It's both a blessing and a curse to be protected, as Malaysian lawyers admit. The 13,000 lawyers in the Malaysian peninsular practise in one of the Asian jurisdictions where foreign law firms are forbidden entry.

So while this means that Malaysia's leading firms get to keep all the juicy top-notch domestic instructions for themselves, the jurisdiction - as some law firms admit - misses out from the sharpening tool that is international competition.

"We can't avoid globalisation so we might as well embrace it," notes Dato' Cecil Abraham, managing partner at Shearn Delamore & Co, one of Malaysia's largest and oldest firms.

Although Malaysia has signed up to the WTO and therefore, on paper, a liberalisation of legal and financial sectors is inevitable, the reality is very different.

The local bar council has the draft legislation in front of it, but according to locals it will be a long time coming.

"Malaysia is a closed shop and there are no foreign firms here," confirms Brian Chia, managing partner at Wong & Partners, which is part of the Baker & McKenzie network. "Although we have signed up to the WTO there is still a lot of protectionism and I don't think that it will open up to foreign firms in the near future."

The resistance, as the larger firms tell it, comes from smaller firms among the 13,000-lawyer community. "They are fearful that there will be an invasion of foreign firms," says Abraham. "But we say it's the larger firms that should be afraid - and we're not!"

However, not all of Malaysia's large law firms share Abraham's nonchalance about a legal invasion. Too Hing Yeap, managing partner at Shook Lin & Bok, says: "There's been talk of it for many, many years and I'm not sure that it will work out for us. We've had a good working model for many years and I don't see why it will need to change."

In any case it's unlikely that an open door policy would lead to a flood of international players. Most of the big firms use Singapore as a hub in the region and it's only a 45 minute flight to Kuala Lumpur (KL).

And as Chia puts it: "I don't know how many firms would come here even if they could. I mean it's not a big market and it's not that lucrative."

With such limited external influences, things move slowly on the Malaysian front. "It's a sleepy jurisdiction," confirms Chia. It's also hugely over-lawyered. There are approximately 6000 lawyers in the region around KL servicing a population of three million. Compare that to the 3000 lawyers that service Singapore's four million inhabitants.

"With every new law firm there's a new profit and loss centre, so everyone is chasing money and there's a lot of undercutting," says one local lawyer who prefers to remain anonymous.

The 'S' brigade
A triumvirate of well-established long-term firms dominate the scene. Collectively known as the three 'S's, the trip of Shearn Delamore & Co, Shook Lin & Bok and Skrine boast a combined total of 186 years of existence.

All three have strong general corporate practices - although Shearn, with two offices and over 85 lawyers, has a good standing as a litigation practice. This is partly because managing partner Cecil Abraham is a renowned litigator.

Shook Lin & Bok's corporate reputation is bolstered by its presence on landmark deals. It acted on this year's launch of the ABF Malaysian Bond Index Fund - the first ETF in Malaysia and the first bond ETF in Southeast Asia. Other notable work includes its recent involvement in a US$100m Islamic medium term note.

Skrine is the younger of the three S firms with a good reputation across banking and corporate.

The combined history of the S firms is something that is difficult for other firms to shake. But that's not to say they haven't been trying. While Shearn, Skrine and Shook have the history, it may come as a surprise to find that they have been caught up - in size at any case.

Zaid Ibrahim & Co has leapt up the lawyer number charts in the last 10 years to now have a comfortable lead over other firms in terms of size. It was previously a member of the Andersen Legal network and although that no longer exists, undoubtedly the firm benefited from its brush with the bean counters.

It has had impressive growth in a market where the top firms shake their heads about the availability of top-class lawyers.

"We're still growing but we're very short on lawyers," acknowledges Too. "Good lawyers with good English skills are a commodity that is very hard to find."

There's a number of reasons for this. According to Too Hing Yeap, it's the lack of language skills that cause the problem as English is the business language in KL and anywhere else that counts.

But others point to the lure of the dollar as top Malaysian graduates are in demand in Hong Kong, Singapore and London. "We're losing a lot of younger lawyers that don't come back from Singapore or London where salaries are much better and they want to be exposed to high quality work," bemoans Abraham.

