South East Asia

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

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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”


Law firms are failing to support clients in South East Asia – really?

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Yesterday I read an article on the website by Felicity Nelson titled Law firms are failing to support clients in South East Asia‘. This article cites recent research done by Acitas, including:

  • 45 per cent of multinationals require legal advice in South East Asia;
  • 34 per cent of Australian multinationals’ legal spend now goes outside their home jurisdiction; and
  • 60 per cent of Australian in-house counsel surveyed said they needed legal advice in South East Asia

There is no doubt in my mind that Acitas research is both good and thorough. I have high regard for them.

But there is one niggling issue I have with the title of this article and that is this: while it would be fair to ‘Australian’ law firms (such as Minter Ellison or Clayton Utz) are not particularly active on the ground in South East Asia – and we can debate the merits of that strategy till the sun comes up – it’s a far cry to then extend that argument to say:

 Law firms are failing to support clients in South East Asia.

And why do I say this?

Well, some firms with a presence is South East Asia and Australia – and who therefore must have a strategic plan around meeting their multinational clients needs in both jurisdictions – include:

  • Allen & Overy
  • Baker & McKenzie
  • Clifford Chance
  • DLA Piper
  • Linklates – Allens
  • Norton Rose Fulbright

Keep in mind that these are international law firms with an actual presence in South East Asia and Australia with a declared strategy of having multiple offices in order to meet the needs of their multinational clients. They’re not ‘fly-in, fly-out‘ operators; so they don’t have to worry about some of the very real strategic and cost issues that Lisa Hart Shepherd, CEO of Acritas, points out in the article and which I made only yesterday around organic growth and local knowledge acquisition!

My only question having read Nelson’s article is this then:

What the Hell are these firms doing if, as is alluded to in the article title, a large proportion of Australian and multinationals in-house counsels’ needs in South East Asia are going unmet?

and having read the results of Acritas’ survey in the article,

What do these firms plan to do to meet these very real needs now?


* I would recommend you read the Lawyers Weekly article, it raises w hole host of additional issues not covered in this post

Does my law firm need an Asian strategy?

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I go to a lot of meetings at which the state of the Asian* legal market is discussed during the course of a year. At a lot of these meetings, it is taken as a given that the relevant/respective law firm “needs” to either be in Asia, have an Asian strategy, or both. But, as is the case with a lot of prospect mining in this industry, short consideration seems to be given to the pitfalls of getting involved, and the most important strategic question of the lot:


as in:

Why do we (as a firm) even want to be involved in the cutthroat market of Asia?

is all but glossed over.

Keep in mind that most law firms won’t make money in their first few years of involvement in the region (and I should know, I have first-hand experience helping with the success of a start-up law firm that later became part of Clifford Chance). Indeed, some firms have been active in Asia for over a decade and still haven’t made any real money (and now exist on the principal that they have “a lot invested in the region”). And with a number of firms saying they want to grow revenue by 30 or so per cent year-on-year, if you do decide to get involved in the region then your firm’s commitment can easily and quickly translate into millions of dollars.

With all of this in mind then, it is important that your strategic reasons for being involved are more than simply a partner’s desire to live somewhere a little more exotic than cold, windy [insert name of city] or because you heard on your train ride to work this morning that XYZ company may give you a job in Rangoon at some unspecified time in the future.

More specific questions your firm needs to be asking include:

  • does the firm have short-term, medium-term and long-term strategic goals in place that will help measure whether your foray into the market has been a success?
  • has the firm identified which of your existing client base is active in the region?
  • do any of your firm’s clients have strategic growth plans for the Asian market?
  • are your firm’s potential clients in the region growth prospects, or are they mature players whose account you need to keep?
  • is your firm pursuing an aggressive acquisition policy or more conservative rear-guard protectionist policy?
  • how are looking to grow in Asia – lateral hires in the markets we want to be in (preferred method for South East Asia)? Or are we relocating partners from elsewhere into the jurisdiction (favoured method in Korea for example)?
  • what performance related metrics has the firm put in place to encourage its partners to be actively involved in the strategy (for example, is there cross-referral profit points?)?
  • what local issues will the firm need to include? – For example, how many law firms send lawyers to Asia without sending them on a cultural awareness or language program (in the same way as government departments do)? Why is that I wonder?
  • what are your competition currently doing/likely to do in the near future in the region? Importantly, do they have a chequebook that is likely to cause me considerable pain?

These are just some of the issues your firm should be thinking through if it wants to get involved in the potentially lucrative Asian market.

