’ve become 65 lawyers and 17 partners in Asia. It’s a big step forward for us. But longer term, to be a pre-eminent law firm in China as a foreign firm is not possible.
The firm’s rapid Asia growth has been driven in part by the addition of a 30-lawyer Singapore base—the combination of legacy Nabarro and Olswang’s offices in the city-state.
But it also came about because CMS’s Hong Kong office, opened just over a year ago, deliberately tapped into the strength and unique offering of its German arm.
The instant office expansion in Singapore, combined with the German practice expertise, have had an even larger impact on the firm’s regional practice in Asia than anyone anticipated.
When the news was first reported in the summer of 2016 that CMS and Olswang were discussing a merger, CMS, which had more than 2,600 lawyers in 34 countries, had just two Asian offices, both in China.
But the firm had already decided it would launch a Hong Kong office through its German arm, CMS Hasche Sigle, initially focusing on two niche areas—international arbitration and asset finance work. The firm had a strong Europe-based international arbitration practice, and it saw an opportunity to use its arbitration expertise to fill a gap in the Asian market.
“We thought there might be a business case for us to be out here,” said CMS Hong Kong managing partner Nicolas Wiegand.
For years, the firm’s lawyers in Germany had noticed that a large number of Asia-related cases were being handled by U.S. or U.K. law firms instead of by European firms. They deemed this counterintuitive because the legal systems of most countries in Asia are, like continental Europe, founded in civil law, while the U.S. and U.K. are common-law jurisdictions.
“Ninety-five percent of the clients from this part of the world are from civil law jurisdictions, and yet the landscape here is purely U.S. or U.K. firms with no civil law roots,” said Wiegand. ”Hong Kong and Singapore are common law islands surrounded by a sea of civil law jurisdictions.”
Hong Kong v Singapore
CMS’s Asian offices are extensions of different parts of the firm, which is not financially integrated across the different regional firm members.
While the Beijing and Singapore offices are part of the U.K. arm of the firm, now named CMS Cameron McKenna Nabarro Olswang, its offices in Hong Kong and Shanghai were launched by CMS’s German arm Hasche Sigle.
CMS partners had spent a lot of time debating whether to make Hong Kong or Singapore the firm’s third location in Asia after Shanghai and Beijing, and they eventually decided Hong Kong made more sense as China started mapping out its One Belt, One Road initiatives.
That ambitious infrastructure project, which aims to cover most of Asia, the Middle East, Africa and eastern and central Europe, would potentially generate many opportunities for fundraising and dispute resolution. As a regional financial center, Hong Kong is set to benefit from bridging Chinese parties to those overseas.
“We wanted to start with Hong Kong and build up the practice from there,” Wiegand said.
The Hong Kong office opened in September 2016, with the U.K. merger announced the following month ultimately gifting CMS not one, but two, Singapore offices by May of this year.
CMS combined the two teams in Singapore and the firm’s lawyers there are now handling construction, technology, media and telecoms and litigation matters. This September, after the merger went live, the 30-lawyer Singapore office also secured a local law capability by forming a formal law alliance with Singaporean firm Holborn Law.
The Hong Kong office, meanwhile, has now grown to 10 lawyers, including Wiegand and asset finance partner Tim Elliott, who relocated from London in January.
So far, the German connection has paid off. “We came with our civil law background, combined with our big network in both continental Europe and the UK,” said Wiegand, who added that it is appealing to clients who are used to litigation in their own jurisdictions.
CMS has been able to capitalize on the fact Germany is an attractive outbound investment destination for China. In 2016, Chinese companies invested a record $12.6 billion in Germany, making it the largest recipient of Chinese foreign direct investment in Europe.
Elliott, who had worked for Chinese clients on asset and offshore financing in London, meanwhile, moved to Asia in part to respond to clients’ requests that he be closer, and in part to tap into an active borrowing market. “Eighty percent of the world’s shipyard financing activity is in Asia,” he said.
Both Elliott and Wiegand travel often to Singapore and the firm’s Beijing and Shanghai offices. “We have different products in these offices, and we support each other well,” Elliott said.
CMS is now hoping that this broader coverage gained in Asia through both its U.K. merger and its Hong Kong launch, will make it more attractive to Chinese law firms looking for an international alliance or merger.
Weston does not offer a timeline for establishing such an association or alliance in China though, insisting that a potential partner would have to meet the firm’s quality standard in Europe.
“We have built up relationships with Chinese law firms over the years,” said Weston. ”And as those firms become more sophisticated, I hope we can find a CMS firm in China.”