Loo Choon Chiaw, partner, Loo & Partners
- Uncertainty is the only certainty as law firms enter 2010
- Expected increases in operational costs mean firms must respond prudently
- Demand for specialised legal services such as IP will increase, insolvency & restructuring work will decrease
Uncertainty would appear to be the only certainty in the ever-changing global economic and financial climate as we enter 2010. Yet barring unforeseen circumstances, including a worsening of the global financial market, Singapore should be on a steady path of recovery. The recent forecast by the Ministry of Trade and Industry indicates 3-5% economic growth. The benchmark Straits Times index has risen to 2,791 points in December, in contrast with its mere 1,800 points when 2009 predictions were penned in this column last year.
Most law firms will need time to build up their pipeline of cases and will take a cautious approach. Salary increases (even in deserving cases) and rise in office rentals will be contained and the overall business costs of operating a law firm will be manageable. There will be very little justification for law firms to increase their billing rate and recruitment drives from both the local and foreign law firms will be slow. However, specialised legal services including IPO, M&A and corporate finance and corporate governance and compliance work will pick up steadily. Arbitration work will also increase with strong support from the government. While corporate insolvency & restructuring work will dwindle, IP business will increase.
Ken-Ying Tseng, partner, Lee and Li
- Taiwan economy to recover quickly with deals to return and few bankruptcies expected
- Law firms need to offer clients more specialisation and value-added services to hold on to work
- Chinese investment in Taiwan companies to take off, keeping lawyers busy
While we have seen a drop in caseloads and an increase in requests for discounts, a gradual economic recovery has been visible since Q3 2009. The size of the largest M&A deal for this year (US$1.7bn Taiwan Mobile/Eastern Multimedia) is almost twice the size of the largest deal seen in 2008 (US$862m Dragon Steel/China Steel). Bankruptcy cases did not rise at all and the anticipated redundancy cases peaked in Q2 2009.
Nonetheless, the environment remains a challenge for law practices. Clients are tightening their budgets, so law firms need to demonstrate strong skills in specialised fields and provide value-added services to maintain or attract clients. New practice areas and business focus is also developing.
In 2010, the IPOs of foreign companies on the Taiwan stock exchange and M&As and restructuring of financial institutions will continue to be a leading trend. It is expected that the Taiwan government will continue to liberalise the legal barriers on cross-Strait activities. Investment from China in leading Taiwan companies will be the next hot practice area in Taiwan.
Peter Siembab, head of transaction legal (investment banking)
non-Japan Asia, Nomura
- International firms to ramp up local law practices and expertise
- Little progress will be made vis-à-vis legal market liberalisation in India and Korea
- Practice development and expansion could become more difficult despite improving economic conditions
Growth of Asia as a financial centre, the global economic meltdown and Asia’s recovery and resilience has set the stage for 2010 developments. Continued growth and use of Asian-law governed documents and clients using Asian law practices will be seen in the year ahead. Expansion of international law firms into domestic markets will continue, with many setting up local law practices – although little progress will be made in opening up Korea and India to foreign law firms.
Of the firms that don’t expand by opening local law practices, some will become boutique operations and some will be unable to survive, leading to their collapse or merger with a competitor.On the other hand, for those who pick up local law practices in 2010, there will be a struggle to build and maintain profitability. Billing rates will drop due to increased competition and costs will increase, particularly for talented local practitioners with much business to process. In these challenging competitive and economic conditions, law firms will also explore alternative fee arrangements with clients and, likewise, alternative compensation arrangements with their lawyers.
NEXT: Outlook for Malaysia/Vietnam
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