As far as clients go, SMEs and startups might not hold the same allure as larger corporations, but law firms would be foolish to ignore them
In business, small can be anything but. According to the Asia-Pacific Economic Cooperation (APEC), small and medium-sized enterprises (SMEs) are “the engines of growth and innovation” in the region, accounting for over 97 percent of all enterprises and employing more than half of the workforce across its economies. Additionally, their share of GDP ranges from 20 percent to 50 percent in the majority of APEC economies. In Singapore, 180,000 SMEs make up 99 percent of the enterprises in the country and contribute to nearly half of the GDP, while employing 70 percent of the workforce. And yet, empirical evidence suggests that these companies don’t always have access to the legal services that they require. “SMEs are like the poor relative at the wedding – they are treated a bit differently from how MNCs or large regional companies are treated, at least by the large Singapore-based local and international firms,” says Azmul Haque, managing director of Collyer Law. “Everyone wants to work on 100-million-dollar deals and have a client roster of Fortune 500 companies. The smaller Singapore firms and boutique shops may not have the relevant ‘Big Law’ expertise. That is the biggest challenge for the SME market. Big Law expertise doesn’t come cheap and they aren’t being wooed by the right type of lawyers who can actually handle the work.”
That scenario looks to be changing slightly. Haque, after a decade and a half of private practice in Singapore with firms like Olswang and Berwin Leighton Paisner, set up Collyer Law in October this year, focusing “on advising high-growth startups, SMEs and entrepreneurs of all kinds.” In November, Rajah & Tann Singapore launched a new practice group called Business Fundamentals for startups and SMEs. Like Haque, the firm saw a gap in the market. “SMEs are constantly faced with the challenge of obtaining professional and reliable legal advice arising from a lack of an informed choice due to limited business resources,” says Jonathan Yuen, head of the practice group. “Rajah & Tann’s Business Fundamentals group closes this gap by offering legal solutions that are growth-stage appropriate for the SME.”
The sheer volume of SMEs and the explosion in startups in Asia means there’s plenty of work going around, as their requirements for legal services would be similar – if not in size, but in type – to larger corporations, and firms would be foolish to ignore this relatively untapped market. “SMEs and early-stage companies may need the exact same type of services that more mature companies require,” says Haque. “This includes everything from assistance with early-stage capital raising to Series A, B, C venture capital investment, corporate law and governance, intellectual property, corporate finance as well as, in due course, exits and strategic mergers and acquisitions.”
Additionally, working with startups is an opportunity to guide a company from the floor stage and reap the rewards at the end. “Most large Singapore law-firms that do have the expertise to handle complex corporate matters are not interested in serving the SME/entrepreneur market as they think it’s low-value work and don’t see the longer-term opportunity,” he adds. “I strongly disagree. Every oak tree was an acorn once.”