Just as Rome needed more than a day to construct its mighty empire, so too has Singapore embarked on the long road of building the legal empire to outlast all others. But this about as far as the analogy extends.
Where Rome was adventurous, Singapore has proved conservative. Where Rome had an appetite for risk, Singapore has shown itself to be predicable - just look at the six firms recently awarded Qualifying Foreign Law Practice (QFLP) licences.
A three-month long evaluation process presided over by government officers including the Attorney-General, the Minister of Law and Permanent Secretaries from the Ministry of Finance and the Ministry of Trade and Industry culminated in the announcement last December that six firms had beaten off 14 others to successfully claim QFLP licences - licences that will permit them to practice Singapore law in certain areas using Singapore-qualified lawyers.
Allen & Overy, Clifford Chance, Herbert Smith, Latham & Watkins, Norton Rose, and White & Case - the list of QFLP firms reads like a who's who of corporate law. Between them they boast over 140 years of activity in Singapore, each firm's name synonymous with high-profile, high-value transactional work in Asia.
And while this list may seem complete to some observers, to others it is the omissions that were the most telling. Those who didn't make the cut - the likes of Ashurst, Jones Day, DLA Piper, Baker & McKenzie, O'Melveny & Myers, Freshfields, Slaugher and May, Davis Polk, Sidley Austin, Simpson Thatcher, Sullivan & Cromwell, Gibson Dunn & Crutcher and Milbank, or those who didn't apply for example, Linklaters and Lovells.
Does this prove that the Singapore legal market is only capable of sustaining a few heavyweights at a time? Or is an opening up imminent?
The real story is not how the complexion of Singapore's legal market will change in two, three or even four months from now, but what it will look like in six months time when sources close to ALB predict the next round of liberalisation will occur.
New licence, same approach
It's hard to differentiate between the stated five-year plans of each of the QFLP licencees (see box out). If you've read one, it seems, you've read them all - so striking are the similarities between them. Nevertheless, said Austin Sweeney, Herbert Smith's Southeast Asia managing partner, these bland, mundane statements accurately depict the situation confronting each of the six firms.
"All of the law firms granted licences have been in Singapore, doing business here for a number of years," Sweeney said. Herbert Smith established its Singapore office in 1995.
"The reason why statements about five-year plans won't differ all that much is because in being granted licences, the QFLP firms won't have to drastically change their approach - they will have to continue to support the development of the domestic legal market and Singapore's position as
the financial hub of Southeast Asia," said Sweeney.
Jeff Smith, a partner at Norton Rose in Singapore, agreed, noting that while firms will need to further develop their capacities in areas that "reflect Singapore Inc's ambitions," areas such as Shariah law, international arbitration, energy, infrastructure as well as aviation and marine law, they will not be asked to change their strategies in Singapore.
"Success for QFLP firms will be down to sticking with core strengths," he said. "There are no plans to start moving away or into areas just because a licence has been granted, and no plans to start moving away from an approach that has worked for over a decade. QFLP firms will analyse what can be done, what opportunities there are, but the broader strategy will not change. But one shouldn't think that nothing will change. While some may feel that the granting of QFLP licences is a 'pat on the back' and a 'thankyou' for the work these firms have done in Singapore over the past few decades, for some firms it represents a substantial departure from existing law firm business structures."
This is especially the case for the QFLP firms who were previously in Joint Law Ventures (JLVs) or alliance agreements. For these firms, Allen & Overy (JLV with Shook, Lin & Bok) Clifford Chance (previously in a JLV with WongPartnership) and White & Case (in a formal law alliance with Venture Law) the granting of a licence will allow them to cultivate their Singapore operations off their own bat.
RIP Singapore JLVs?
Clifford Chance's Singapore managing partner Philip Rapp said that although its JLV provided years of solid growth, the opportunities provided under the QFLP scheme proved too good to pass up. "We saw the QFLP as the best way in that we could expand the range of legal services we provide, said Rapp. "We enjoyed a productive six-year JLV with WongPartnership, but the time was right to review our business strategy in the Singapore and South Asia markets. The liberalisation of the local legal services market, growth in other South and Southeast Asia markets and other changes in this region led us to believe that our own interests and those of our clients would best be served by operating as an independent entity rather than pursuing the joint venture."
A statement released by Allen & Overy provides a strong indication that it is looking to cut ties with its JLV partner. "The new licence will enable Allen & Overy to develop [its own] Singapore law practice separately."
White & Case's situation is a little different. Instead of a JLV, the firm has been in a formal law alliance with domestic firm Venture Law, a model that makes the transition to QFLP firm a little easier, according to White & Case's Singapore managing partner, Doug Peel. "Our alliance with Venture Law has been extremely useful and has enabled us to combine our resources with Venture Law's vast domestic knowledge. It has been a happy and fulfilling relationship and the granting of this licence will create opportunities for the two of us to unify."
No easy ride
But the six QFLP firms won't be in for an easy ride over the next two years. According to sources close to ALB, each firm must meet strict criteria regarding headcount and revenue increases, based both on their own modelling and as stipulated by the Singapore government - or risk having their licences rescinded.
