This article first appeared in the October 2011 issue of ALB. Some of the information may have changed since then. Please email ALBEditor@thomsonreuters.com for enquiries and clarifications.
Unparalleled dominance in headcount growth by PRC firms is reflected in a dramatic reshuffle in this year’s ALB 50. In addition to Chinese law firm Dacheng maintaining its status as the largest law firm in Asia – nine out of the 10 largest firms this year came from the People’s Republic of China.
An indication of the continued robust growth of PRC firms for this year’s ALB 50 may be found in the average size of Chinese firms in comparison with last year. The median size of this year’s top 10 domestic Chinese firms stand at 898.5 – a 39 percent increase over last year’s median of 548. Dacheng alone grew by an additional 621 fee-earners in the past 12 months. New entrant in the Chinese domestic top ten, PRC firm Logan jumped into seventh place in the overall regional table with 656 partners and lawyers from 20th position last year. It more than doubled its size from 310 to 656 lawyers this year – a 52 percent spike in numbers.
Baker & McKenzie, the only international firm in this year’s overall rankings to make it into the top 20, slipped three places to finish fifth on the table as Chinese firm Yingke leapt 10 spots from 12th to
pip Baker & McKenzie to its previous 2nd place. Despite this, Baker & McKenzie remains the largest international player in the region. The healthy growth in numbers from domestic Asian firms is a
telling sign of the global shift in deal making – towards that of emerging and developed markets within the Asia-Pacific region. Chinese firms aside, Indian, Korean and Japanese firms have also performed strongly on this year’s chart, pushing out many international firms from the region’s overall rankings.
All eyes have turned to Asia as economies in the U.S., UK and Europe slow down over concerns of a deepening euro zone crisis and as fears for U.S. fiscal viability persists.
As firms recognise the growing importance of an Asian strategy, a string of international firms have launched new offices in Asia, formed new partnerships, acquired firms and grown their Asian operations in the last 12 months. In the same vein, domestic Asian law firms have been beefing up their numbers – at an evidently greater pace – to cope with accelerating transaction volumes and demand for legal service expertise.
A notable development this year that warrants special attention is the aggressive push by international firms for immediate presence on the ground in various jurisdictions across Asia. Clifford Chance completed a three-way merger with two of Australia’s leading corporate boutiques, to create a ready-made 14-partner practice in Sydney and Perth. A telling sign of the firm’s focus in the region is demonstrated through the promotion of more than half of its 23 new partners from its Asian offices. Clifford Chance’s move echoes that of Magic Circle competitor Allen & Overy a year ago, which expanded into Australia after hiring 17 partners from leading local firms Down Under.
A&O’s move into Australia was the biggest new practice to be established by the firm in a decade and at the time, was the first of London’s legal elites to set up a division in Australia. Jones Day, which ranked 45 this year for the region, has grown its Asian team by 22 new hires to make 245 lawyers and partners in Asia. Its Japan office, the largest of its eight offices in Asia, continues to be active in a wide range of large and middle market M&A deals. It handled a series of significant deals for Japanese strategic buyers acquiring targets overseas as well as financial investors in inbound transactions.
“On the banking and finance side, the number of transactions in the pipeline has increased along with increased interest among foreign buyers. We believe that this area will strengthen as the reconstruction money makes its way through the economy in the third and fourth quarters of 2011,” Jones Day Japan partner-in-charge Nobutoshi Yamanouchi said.
In the past 12 months, Orrick has brought on six new Asian lateral partners and with them, their teams from their previous firms. Hogan Lovells entered into a formal association with GTs Advocates – a law firm in Ulaanbaatar, Mongolia. In August 2011, Mayer Brown JSM launched its Singapore office. Other
international firms that launched Singapore practices include Duane Morris (in a JLV with Arfat Selvam), Nabarro, and Collas Crill.
The continued strong macroeconomic performance in places like China, India and various countries in Southeast Asia meant busy times for most in the region; many kept hiring while their counterparts in the U.S. or Europe stagnated or laid off. As Asian firms continue their robust drive for new talent, Asian firms have, like their international counterparts, cast their sights beyond their own domains and are now actively spearheading offices across the region and beyond.
Although moving five places down to 11th place on the regional chart, Amarchand & Mangaldas still remains the largest Indian firm in Asia as well as in India itself – swelling its numbers by an additional seven partners and a total of 13 new hires.
According to Amarchand & Mangaldas’ managing partner Shardul Shroff, the firm is presently readying for a major structural overhaul to stay ahead of its competitors. “Our firm’s ethos and culture is to remain the national firm of India,” Shroff said. “We have grown our people strength and our infrastructure to attain size, maintain quality and to have full geographical reach across India. We are at the threshold of a major internal restructuring which will help organize our growth [to pave the way] for the imminent rollout of our plan for the firm.”
