China

China – a tale of two very different strategies…

A tale of two very different strategies

Contrast this:

“…over the last two years the number of Am Law 100 lawyers based in Beijing and Shanghai has declined by 25% from 569 to 424. The decline over a five-year period is 35%.”

John Malpas in the Global Legal Post 6 December 2024

With this:

Over the past 12 months, Chinese Law Firms DeHeng, JunHe, Fangda Partners and Han Kun Law Offices have established overseas offices in Singapore, the U.S., Indonesia, South Korea, Vietnam, and the Middle East

Summary, not direct quote, from: by Jessica Seah on law.com 13 December

In-bound versus Out-bound referral work

Having worked with law firms around the world for close to 30 years to help establish their overseas offices (with a particular focus on Asia), I’m not sure I have ever seen such a significant shift in an in-bound/out-bound referral strategy.

In my view, we are now at the dawn of an era when Asian-based law firms are referring more work out of Asia than International law firms are referring work into Asia.

The only question that remains then is this: “How are you positioning your firm/practice to benefit from this shift?“.

Richard

📩 richard@gsjconsulting.com.au

What does China mean to law firms?

The unfortunate truth is, too much…

…rarely do international law firms get the return on the investment they make in China that they do in other jurisdictions (for example the Middle East right now; but Malaysia and South East Asia if we want to look closer to home!).

If you don’t believe me, take a quick look at the number of firms who have entered/exited the China market in the past 15 years (tip: focus on US firms).

Law firm’s short-sighted approaches to this issue are typically for two reasons:

lack of knowledge of the market
lack of understanding that Asia is a long-term – multi-generational – investment (not, typically, your law firm investment M/O).

So why the post (other than the shout-out that I have been part of a team that has successful established not 1, nor 2, but 3 international law firms in SE Asia)?

Well because, while the Eversheds / KWM tie-up has a long way to go, comments like those in this article…

[‘The art of the possible’ – Eversheds’ international CEO on its eye-catching KWM China alliance‘]

makes me wonder.

Law firm culture isn’t everything, certainly post 2008, it still counts for something.

And the most interesting comment in that article is who initiated the introduction: – Sue Kench.

Which makes me ask: Are the partners in KWM Australia off loading their investment in KWM to Eversheds?

[this article first appeared on rws_01]

Photo credit to: Li Yang on Unsplash

International trade of Australian legal and related services is now a billion-dollar industry

Last Monday (15 December 2014) saw the publication of the Law Council of Australia‘s ‘Fourth Legal and Related Services Export Survey‘.

Key findings from the Report – which relate to the FY2010-11 period – are fascinating, not least of which is that total income from exports and international activity of Australian legal services was $932.8 million.

Other stand-out findings include:

‘Asia’ remains Australia’s largest “regional” export market.
‘Asia’, as a region, contributed $320.5 million in total exports.
‘Asia’, as a region, is the only global region to have experienced continuous growth since FY2004-05.
Interestingly, the export of legal services to China and Hong Kong grew slower than the average growth rate (at 31.6%) – which is probably reflective of how mature this market is.
Export of legal services to China/HK amounted to $124.1 million – dropping from second largest export market to fourth. It is worth noting, however, that the China and Hong Kong market – in dollar ($) terms – still represented the largest by country in the Asia region.
Indonesia saw the biggest per cent increase in exports, up a whopping 115.2% (although the dollar sum is still fairly low at $8.1 million – and it remains to be seen in future reports if this was a transactional glitch or part of a growing trend).
Singapore saw 80% grow from $32.5 million to $73.1 million.
South East Asia (excluding Indonesia and Singapore – termed “Other South East Asia” in the Report) contributed $35.5 million to exports. Given what I blogged on Friday, SE Asia would now have to be considered one of the real growth prospects for Australian legal services going forward and this is indeed reflected in the Report which states that “South-East Asia has grown much more strongly than North Asia since FY2008-09 as a destination for exports of Australian legal and related services“.
Somewhat surprisingly to me; at $272.9 million, North America and Canada are the largest “single” export market for Australian legal and related services.

Another interesting number in the Report, given that FY2010-11 still represented a fairly youthful period for international firms in Australia (and its worth noting that K&L Gates didn’t open its doors in Australia till 2013) is that $150.3 million of the overall $932.8 million is represented by “billings from overseas offices of Australian practices“. Moreover, the value of fly-in/fly-out legal services actually fell during this period (from $52.9 million to $39 million).

One surprise in the Report was the relatively low dollar value of “Arbitration” related work (at $3.6 million); but this could be accounted for by the fact that this period (FY2010-11) pre-dates [2011] the Australian Government confirming the Australian Centre for International Commercial Arbitration (ACICA) as the sole default appointing authority competent to perform the arbitrator appointment functions under the amended International Arbitration Act 1974 (Cth) and concerted efforts by both the Commonwealth and New South Wales Governments to make Sydney a leading arbitration centre globally.

And for those of you who have ever wondered why so many international law firms have entered the Australian market in recent years I will end this post with a crunching number to mull over:

“The 10 largest national law firms exported $609m (65.3% of total market) of legal and related services in FY2010-11”

Demand for legal services in Australia is flat – so what can I do about it?

Yesterday’s [4 July 2014] Australian newspaper Legal Affairs section published an article – “Top-tier firms axe hundreds of jobs” (subscription required if you wish to read the full article) – that opened with the following paragraph:

THE nation’s biggest law firms are in the midst of an employment shake-out with hundreds of jobs disappearing as the firms slash costs in the face of flat demand and intense competition.

The point of this post is not to opine on whether or not demand for legal services in Australia is truly flat, nor whether indeed demand among, so-called, ‘top-tier’ firms is intense, which I’ll leave for another day, but rather to comment on whether or not such flat demand, and indeed intense competition, should lead to the loss of hundred of jobs.

First off, anyone who has a memory even slightly longer than a gold fish, will recall that most (if not all) international firms (of whom most make up this so-called ‘top-tier’ level here in Australia) who entered the Australian market post the GFC cited “flat demand” in their domestic jurisdictions, and the need to grow revenue from other jurisdictions, as a strategic reason for doing such.

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