Allen & Gledhill has often been referred to as a lion in a rabbit's cage.

A cut above the already strong local competition in Singapore, the size, innovation and scope of the transactions A&G has had a hand in - helped in part by its Joint Law Venture tie-up with Magic Circle heavyweight Linklaters - have ensured its success as ALB's 'Deal Firm of the Year' in Southeast Asia for the past three years.

But a rabbit's cage can only contain a lion for so long. A&G recently burst from its jurisdictional confines with the signing of a strategic alliance with Zaid Ibrahim & Co (ZICO), the largest, most successful full-service firm in Malaysia.

The language used when making the announcement contained revealing rhetoric. Littered with adjectival profundities including "regional powerhouse", "pan-ASEAN" and "pan-Asian", the message was clear: A&G is out of its cage and on the hunt for regional business. The allied firms, with a combined bench-strength of over 400 lawyers, declared they would target cross-border mandates in practices such as corporate and commercial, finance, real estate and intellectual property. The firms also plan to establish solid presences in ASEAN countries, including Indonesia and Vietnam.

A&G and ZICO's alliance is symptomatic of a new force in Southeast Asia. The race towards regionalism has begun, and it has changed the dynamic among local firms. While they could once sit back comfortably in their home jurisdictions dolling out top-notch but focused advice, clients now want more, and firms are doing their best to oblige.

Rampant regionalism
ZICO had already tapped into this undercurrent of regional desire when it decided to open offices in Singapore in 2003, Jakarta in 2005 and Bangkok in 2007.

Other firms have also made moves. The China offices of Singapore firms have become key steps toward regionalism, as China's economic momentum has grown. WongPartnerhsip, Drew & Napier and KhattarWong all have offices in Shanghai. WongPartnership has branched even further, being the first Singapore firm in the Middle East with an office in Doha. Recently, KhattarWong announced a potential JV with Vietnamese law firm PBC & Partners, and received its licence to operate in Vietnam.

Australian law firms were among the first Asia-Pacific 'regional' players. Allens Arthur Robinson has built a strong network in Southeast Asia, with offices in Jakarta, Singapore, Bangkok, Hanoi, Ho Chi Minh, Phnom Penh and three more in China.

Pressure to proliferate
KhattarWong has flagged an aggressive expansion strategy in the region. Managing partner Tan Chong Huat has revealed that the firm is looking to intensify and expand its practices in Hong Kong and Malaysia, as well as in Vietnam.

"With the maturation of the legal industry across various Southeast Asian countries and Australia, there's a need to grow organically to further the strategies of each firm," Huat said. Some of this is due to pressure from compatriot law firms. "When the competition establishes a presence in an area where you aren't represented, they can reach out to businesses operating there, some of which may be traditionally your clients and eventually cascade that competition for that client down to your home turf."

However, becoming regional is more than succumbing to competition pressures locally. Huat said geographical borders are becoming blurred, with multi-nationals setting up offices across the region. "It's a very natural progression in the growth of a firm to want to establish itself regionally to service its expanding client base," he said.

Allens Arthur Robinson's Jim Dunstan, who has relocated to the firm's Hong Kong office in line with its regional push, said that Allens saw a gap in the market in Asia and set out to exploit it. "There are many good, single country law firms and a few with a couple of offices, but there are a lot of jobs requiring advice from around the region."

He added that corporate counsel were demanding firms that could handle regional due diligence or regional advice efficiently. "Clearly, a single firm can retain half a dozen local firms, but a firm delivering high quality regional advice is a very attractive option."

Not for everybody?
Law firms who want to compete regionally will have to act fast if they are to develop an offering to compete with these first-movers in the market. It may also present challenges.

"It requires a lot of patience and willpower to build a regional law firm," Dustan said. "We started in 1981 and have added offices over a long period. New offices take time to get to acceptable levels of profitability, and partnerships aren't generally long-term planners."

Huat said that only firms with a critical mass are likely to form an alliance or venture overseas. "The bigger, more established firms will look to take advantage of growing economies in the region. Big multi-national firms will also be looking to form alliances with established local law firms to gain inroads into Asia," he said.

KhattarWong managing partner Tan Chong Huat said both methods are effective in different ways, depending on the firm's growth strategy. "A strategic, well-planned and executed alliance brings to both parties new perspectives, new knowledge and yes, new geographical coverage," he said. "An alliance or JV can also encourage the co-creation of new clients in new locations and be beneficial to both firms." However, he cautioned that opening a new office in a new jurisdiction requires a completely different level of homework and commitment. But, he added, with a clear understanding of the new market, "the potential yields are enormous".