And the pot of gold at the end of the rainbow?

  • The Asia-Pacific legal services market had total revenues of $80.4bn in 2013
  • The Asia-Pacific legal services market enjoyed compound annual growth rate (CAGR) of 5.9% between 2009 and 2013
  • The Asia-Pacific legal services market is forecast to enjoy an compound annual growth rate (CAGR) of 7% for the five-year period 2013 – 2018
  • The monetary value of the Asia-Pacific legal services market is forecast to be $112.9bn by the end of 2018

Unsurprisingly then, you won’t be alone. There were approximately half a million active lawyers in the Asia-Pacific legal services market 2013.


* It is critical, when looking at your “Asian” strategy, that you think of the whole of Asia – Indonesia; Korea; Myanmar; Malaysia; Philippines; Singapore; Thailand; Taiwan; Vietnam; as well as China. In other words, Asia is more than just China. If China is your market strategy, that’s fine but don’t call it an “Asian” strategy, call it a “China” strategy. Likewise, if ASEAN is your target market, call it an ASEAN strategy, not Asian.

Coming of Age in Asia

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2014 is slowing to drawing to a close, and with it a notable milestone in my career:-

2014 constitutes 18 years since I started working in the Asia-Pacific region; hence, the year I consider myself as coming of age in Asia.

If I’m completely honest, the start of my career in Asia was more of an accident than a plan. Having backpacked my way through South East Asia (SEA) in 1991, I had returned for a “brief” visit to see friends before moving on to live in Australia for a while. While there, I met a group of young lawyers who were looking to set up their own firm. They were full of vigour and had a zest for life I found infectious and, as luck would have it, it would be another 12 years (and several coup d’états) before I made it to the shores of Australia!

And so, in a reflective mood of nostalgia, I have decided to write down 10 things that remind me of those times to see how far, as a profession, we have progressed.

1. There was a financial crisis

I had hardly got my feet under the table when the Asian Financial Crisis (AFC) would hit in 1997.

What’s more, I was squarely in the epicentre of this crisis – later to be called the Tom Yum Goong effect (following the forced float of the Thai Baht) – and a whole bunch of lawyers in the region would find themselves retraining from being project finance, M&A and capital markets lawyers to bankruptcy and restructuring lawyers tout de suite.

The “internet” (pre-Google) was our new best friend and Chapter 11 was the new buzzword!

Not that I knew it then, but the AFC would play a major role in my career for many years to come.

(NB: I was later to arrive in Australia in 2007, a few months prior to the Global Financial Crisis (GFC))

2. International law firms were in expansion mode

International law firms operating in SEA in 1996 largely consisted of Baker & McKenzie and Freshfields. A number of others did have “best friend” status with local firms, but they had not made the move to hanging their own shingle on the door just yet. The operating strategy of the day was still “fly-in, fly-out” from Singapore or Hong Kong.

The considerable upswing in workout work following the AFC would fundamentally change this approach and it would not be long before Allen & Overy, Clifford Chance and Linklaters would all have local operations. Norton Rose would follow later. Coudert Brothers and White & Case would also operate locally (Coudert Brothers on the back of Freshfields closing down its operations).

Unlike later expansions undertaken by these firms however, all flew-in international partners (a number, including Linklaters, would later reduce or eliminate their “international partners” from on the ground in SEA for a “local partner” strategic approach), and all cited “assisting global clients locally” as the rationale for opening locally.

(NB: It is worth noting that a number of international law firms would continue to offer services in Indonesia and the Philippines on a “fly-in, fly-out” basis).

3. India and China were the future

Everyone you ran into in those days talked about the future being India and/or China (it would be some time before I would hear of the acronym “BRIC”, but accept it may have been in use then). The only problem at the time was that (a) India’s market was regulated, and (b) China’s market was very embolic – in those days, not too long after Mao, it was extremely difficult to find a mainland Chinese qualified lawyer who spoke English. Add to that the restrictions in place on mainland qualified lawyers and foreign firms acting on the ground in mainland China, and it was rare to find an international firm who had such an offering.

As would transpire, our approach to India would arguably prove to be the blueprint to the “sector” approach that would become all the rage in years to come. In India’s case, practices were set up in Singapore and Dubai (for proximity purposes) with “India desks” in London, Hong Kong and New York (at that time, most capital raisings being undertaken by India companies were NY-based 144a deals and if I was to be paid a $1 for every time I heard a NY qualified lawyer complain about direct flights between HK and Mumbai I would never have to work again!). The notable thing about these Indian practices? – they included capital markets, corporate and commercial, and finance lawyers sitting together in the same space.

