A growing number of law firms no longer have eyes only for China. They’re now looking south, too.
With its central location, friendliness to business and proximity to emerging economies, Singapore is a popular destination for many foreign firms hoping to get a foothold in Southeast Asia, consultants say. The nearly two dozen foreign firms that applied for licenses to practice Singaporean law last fall expect to hear back from the government later this month.
Several California firms are stepping up their investments in the city-state. Latham & Watkins and O’Melveny & Myers have deepened their bench in Singapore. And Morrison & Foerster will reopen the office that it shuttered during the economic downturn on January 18, following the lead of Freshfields Bruckhaus Deringer.
MoFo is setting up shop with five attorneys who will focus on M&A and private equity, said Asia managing partner Eric Piesner, who will be based in Singapore. The firm has noticed heightened interest from its clients in Southeast Asia, which has been overshadowed by China at times, he noted.
“Many of our clients are looking to Southeast Asia and South Asia as growth markets, and as they expand their businesses in those regions we want to be positioned to assist them,” Piesner said. “Singapore is the ideal location from which to do that.”
And firms that are already in Singapore are adding manpower, law firm consultant Brad Hildebrandt noted. Jones Day, which entered Singapore in 2001, roughly doubled the size of its office in 2012 to about 30 lawyers, said Dennis Barsky, a partner based in the region. Latham, which recently celebrated the 15th anniversary of its office, will place summer associates from the United States and Europe in Singapore for the first time this year to lay the foundation for the demand it expects in the region, said Stephen McWilliams, the office’s managing partner. The firm now has about 40 lawyers in Singapore.
“Most firms rely on internal transfers and lateral hires to grow in Singapore, as we have in the past,” McWilliams said. “We are completely changing our growth strategy and trying to build for the future.”
Some firms find synergy between their offices in Singapore and Silicon Valley. Latham’s lawyers in Singapore often collaborate with their partners in Menlo Park, Calif., on capital markets deals for Indian companies, McWilliams said. The wave of tech companies and funds emerging in Southeast Asia want to learn from and increase their ties to Silicon Valley as they grow, which has generated work for O’Melveny’s 28 lawyers in the region since the firm opened up shop in 2008, partner David Makarechian said.
“We had this thesis in our transactions group that there is a link between Southeast Asia and Silicon Valley that is going to continue to grow,” said Makarechian, who is based in Silicon Valley and travels to Singapore.
American law firms arrived in Singapore more than a decade ago, lured by its status as a financial center. But their interest in the city-state ebbed and flowed with the market.
“Firms would pile into Singapore when the market was good, and the next crash would send them packing,” said Kenneth Culotta, the Houston-based leader of the global transactions practice group at King & Spalding, which came to Singapore in 2010.
Firms are more committed to Singapore now, in part because of their interest in the countries at its doorstep.
“You’re in Singapore not necessarily to access the Singapore market but to access 10 different markets, and not everybody has the same strategy,” said Barsky of Jones Day.
An office in Singapore positions firms for business in Indonesia’s growing economy and also gives them access to Australia, where the market for legal services recently opened up, Hildebrandt noted. Plus, many firms serve Indian clients from Singapore as they cannot open offices in the country.
The tiny city-state supports a variety of practice groups, particularly finance, M&A, dispute resolution and energy, Hildebrandt said. King & Spalding’s 11 lawyers stay busy working on energy transactions and arbitration in Singapore, whose sophisticated legal system makes it an attractive place to resolve disputes in Southeast Asia, Culotta noted. The Singapore office is the firm’s first and only outpost in Asia.
“We had been trying for years to figure out how to get into Asia and not lose money,” Culotta said.
But lawyers face considerable fee pressure from clients in Southeast Asia, who are sometimes unaccustomed to paying high rates for legal services and have plenty of foreign firms to choose from, McWilliams noted.
“Firms that have been successful out here are the ones that focus on high-end work such as capital markets and M&A,” he said. “You can get the rates you’re used to.”
And the influx of firms in the region has heightened the competition for talent. After deciding to expand its Singapore office, Jones Day spent a few years looking for the right lateral hires, Barsky said. O’Melveny has launched internship programs with local universities to forge relationships with young lawyers in the region, Makarechian said.
But Hildebrandt does not expect the Singapore marketplace to stay this crowded forever.
“There are some firms that are going there because everyone else is,” he said. “You have to have a reason to be there. You have to have clients that need that location.”