Proactive engagement of the Asia-Pacific region is of paramount importance to the continued growth of Australian law firms. An export strategy report titled Australian Legal Services - Strategic Global Engagement, prepared by the International Legal Services Advisory Council (ILSAC), identifies Asia as the biggest growth opportunity for Australian law firms.
Some Australian law firms are of course already achieving success in the Asia-Pacific region. Mergermarket's M&A League Tables of Legal Advisers Q1 2009, for example, ranked Freehills as the top M&A adviser in the Asia-Pacific region by value (advising on 11 transactions with a total value of US$5.3bn this year), and Mallesons as the third-place firm.
Traditionally, Australian law firms have adopted the "hub and spokes" model of regional engagement. However firms such as Phillips Fox (with DLA Piper), Deacons (with Deacons in Hong Kong) and Gilbert + Tobin (with leading Chinese firm King & Wood) have formed strategic alliances with major international law firms to establish a more permanent presence in the region. The strategic merger such as that undertaken by Deacons is in fact ILSAC's preferred approach to regional engagement.
Asian markets have shown more resilience to the global financial crisis than European and American markets and appear to be recovering at a faster pace, but Australian firms will have to compete for a share of Asian markets. Unsurprisingly, Magic Circle firms are already implementing strategies to strengthen their position beyond their traditional bases and expand their operations in the two leading emerging markets - China and India. Clifford Chance, for example, having established an alliance with AZB & Partners in India in January 2009, has now announced it will be seconding the head partner of its Indian practice group, Chris Wyman, for "as long as it takes" to integrate the two firms. Australian firms wishing to grow their business without adopting a strategic alliance model must bolster its own efforts in the region, or risk losing market share to major international firms.
The ILSAC report also notes that China must remove trade barriers and permit foreign competition as a result of its WTO accession. This will result in a much more open legal market ion mainland China and presents an opportunity for growth for Australian law firms that may never occur in the region again. The second great emerging opportunity, India's legal services market, faces significant internal challenges and for the time being remains closed, but the ILSAC report identifies the need for Australia to cultivate stronger relationships in the jurisdiction now.
Australian law firms are in a strong position to capitalise and firmly establish Australia's presence in Asia-Pacific. To grow their already significant presence, Australian law firms need to be aggressively proactive in engaging the Asia-Pacific region.