18 years later and India and China are still the future. Meanwhile, a generation of lawyers have passed through the system.

4. Fee pressure was immense

Fee pressure was immense following the AFC – period!

99 per cent of the work assigned to lawyers went out on a competitive tender basis and, in many cases, firms would tender to do the work on a loss leading basis. Often the reason cited for this was “to keep our lawyers busy”.

Needless to say, those firms who didn’t smarten up to the tendering process and how to price work profitably were pretty quickly destined not to hang around.

(NB: so prevalent was competitive bidding at the time, that I heard of one occasion – unverified – where a firm ended up bidding against itself.)

5. Alternative fee arrangement (AFAs) were the rage!

The first AFA I ever saw was an agreement to do the legal work on an IPO in exchange for shares in the listing company (a practice that would later be prohibited by the regulators). I would soon see a “success fee” arrangement for a competitive bid of bankrupt assets and more “fixed fees” for loan workouts and debt repayment applications than you can poke a stick at.

All of these pre-dated the GFC in 2008.

So when I say to people there is absolutely nothing new with AFAs, I mean I can actually cite examples dating back to 1997 where we used alternatives to the hourly rate on a daily, if not hourly (pun intended), basis.

(NB: a firm I worked with had an annual retainer for a client in place in 1998)

6. Technology

Anyone remember the Y2K bug?

Oh what fun we had with that one! I don’t think I ever did work out how much we must have spent making sure we didn’t lose all of our clients’ records overnight. In a day when most of our computers weren’t even networked, technology was something we thought about constantly.

7. Outsourcing

A debate was taking place in the business at the time as to whether or not support services should be outsourced and lawyers should “concentrate on lawyering”.

At least one firm I know went down this path and outsourced its accounting and secretarial services (and later, marketing would also be outsourced). That firm is still operating on that basis to this day.

Another firm I know spun off its support services function into a limited liability company and then charged back the support services to the firm on an “as needs basis”. Unlike the previous example, this practice became too contentious and, as far as I am aware, the support service was brought back into the mainfold of the firm (but it is worth noting that a number of in-house legal teams would operate on very similar structures down the road).

8. Support services became its own business

Prior to 2000, most lawyers I knew did their own marketing, wrote their own tenders and were in charge of their own knowledge management and client updates.

A significant increase in global panel tendering for financial institutions and corporates, together with project based pitching, changed this approach. Add into the equation the rise of corporate events and directory listings (at that time, Martindale Hubble was the only real regional directory listing but Chambers and APL500 were just about to take off) meant a business case could now be put forward for specific support services.

Likewise, the need for precedent documents to help keep costs down when pricing for work, as well corporate intelligence on clients (used in things such as client meetings and tenders), client legal updates, and more general information management saw the development of the “professional support lawyer” / knowledge management role.

In sum, between 1998 and 2005, in my part of the world, support services rapidly became a business in its own right. Which is probably just as well for me.

9. Relationships trumped all

The relationship between a lawyer and their client trumped all – and it was as simple as that.

There was no such thing as “commercial” and “legal” conflicts, because there was a complete understanding that you would never act against the interests of your client. This was ingrained culturally. In times that pre-dated key account management, global account management, etc. lawyers knew everything about their client. They spoke with the client frequently and often met informally.

There were, however, two prevailing problems with this approach: (1) many client relationships were not that profitable and (2) we hadn’t yet worked that out yet!

This would change with time, and while I would argue that relationships still trump all in Asia, the level of sophistication surrounding the profitability of a relationship has improved significantly since those days.

10. It was fun!

Last, but not least, we had a lot of fun!

Yes, we worked long hours. But, we were young. And, we grew up together. Many of us went to each other’s weddings. We celebrated each other’s children being born. And we went to significant other events in each other’s lives.

(p.s., in days before the Asian Financial Crisis there was a restaurant in the old Stock Exchange of Thailand (SET) building on Wireless Road that would set its lunchtime buffet price according to the [lunchtime] closing bell. It occurred to me when writing this post that it’s probably only now, 18 years later, that they would be able to get away with doing that again – if they still existed)

Which ‘top’ Australian law firms are struggling to enter Asia?

