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Law firms open doors as opportunity knocks

(SINGAPORE) Facing increasing competition from foreign law firms, more local law firms this year have begun frontloading annual bonuses into larger monthly salaries to sweeten pay packages - a trend that's likely to continue through next year.
Grace Leong

Fri, Dec 17, 2010
The Business Times

(SINGAPORE) Facing increasing competition from foreign law firms, more local law firms this year have begun frontloading annual bonuses into larger monthly salaries to sweeten pay packages - a trend that's likely to continue through next year.

'The monthly salary component has gone up 20-25 per cent for some local firms. The question now is how large the bonus payout will be this year after frontloading,' said Lee Eng Beng, joint managing partner of Rajah & Tann LLP.

'Overall, I think law firms have done as well or better this year, so I don't think the whole package will be worse,' he said.

The strengthening of the Singapore dollar against the US dollar and pound sterling has also helped improve the competitiveness of local pay packages against those of international law firms, he said.

'We've managed to hire three to four lawyers at partner levels from some international law firms because we now have more budgeting power,' Mr Lee said.

With the liberalisation of entry admission requirements, returning Singapore lawyers from UK, Australia and New Zealand or foreign-qualified lawyers will find it easier to convert or be admitted to the Singapore bar - a development that would help increase the pool of available legal talent in Singapore, he said.

As Asia rebounds, some local law firms are speeding up their regional drive to serve businesses that want to use Singapore law as the governing law for Asian transactions.

Rajah & Tann, which has offices in Kuala Lumpur, Shanghai and Vientiane, plans to open new offices in Ho Chih Minh City and over the next year in Phnom Penh, Jakarta and possibly Thailand.

'We can't expand a lot more in Singapore. Through regionalisation, we hope to attract the best young lawyers to join our practice because some might see the Singapore platform as being too small,' Mr Lee said.

One of his firm's biggest challenges has been finding reliable and trustworthy partners in foreign jurisdictions, he said. 'We've been very stringent in our hunt for good people and many of those we've found are lawyers we encountered in the course of our work,' he said.

WongPartnership, which has offices in Shanghai, Qatar and Abu Dhabi, is opening its Beijing office by early next year to handle foreign investment deals in China as well as to capture the 'outbound ambitions' of state-owned enterprises.

'There are state-owned enterprises investing in Singapore, for instance in SPC and Tuas,' said Rachel Eng, managing partner of WongPartnership.

'In future, about 30 per cent of our business will come from regional work in China, the Middle East and other countries.'

Meanwhile, with the US and Europe still struggling to recover, companies searching for growth will focus on the Asia-Pacific and an upward trend is expected in mergers and acquisitions activities in the region, said Lucien Wong, managing partner of Allen & Gledhill LLP.

Asian IPOs are back in vogue and this should extend into 2011, he said.

Ms Eng agreed. 'We're seeing more private equity funds - especially those that bought shares in listed companies a few years ago, took them private and grew the business - now looking to list these companies again to recoup their investment,' she said.

She expects to see further momentum in the mergers and acquisitions space.

'A number of private equity funds that have been hoarding their cash during the financial crisis are now looking for good investments, particularly in Asia,' Ms Eng said.

'For 2011, there will be greater allocation of private equity funds from the US and Europe to Asia, which many see as the place for growth over the next 10 to 20 years,' she said.

The weaker US dollar and euro have made it cheaper to expand overseas and some firms are taking on US or European private equity funds as shareholders.

Arbitration continues to be lucrative. 'We've seen more evidence confirming that a lot of business entities are naming Singapore as a forum for arbitration because we're perceived as neutral ground by a lot of businessmen in Asia, the US, Europe and the Middle East,' Mr Lee said.

Allen & Gledhill's Mr Wong said his firm has also seen a significant increase in regional arbitration cases heard at the Singapore International Arbitration Centre.

Cases handled by the centre jumped from 74 in 2005 to 160 last year. About 130 cases were handled by the SIAC, including new claims worth $1.13 billion, for this year up to Sept 30.

In addition, Maxwell Chambers, a world-class arbitration centre that opened last July, already chalked up more than 120 cases, of which two-thirds involved at least one foreign party, said a Chambers spokesman.

'These trends and the resulting opportunities are expected to collectively drive up activities in the legal industry in Singapore,' said Mr Wong.

Meanwhile, the Singapore Exchange's proposal for listed companies here to publicly report their environmental, social and governance performance to investors starting possibly in the first quarter of next year may generate more work for auditors and lawyers.

'Until now, corporate social responsibility reporting has been largely voluntary. But if it becomes mandatory in due course, there will be legal implications for non-compliance,' Ms Eng said.