All this means increasing competitive pressures on both sides: in terms of getting work and in terms of attracting lawyers. "There have been lots of new law firms on the scene in the last decade or so," acknowledges Too. "That makes it more competitive and we have to be more efficient."

The three S's are known for their traditional connections to private sector business, which is dominated by Chinese Malaysians.

In contrast, a group of Bumiputra (ethnic Malay) firms has developed which have typically had a strong foothold in government work because of their Malay connections.

Firms such as Zul Rafique & Partners and Zaid Ibrahim are particularly known for government work, although observers note that these traditional distinctions are dying down.

In addition, a growing number of mergers between mid-tier firms is positioning certain firms to take on the top trio.

The firm of Shahrizat Rashid & Lee is one of those merged firms. In 2003 the legacy firms of Rashid & Lee and Shahrizat & Tan came together to form what is now a 47-lawyer firms.

A more recent merger is that between Lee Hishammuddin and Allen & Gledhill which took place last year.

Niche developments
Another attack on the hegemony of the top trio is the development of niche firms and niche practice areas designed to highlight the fact that the S firms have broad and general practices.

The one success in this field has been Raslan Loong, where founding and managing partner Loong Caesar has managed to create in just over 10 years a firm where 80% of the work is corporate. Recent work has included involvement on the 2003 Malaysian International Shipping Corporate Berhad's acquisition of American Eagle Tankers, and the firm is also acting on the Malaysian Airports restructuring

"We see ourselves as a corporate boutique in a market that is driven by volume," says Loong. "It's difficult to develop a specialisation here because there is not enough volume in any particular area, so most firms have to do a spread of work."

Loong, however, achieved his boutique status by doing what lawyers find nearly impossible to do: saying no to work. "We resisted saying we were an all-service law firm, meaning that we do litigation, IP, IT etc," he says. "Even when things have been slow we have resisted that temptation."

Other firms have focused on developing niche practice areas as a way of standing out from the crowd. Tay & Partners, for example, is developing a reputation in the increasingly litigious area of employment. Partner Leonard Yeoh says the service is particularly suited to international clients that have bought a local asset and along with it, local employment problems. "For our foreign clients, they need to be informed about local employment laws as they will encounter labour issues," he confirms. "This is a niche practice but we're growing it at the moment and a flow of work is coming in."

Over the seas
While Malaysia may still be a closed shop, naturally most firms have close alliances with overseas firms.

The first stop for any Malaysian firm is to have a Singapore alliance or office, as the two jurisdictions are closely aligned.

For example, the Shook Lin & Bok of Malaysia shares its name with its Singapore counterpart because up until 1968 they were the same firm. Then the separation between the two jurisdictions forced them to become separate firms, although the two have a strong referral relationship.

Firms have taken different approaches to the overseas question. While Shook Lin has no formal association, Shearn is a member of the World Law Group which has representatives in 34 countries.

Tay & Partners has formed an alliance with Alban Tay Mahtani & de Silva. The two firms have long had strong personal relationships but earlier this year they formalised it with the development of AxcelAsia. Managing partner Tay Beng Chai says the alliance was to raise the profile of the relationship between the two firms and to offer a seamless cross-border service.

Another alliance that came about through personal contacts was that between Raslan Loong and Mannheim-based Reeg Rechtsanwälte. It is, according to Loong, a partnering agreement which sees the firms go beyond referring work to harmonising how they do work at both ends and having a lawyer exchange program.

It also has a Singapore office that Loong describes as a 'marketing office' as Malaysian firms cannot practice Singapore law. "However, it acts as a funnel for work to Malaysia," he says. For actual Singapore law, he tends to use Rajah & Tann along with Drew & Napier.

But the firm that probably has the strongest international connections is Wong & Partners, courtesy of it belonging to the Baker & McKenzie network. Managing partner Brian Chia was with Bakers in Singapore where the high level of activity in its Malaysian desk encouraged him to move to KL to set up what is effectively its Malaysian office.

For Chia the network has been invaluable, allowing the firm to act on the IBM/Lenovo deal as well as doing the recent global restructuring of local car company Proton which involved work in 12 jurisdictions.

"I think that we do a higher amount of cross-border work than other firms because of the Bakers network," says Chia.