Two separate comprehensive reports on the state of the legal market in Asia have recently been published. While both look to have been very thoroughly researched, that, and the shared (as in, this) week in which they were published, is, however, about all the two appear to have in common.
As to the two publications in question: one was published by the UK’s The Lawyer and the other by The Asian Lawyer – part of The American Lawyer stable. As such, the two publication represent a fairly comprehensive review of how international firms are fairing in the ever competitive Asian market.
Turning first to the The Lawyer publication, the executive summary of which you can read here and the full report of which you can purchase here.
On reading this publication, “teething troubles aside“, you are left in little doubt that international law firms have positioned themselves well for the uptake in demand in the increasingly important Asia-Pacific legal market. Importantly, those who made the decision to invest in Asia a decade or more ago would appear to be seeing that investment finally paying dividends, with international firms in the region recording 5.7 per cent growth [in headcount] between 2013 and 2014.
- international law firms now make up 16 per cent of the Asia Top 50 (which is the same make up as two years ago).
- five (six if you include KWM) of the Top 10 Asia firms hail from China – but number two in the list, Dacheng, has approved a merger with Dentons and so arguably is now an “international firm”.
- no doubt because of the abundance of Swiss Verein these days, Australian law firm Minter Ellison sneaks into Top 10 Asia firms despite not being financially integrated but rather because the firm is integrated under “one brand”.
- continued prosperity for internationals in the region is seen on the back of robust M&A activity and 5+ per cent growth predications by the IMF .
Overall though, content and opinion in this report can largely be summed by the comment that Freshfields Asia managing partner, Robert Ashworth, “is generally bullish about the region“.
The Asian Lawyer
Turning our attention now to The Asian Lawyer publication (and please do because the graph in this article is fantastic!) and we find we get a very different picture being painted of how the market is shaping up for US firms operating in Asia.
The context of this post, based on results of The NLJ 350 Annual Survey of the [US] Nation’s Largest Law Firms, can be summed up from its title: “Signs of Slower Growth for U.S. Firms in Asia“.
Although the post starts out saying: “Asia has been a powerful magnet for international firms over the past decade” – with the number of Am Law 200 attorneys having nearly tripled in that time, the latest year-on-year stats show a near flat-lining in these numbers.
It is also no secret that a number of US firms have been looking closely at their Asia strategy – the latest of which is Latham & Watkins, but even the US arm of DLA Piper has taken a financial interest in the Asia business in the hope of moving things along following some turmoil in the region.
It should not, therefore, be a surprise that this post finishes on the note: “Are more dramatic cuts to Am Law 200 lawyer counts in Asia coming? Stay tuned“.
So who is right?
I think you’ll agree that the two publications are very contrasting and paint different pictures of international law firms operating in the Asia legal market.
In a world of two Asias, a question arises: “Whose version is right?“.
My answer to that question is – probably both.
There is certainly some – finally some cry out! – positive signs for international firms operating on the ground in Asia (as opposed to those who may still operate a fly-in/fly-out operation). The market looks like it might start to deliver on some of the rich rewards it has promised for a long time. But to do this firms have to come to the realisation that they need to get over two crucial hurdles:
- they must have a strategy for the whole of Asia and not just China, and
- while staffing maybe cheaper in Asia, headcount doesn’t tell the story of financial size or profitability.