Law firms slow Asia expansion as credit crunch contagion spreads
The Asian legal market is starting to feel the effects of the credit crunch with partners no longer viewing the region as safe from the effects of the global downturn.Growth has slowed in the previously booming India and Chinese markets, with business confidence slipping fast. The drop in market confidence is reflected in Mergermarket statistics, which show a drop in Asia-Pacific M&A activity, with deal volumes during Q3 2008 at their lowest level since the same period in 2005. Law firms are seeing an even bigger impact on work levels in the capital markets and private equity sectors.Nick Seddon, who is spearheading Eversheds' move into Hong Kong and who was, until last month, head of Asia at collapsed US law firm Heller Ehrman, said: "We still have China predicting a growth rate of 8%, (down from 10%-11%) which is something Western nations would die for. However, there has been a knock-on effect from Lehman Brothers, which had a large presence in Asia."Eversheds is still looking for office space in Hong Kong and, according to Seddon, also hopes to launch in Singapore and Beijing at some point in the future. However, he believes some firms may scale back their expansion plans in the region as a result of the downturn. He said: "There are a lot of firms still opening in Asia, but I get the sense that one or two might be pulling in their wings." Clifford Chance (CC) India group head Chris Wyman said that although the firm was still active in areas such as infrastructure development, sentiment had changed significantly. He said: "When the credit crunch first started in the US, and spread to Europe, there was a widespread belief in the Indian market that it was not going to be affected. Sadly, I think that has proven to be incorrect and the crunch is affecting their market as well."DLA Piper Asia head Alastair da Costa added: "The outlook over the next six months is a little uncertain but we remain confident that, for a broad-based practice with international offices, Asia will still be a relatively positive place for activity across our main areas." News of a dip in market confidence comes as troubled US firm Thelen last week lost its entire 20-lawyer Asia practice to West Coast firm Pillsbury Winthrop. Meanwhile, many in the market are waiting to see where Heller's Asian partners end up as the dissolving firm had offices in Hong Kong, Beijing, Shanghai and Singapore.
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