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The headline of the lead-off item in Friday’s (8/8/2014) Global Legal Post was:

Top Australian firms struggle to enter Asia

Pretty strong stuff, made all the more so by the first line of the post, which reads:

“BigLaw Australia has been ‘bitterly disappointed’ at its limited success in entering Asian markets, according to business consultant Dr George Beaton.”

The post left me wondering:

  • which ‘top’ Australian law firms are they referring to?, and
  • is it fair to say that “BigLaw Australia” has been ‘bitterly disappointed’ at its limited success in entering the Asian markets?

So, over the weekend I decided to take a look at this more closely. And, for the purposes of the remainder of this post I have limited my research to:

  • independent ‘Australian’ law firms (i.e., not international firms with an Australian presence),
  • with a presence on the ground in Asia (i.e., not looking at firms’ informal or formal referral arrangements – such as Advoc Asia, Lex Mundi or PRAC, which will likely be the subject of a future post).

Also, in undertaking this I have used the most recent ‘Top 10 Independent Australian Law Firms by Revenue’ list I could find – in this case, complied by the excellent Yun Kriegler (aka @TheLawyerAsia) in her 30 June 2014 analysts post for The LawyerAustralia: medium pace’.

So, here goes:

Top 10 Independent Australian Law Firm by revenue

Offices in Asia

1. Clayton Utz* None
2. Allens** Beijing, Hanoi, Ho Chi Minh City, Hong Kong, Jakarta, Port Moresby, Singapore, Ulaanbaatar
3. Minter Ellison*** Beijing, Hong Kong, Shanghai, Ulaanbaatar
4. Corrs Chambers Westgarth None
5. Gadens Singapore, Port Moresby
6. Gilbert & Tobin None
7. HWL Ebsworth None
8. Maddocks None
9. Sparke Helmore None
10. McCullough Robertson None

* Clayton Utz hit the headlines earlier this year for scratching it’s HK association with Haley & Co. but I’m not sure this one incident is enough to warrant a headline like that above.

** Given Allens tie-up with Linklaters, it’s questionable how ‘independent’ the firm remains.

*** as far as I can see, Minter Ellison’s Asian offices are not financial integrated with the Australian operations.



  • 7 out of the Top 10 Independent Australian Law Firms by revenue have no on the ground presence in Asia at all,
  • for 2 out of the 3 that do have on the ground presence in Asia, it is questionable how financially linked their Asian offices are to the Australian operations, and
  • out of the 7 that currently have no on the ground presence, only Clayton Utz looks like it has attempted to create any on the ground presence in the past few years.

Which essentially leaves Gadens, listed at #5 on the list, as the only independent Australian law firm with any on the ground representation in mainland Asia itself (Singapore, where it doesn’t appear to have a local Qualifying Foreign Law Practice (QFLP) licence).

Overall then I think it is fair to say that that top Australian laws firms have not struggled to enter Asia – because they are simply not there in the first place and many of them have not even made an attempt to be there!

Is it also fair to say then that:

“BigLaw Australia has been ‘bitterly disappointed’ at its limited success in entering Asian markets”?

I’m not sure, because when you look at the published strategy of leading independent Australian law firms there appears to be three different approaches being adopted:

  • First, firms who are aligning with referral groups, such as Lex Mundi mentioned above,
  • Second, firms who are working off informal referral arrangements with firms operating in the Region, and
  • Third, firms who have decided to stay 100% Australian and are not looking at Asia in any great way for future development.

And so the honest answer is that this will take further analysis.

Now, if we were looking at how happy global firms with an Australian presence were with their Asian operations, then this would be a completely different post!


Celebrate “Values Day” – now isn’t that a great idea!

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Anyone who knows me can tell you that I’m an avid follower of all things to do with business development, especially as it relates to Asia / Australasia. It’s with this hat on that I recently decided to follow Gordon Orr, Chairman, Asia at McKinsey & Company, as an Influencer on LinkedIn.

One of Gordon’s more recent posts was titled “Team Building In China”. While I found Gordon’s  post interesting, what stopped me in my tracks was the reason behind Gordon’s post – his attendance at the Shanghai office “Values Day”.

Now don’t get me wrong, I’ve obviously heard of law firms having values – after all, nearly every law firm includes these on their website these days. But what I have never heard of before is of a law firm who holds its values so close to its core business strategy that it is willing to celebrate this in such a way (and if you are a law firm that does have a Values Day, please forgive me).

According to Gordon, McKinsey & Co.’s Values Day is:

“an annual event for everyone in the office (and in McKinsey offices worldwide) at which we celebrate and discuss our core values.”


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

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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.