The restructuring Shroff speaks of will take the firm into its next growth phase that will see Amarchand
& Mangaldas grow beyond 500 lawyers. The firm expects to roll out this strategy in October this year. Like other Indian firms, the past year has seen significant expansion for Kochhar & Co, which not only
became the largest law firm in Tamil Nadu, but also recently acquired Juris Prime, a full-service law firm based in Hyderabad. Looking further afield, Kocchar & Co also became the first Indian law firm to expand into the Middle East by establishing a presence in the United Arab Emirates and Saudi Arabia through collaboration with local firms.
Khaitan & Co, ranked fourth this year in India, says the firm’s approach to expansion has been to identify and nurture talent from within as well as through lateral partner hires from domestic and international firms. Its numbers has swelled by 44 additional lawyers and partners – 11 of those at the partner level – since 2010.
Two notable Korean firms merit special mention for their achievements in climbing up the rankings this
year. Yoon Yang Kim Shin & Yu and Yulchon rose 11 places and 10 places to arrive at 27 and 34, respectively in 2011. Yoon & Yang has recently established a pharmaceutical practice group. To support its ongoing growth, the firm recruited 23 graduates to join the firm as associates in 2012. “We expect that foreign law firms will start to show vigorous movements in the next 12 months in the wake of the opening of the Korean market,” Yoon & Yang managing partner Dong Geul Byun said. “[Yoon & Yang] in its efforts to enhance expertise and expand its practice areas, leaves the door to the possibility of merging with other law firms open and pays continuous attention to the possibility of opening overseas offices in Russia, China and other countries.”
Similar transpacific ambitions is seen at 36th ranked Shin & Kim, with the firm establishing a Europe
practice group and setting up a liaison office in Munich, Germany. Yulchon added 26 new fee-earners over the past 12 months in addition to opening its third overseas office in Beijing in May this year. Korea’s Bae, Kim & Lee added 30 attorneys and of counsels to its team, climbed five places from 27th to 22nd place on the table.
Although all Korean firms ranked in ALB 50 have grown by at least 10 percent, its numbers could hardly match the insatiable appetite for growth by acquisition by the Chinese firms. Kim & Chang, at 545 lawyers and partners this year, up 94 fee-earners, still managed to fall five places from 8th position last year to 13th in 2011.
Japan’s big four firms have traditionally done well in ALB 50, with all four firms usually ranking
in the top half of the table. This year was no different, with the largest Nishimura & Asahi at 12th (down five), Nagashima Ohno & Tsunematsu at 19th (down four), Mori Hamada & Matsumoto and Anderson Mori & Tomotsune both down two places to finish at 23 and 25 positions respectively. The Japanese domestic offices expected.
At 323 lawyers, Rajah & Tann is the largest Southeast Asian law firm. It has even surpassed Allen & Gledhill – traditionally the largest domestic firm in Singapore – and it has done so through its multiple office launches across the region this past year. Rajah & Tann currently have regional offices in Shanghai, Vientianne, Kuala Lumpur and Ho Chi Minh. “The firm will continue to maintain and enhance its very strong presence in Singapore but the growth in this mature market will be incremental and opportunistic, probably not more than 10 percent in terms of fee-earners,” Rajah & Tann managing partner Lee Eng Beng said. “We expect that this will be outstripped by the growth of our regional offices and practices.
In the last 12 months, we have opened two offices in Vientiane and Ho Chi Minh and we will soon be making an announcement on the launch of another office in a popular Asian city.” WongPartnership also has an impressive list of regional feathers to its cap. Although current headcount stands at 272 fee-earners, it is the first Singapore domestic law firm to launch into the Middle East. It presently has offices in Shanghai, Qatar, Abu Dhabi with its latest venture opened in Beijing in 2010.
KhattarWong’s dramatic split in early 2011 has made it the biggest casualty in this year’s rankings in terms of size. Having lost nearly half of its fee-earners to new entity RHT Law, the firm has dropped from 103 total fee-earners to 80 lawyers and partners. RHT Law, with its recent tie-up with Taylor Wessing, is looking to expand from its 53 lawyers and partners beyond the shores of Singapore.
The ALB 50 2011: What it all means This year has presented an anomaly in trends and might prove to be a harbinger of things to come. Through an analysis of firm growth, a number of themes have become apparent this year. The first and most obvious trend that has emerged is the unbridled growth of Chinese firms in what seems to be a development that is only gaining momentum and is chugging along full steam ahead. As PRC lawyers gain greater sophistication and as domestic law firms grow in scale, reach and depth, the question of Chinese law firms overtaking what is typically seen to be the domain of international law firms here in Asia has become a real and tangible possibility.
Although Asia escaped the 2009 global downturn relatively unscathed, the dip in instructions was significant enough to make an impact, so much so that the recovery in the aftermath of the financial crisis has shown stark contrasts in the hiring patterns of firms both international and domestic. As demonstrated in ALB 50 2011, international firms has had it tougher than its Asian domestic counterparts, unable to expand at the same rate, or go out on an acquisition buying spree like some PRC firms have.
The short-term impact of large scale consolidation of PRC firms remain to be seen although in the longer term, these changes might force the hand of international firms to relook at internal firm structures, cost overheads and its offering to remain competitive in this region. ALB