ALB understands that, at the time of application, firms were required to commit to increasing headcount levels in practice areas identified by the Singapore government in addition to meeting agreed overseas revenue targets. If the six firms fall short on either condition by 50% after two years, the Singapore government has reserved the right to take back that firm's QFLP licence.
A tough task, especially given the current economic environment. All the firms ALB spoke to in the preparation of this report remained bullish about meeting their targets.
Singapore: one step closer to India
That Singapore is the perfect platform for law firms seeking access to the largely untapped potential of Indian legal market (with a view perhaps to launching into a liberalised legal sector) is no secret. The economic, social, historical and legal links between the two countries span some 100 years and the two can only become closer as levels of bilateral trade between the two continue to increase.
"We will be able to service Indian clients very well from Singapore," said Sweeney. "Many of the firm's Indian clientele have their Southeast Asia headquarters in Singapore. Being able to handle the Singapore aspects of Indian cross-border work will be a positive," he added.
The implication is that Herbert Smith would seek to run more of its India practice out of Singapore (it is currently run out of the firm's London office) and seek to establish a presence in India if the situation permits.
Rapp's Clifford Chance has made no secret of its Indian ambitions. In November 2008, the firm established a dedicated team of lawyers in its Singapore office focusing primarily on transactions in the Indian market headed by Amarchand & Mangaldas lateral hire Rahul Guptan. More recently Clifford Chance cemented a 'best friends' agreement with Indian firm AZB Partners, all part of the firm's strategy to use Singapore as its launching pad into India.
QFLP firms: coming for your young
While competition between domestic and QFLP firms will at most be a medium-term war, all agreed that the real terrain on which the short-term battle will be fought is Singapore's tight talent market. And while Singapore-qualified lawyers of all levels, particularly those with significant PQE in corporate, banking & finance, M&A and project finance areas are already in high demand, expect to see a ramping up of activity in this regard in the months ahead.
And while activity at the lateral hire level is expected to peak in the next few months as QFLP firms set up their new operations, watch out for intra-office movements and secondments as Singapore-qualified lawyers working in QFLP's foreign offices start being sent back home.
"We will add new hires, relocations and secondments at all levels," Rapp told ALB. In 2008, Clifford Chance secured two partner-level lateral hires in Singapore, promoted two of counsel to partnership and relocated a partner from its London office.
Sweeney said that Herbert Smith will also look at both lateral hires and relocating partners from its overseas offices to complement its offering in Singapore where many of its employed Singapore lawyers will soon be eligible to regain their Singapore practicing certificates. In the second half of 2008, Sweeney himself both relocated to Singapore, while London-based partner Nick Peacock followed him in late January 2009.
And while such moves are largely unsurprising, what is novel is that most of the QFLP firms are quite open about their plans to dip into the domestic employment market at the lower levels and go after fresh graduates. "We intend to hire and develop promising Singapore law graduates," an Allen & Overy spokesperson said.
"We also want to explore the possibility of offering graduate training places to Singapore graduates in the future," said Rapp.
Peel, Sweeney and Smith, while somewhat more guarded about the prospect, all admit that such moves will be considered in the mid- to long-term.
Further liberalisation in six months
In his opening remarks at the QFLP press conference, the minister for law, Mr K Shanmugam, noted that the Singapore government will "review the [QFLP] scheme in 18 months, plus or minus, and see whether [it] needs to finetune the scheme, and whether [it] needs to consider further steps."
As implied by Shanmugam, the timeframe for the review of the scheme is flexible, and sources close to ALB have suggested "rather confidently" according to one source, that further steps could be taken as soon as six months after the first licences were awarded. But just what form this will take is a source of speculation.
Perhaps the worst kept secret in the Singapore legal fraternity at the moment is that Singapore-qualified lawyers employed by international firms who were not granted/did not apply for QFLP licences will soon be eligible to reclaim their Singapore practicing certificates.
But there are much more profound liberalising measures on the cards according to one international firm who missed out on a QFLP licence this time around.
"We have been in discussions with the Attorney General's Chamber and the Ministry of Law since the initial decision was made," said the source. "We have it on good authority that some of the firms who missed out will be granted a QFLP licence, or something equivalent, within six months."
While this is certainly a 'wait and see' proposition, what could be more immediate is a launching of and enhanced JLV (EJLV) scheme, the possibility of which was first raised some six months ago by the Ministry of Law.
Under the findings of Justice VK Rajah's Committee to Develop the Singapore Legal Sector, the government noted the possibility of introducing EJLVs in which foreign law firms would be allowed to hire their own Singapore qualified lawyers and share in up to 49% of their profits with their Singapore partner firm. Thus far, the Ministry of Law and the Singapore government have not commented on this scheme.
Our sources within existing JLVs believe that this aspect of legal sector liberalisation is being, as Shanmugam said, 'finetuned' at the moment. When complete we may see the pairing-off of select foreign and domestic firms as a forerunner to the next round of legal market liberalisation.