It’s been two years since Thailand’s junta came to power, and while transactional work has seen a drop of late, the country’s legal sector has remained generally stable. Ranajit Dam speaks to law firms about the kind of work that’s keeping them busy

The year 2015 was a tough one for Thailand’s economy. Total investment applied for by foreign companies between January and November plunged 78 percent from the same period a year earlier to 93.8 billion baht ($2.7 billion), with investment from Japan – historically the largest investor in Thailand by far – down 81 percent. Exports and domestic demand remain sluggish, with the central bank expecting zero export growth this year.

That said, GDP growth in 2015 was 2.8 percent, a rebound from an anemic 0.8 percent a year earlier. The country also introduced a new investment incentive policy, which took effect last year, that favours projects that employ high technology, encourage innovation, or strengthen Thailand’s role as a regional and international trading hub.

In line with this, an increasing number of technology startups established by domestic entrepreneurs have sprung up, says Don Chaiyos Sornumpol, an associate with Silk Legal. “In the past, it was common to see a lot of foreign investors behind a lot of the new startups in Thailand. Now, however, it has begun to catch on with the local business community,” says Sornumphol. “This will also change the legal landscape in that very few Thai firms specialise in startup law and in the coming years, you will begin to see more lawyers in Thailand take an interest in this field of law,” he adds.

LAGGING BEHIND

Sornumphol says the best law firms in Thailand are up to par with more developed markets, such as Singapore or Hong Kong. “Nevertheless, the legal profession in general is still not regulated to the same extent as those in other jurisdictions,” he explains. “Until this issue is resolved, Thai law firms will lag behind their peers in other countries. On the other hand, the Thai legal industry is also different in that you have fewer older established firms who dominate the market. Therefore, this also allows smaller and midsize firms a better chance of competing.”

Albert T. Chandler, senior partner of Chandler & Thong-ek Law Offices, comments that the Thai market is less regulated than other countries. “Most Thai legal practices are based on work which is not subject to the Lawyers’ Act,” he says. “One does not need to be a Thai qualified lawyer to draft contracts, advise on real estate transactions, or perform other services which fall within the definition of the practice of law in most common law jurisdictions.” While the presence of international law firms is in many cases adding value by providing good and tested standards for Thai firms to follow, the country has continued to limit the role of foreign arbitrators, by imposing restrictive conditions to obtaining work permits, points out Chandler. “This is one of the reasons many major corporates prefer arbitration in Singapore or Kuala Lumpur,” he notes.

KEYS TO SUCCESS

Meanwhile, on the in-house side, the standards demanded by in-house counsel have steadily gone up as Thai firms face more legal issues with an international aspect or which relate to more specialised fields, such as environmental law or the laws of foreign jurisdictions, shares Sornumphol. “Accordingly, firms must adapt by raising the standards for themselves by specialising in more different areas of law that are becoming increasingly relevant for larger Thai firms that are investing globally and facing legal issues in foreign jurisdictions,” he says.

Chandler feels that law firms need to make the effort to reach out to in-house counsel, through in-house workshops.

That said, the most important requirement for success in the Thai market is to understand the local culture and way of life. “Despite the amount of exposure and influence from global culture, the Thais have their own particular mindset and manner of doing things that can appear quite strange to those who are not familiar with the country,” adds Sornumphol. “This uniqueness also extends to most of the people who you will be working with in the Thai legal industry, such as your colleagues and your clients. Therefore, understanding the Thai way of thinking is one of the most fundamental factors for success in the legal market, just as it is in other areas of business here.”

Chandler believes that to succeed in Thailand, foreigner lawyers need to have two important abilities. Firstly, they must have a good understanding of one or more areas of practice, including relevant Thai law and practice specifics. Secondly, they should be able to work effectively with teams of Thai lawyers. “Some fluency in the Thai language is also very helpful. For Western lawyers, an ability to write clear and simple English is important, in part to facilitate understanding with Thai counterparts,” he adds.

BUSINESS COLLATERAL ACT

In the past, Thai law did not provide for fixed or floating charges, or security in most moveables without delivery of possession, says Albert T. Chandler, senior partner at Chandler & Thong-ek Law Offices. “In a bankruptcy context, Thai law provided only for mortgages, pledges, sales with right of redemption, guarantees and avals,” he says. “There is now the new Business Collateral Act, which provides for additional forms of legal security in assets of both individuals and companies. The Business Collateral Act becomes effective on July 2. It introduces a security filing office in the Department of Business Development. Implementation of the new Act will lead to material changes in security packages in project financings.”