When it comes to Singapore, the legal services market is just as hot as the weather - and it's largely thanks to Indonesia, reports Claire Chaffey.
|SKY'S THE LIMIT: Many global firms are finding renewed vigour in the Singapore market due to it growing role as a regional economic hub|
Used to the freezing temperatures and deep snow which covers the US city for a good part of the year, they could not quite imagine what lay in wait.
Needless to say, with temperatures in the South-East Asian country hovering around 30 degrees Celsius for most of the year, the toboggans are slowly gathering dust in Howell's garage, and the kids have had to find other ways of having fun.
Like the endless summer which is Singapore's bane or a blessing, depending on your preference, the legal services market is sweltering, and Australian firms are enjoying some of their busiest periods in recent history.
"July was probably one of our busiest Julys ever," says Singapore-based Freehills partner Simon Taskunas.
While there are several reasons for this, arguably the biggest is the energy and resources boom being experienced by one of Singapore's most populous neighbours: Indonesia.
"Even in the [recent] economic downturn, we have seen a pick up in the interest in and instructions for Indonesian investment," says Taskunas.
"I don't think there has ever been a time where the macro-economic and geo-political environment has meant that Australia is so intrinsically linked with the Asian economy"
Rod Howell, partner, Allens Arthur Robinson
Howell, too, says client interest in investing in Indonesia is keeping the legal services market in Singapore extremely buoyant and cementing its status as 'the place to be' for law firms across Australia and the world.
"I don't think there has ever been a time where the macro-economic and geo-political environment has meant that Australia is so intrinsically linked with the Asian economy," he says. "In broad terms, you have still got a need for resources in the increasingly industrialised north: China, Korea, Japan and India. In the south, you have got huge piles of reserves in the likes of Australia and Indonesia."
Moving on in
As a general rule, foreign law firms operating in Singapore are relatively restricted when it comes to how they practice. Only six foreign law firms hold licenses which allow them to practice local law (none of which are Australian), and the top-tier Singaporean firms have a very strong hold on the market.
Despite these restrictions, firms are still bustling to get a foothold in the lucrative market, and making an impact is not easy.
"Hong Kong and Singapore are probably the most competitive legal markets anywhere in the world," says Howell. "You have everybody. You have all the magic circle firms, the New York firms, some very strong local firms and the Australian firms. You are now also seeing second-tier UK and US firms coming in."
"Even in the economic downturn, we have seen a pick up in the interest in and instructions for Indonesian investment"
Simon Taskunas, partner, Freehills
The reason for the glut of firms wishing to operate in such a restrictive environment is, as Howell puts it, because most firms in the region are there to fry much bigger fish than are available in Singapore alone.
"Whilst there are impediments to becoming a fully-fledged local firm, it is fair to say that most of the international firms here are playing a bigger game," he says. "Most of the stuff we do is not Singapore law-based, so it is not really affected by any of those [local] arrangements."
Cross-border deals are the name of the game, with Singapore being a hub for deals in China, Japan, Vietnam and India, to name a few.
However, the Singaporean Government recently indicated that liberalisation of the local legal services market is just around the corner - and that is certainly something many foreign firms have been waiting for.
"There has been an increase in the number of foreign law firms in recent years, and that has happened partly in response to the Singaporean Government's indication that it wishes to liberalise the practice laws in Singapore to allow more foreign law firms to practice," says Taskunas.
"Firms are establishing themselves here in readiness for [that change]. That is in response to what our clients are doing and what they are saying, which is that they are seeing Asia as a growth area."
While details as to the proposed changes are sketchy, the Government has said it is likely to make a decision by the end of this year.
"It could be that there will be a further number of licenses issued ... or it might mean that they'll throw open the doors and allow all foreign law firms to practice local law," says Taskunas. "If I had to bet on it, I'd say it is more likely to be the former."
While the ability of Australian firms to fully harness the value their proximity to Asia has been criticised in the past, Howell says they are now beginning to make the most of the wealth of opportunities that can be found there. He adds, though, that growth and strategy in the region must be carefully considered.
"I think there is always room for more competition ... so certainly there is room for more Australian firms," he says. "The problem for Australia is that I don't think all firms necessarily understand or appreciate the opportunities that exist here, and it's not easy to replicate a regional network. I don't think we could survive in Singapore without having a regional network around us."
Singapore-based Blake Dawson partner Bill Reid agrees with Howell, and says that while growth in Singapore is certainly on the agenda, it has to be carefully executed.
"There is a need for cautious growth here, and [it's about] finding niche areas where we can operate on a world stage, in a very competitive market, and do so effectively," he says. "To grow willy nilly in this market is unlikely to be a profitable strategy."
An endless summer?
One of the results of Singapore's continued success as a regional hub is that more and more Australian lawyers want to be a part of the action.
"We are seeing a lot more evidence of people in Australia seeing Asia as an option for careers," says Howell. "The fact of the matter is that the legal market in Australia is top-heavy with equity, and the financial services market is stagnant - it's not really growing. So it is difficult for young associates coming through to find a market for themselves, whereas there are plenty of opportunities off-shore."
"I see a growing confidence among our really good young lawyers to come up here, and a growing confidence amongst our partners to be involved"
Bill Reid, partner, Blake Dawson
According to Howell, past skepticism about the value of working in Asia is being replaced by a general view that Asia offers not only a good career move, but also a great place to spend a few years.
"We [are seeing] Australian lawyers who have been in the UK - and that is the traditional route - saying, 'There is a lot going on in Asia and I don't really want to go back to Australia just yet. Asia is where it is all happening'," he said. "There is an opportunity here, so we are seeing quite a steady flow of people."
Reid says that confidence amongst both associates and partners in relation to working in the region is growing, and more and more are putting up their hands when jobs arise.
"[Australian firms] are getting more successful in Asia. We are bringing better partners and better people into the practice and our confidence is growing," he says.
"I see a growing confidence among our really good young lawyers to come up here, and a growing confidence amongst our partners to be involved."
And by the sounds of things, life in Singapore could be far worse.
"Singapore is a very easy place to live, an easy place to settle into," says Reid. "It's 'Asia light', as many people say: easy to assimilate culturally and good for families. It's a really great place to live."