Hong Kong has faced its share of challenges in the past year or two: Fallout from the trade war, political unrest, the COVID-19 pandemic and more. Leaders of law firms, though, believe that the adversity has only strengthened in the city’s position, and with further integration with the mainland happening via the Greater Bay Area (GBA) and other initiatives, Hong Kong will remain a regional hub for years to come.
ALB: Given that the pandemic appears to have lasted much longer than initially anticipated, has it caused you to pivot your strategy for 2021, and what does 2022-2023 look from here?
SIMON GREEN, international partner, Charles Russell Speechlys: The COVID-19 pandemic has reminded us just how quickly the world can change and how agile we must be to respond effectively. As a firm, we have demonstrated strong resilience in the face of challenges posed by the COVID-19 pandemic. It was a testament to our business, clients, and the hard work of all those within the Firm that the last Financial Year (2020-2021) was our best ever. All parts of our business played a role in achieving that success but our continued focus on private client/private wealth work was very important. Essentially, and when COVID-19 became a pandemic, it was clear that our clients were changing their focus from wealth generation to wealth preservation. This obviously created opportunities for us to support our clients through volatile conditions and to help them achieve their critical objectives around wealth structuring, asset protection and succession planning.
Going forward, we will continue with our strategy of leading our business in Asia through our private client/private wealth offering, as well as those practice areas that naturally support this focus such as private wealth disputes and property.
CHRISTOPHER BICKLEY, head of Hong Kong office, Conyers: Obviously, on the business development front, our ability to travel was severely restricted in 2021 so we had to find other ways to interact with our clients. We, therefore, put a lot more focus on webinars and digital media. It is still too early to say how things will look next year. We are certainly looking at more social functions both internally and externally as vaccination rates improve.
ERIC CHOW, managing partner, Eric Chow & Co. in Association with Commerce & Finance Law Offices: A number of factors have contributed to our ability to navigate and grow our firm during this pandemic, including PRC’s successful stronghold on the pandemic situation, our association with Commerce & Finance Law Offices, a top Red Circle PRC law firm and close ties with our PRC offices and professionals, as well as our clientele, which is mainly based in Hong Kong or the Mainland. The fundamentals of our business remain robust, and we are able to keep our business strategy goals on track. We continue to focus on offering a full spectrum of legal services in the capital markets area covering equity capital markets transactions, debt capital markets transactions and compliance work to our clients. Having seen a resurgence in the capital markets during the second half of the year, we expect to maintain our healthy business pipeline and offer a full-service package to clients in the areas of corporate and commercial work.
PHILIP WONG, managing partner, Gallant: Notwithstanding the pandemic, new opportunities have arisen in relation to the GBA-related initiatives, which cover various segments and one typical example is the Cross-Boundary Wealth Management Connect Pilot Scheme, which we understand a number of banks in Hong Kong have shown interest in.
While pandemic-related border restrictions have made it more difficult to travel outside Hong Kong, in relation to doing China business for the law firms in Hong Kong, the strategy should remain basically unchanged, that is to have a strong presence in the Mainland while at the same time maintaining a quality work standard and a close tie with the international network.
For the outlook, given the GBA initiatives, it is expected that there will be a good demand for cross-border legal, compliance and advisory services, including cross-border litigation, execution and enforcement work.
ALB: News reports over the past year have spoken about dampened business sentiment as a result of the national security law as well as pandemic-related border restrictions. Have you seen this reflected in the work you have been doing?
GREEN: The Hong Kong SAR Government has helped restore the core fundamentals for business, namely certainty and stability. This has helped Hong Kong to robustly weather the COVID-19 storm. Hong Kong is a global financial hub, and we believe it will continue to hold this status going forward. The fact that it forms a key part of the GBA will only further enhance its position.
“We have been one of relatively few international law firms in Hong Kong to continue to grow our headcount and to take larger office space here in the last 12 months. We are therefore sufficiently bullish about Hong Kong’s position as a key financial centre for private client/private wealth service.”
— Simon Green, Charles Russell Speechlys
From our firm’s perspective, we have been one of relatively few international law firms in Hong Kong to continue to grow our headcount and to take larger office space here in the last 12 months. We are therefore sufficiently bullish about Hong Kong’s position as a key financial centre for private client/private wealth services, which obviously aligns with our core strategy for this mature and sophisticated legal market.
BICKLEY: Hong Kong continues to be a strong and resilient financial centre and we have not seen any downturn in work on the capital markets side. Clients continue to need to raise money. I don’t think it is so much the national security law as much as the pandemic which affected business sentiment. Our corporate work is largely driven by regional stock markets. As they have pulled back, many clients have looked at privatisations. There, of course, have been some businesses that have come under pressure and our litigation team has been very busy with restructuring work.
CHOW: Generally, we have been able to weather the downturns for the past year. Despite international political tension with the PRC and the worldwide pandemic, we did not experience a decline in transactional practices, demands for our legal services have been steady and new opportunities have arisen. This is mainly due to PRC’s successful stronghold on the pandemic situation and with our clientele heavily based in the PRC, we have been able to operate normally throughout this pandemic so far. Throughout the challenging times, the firm has remained fully operational, and the productivity performance has also been consistent with what we had seen prior to the pandemic.
Whenever clients raise uncertain-ties, we appreciate and address such concerns and provide practicable solutions that are tailored to their commercial needs. Looking forward, we hope to return to business as usual as soon as the pandemic subsides and prosper under a stable working environment. WONG: In the past two years, Hong Kong faced serious challenges, but the Hong Kong market has now become more stable. In relation to the legal market, there are still some ups and downs due to the outbreak of Delta COVID variant in certain countries. When compared to the legal work before the outbreak of COVID, major international and cross-border work such as bank loans and M&A work have become less but this is expected to be a short-term effect as there are new business opportunities arising as a result of the GBA initiatives. It is expected that cross-border legal services will be more as time goes by, in particular in relation to legal and regulatory compliance work.
ALB: What are the challenges the firm has faced in the past year, and how have you looked to overcome them?
GREEN: The pandemic has obviously impacted our business as well as all businesses – even if we just assess it from an operational perspective – things like working from home, the increased use of video-conferencing, restrictions on travel as well as ensuring the continued safety and well-being of our staff. However, we have also seen that it has clearly accelerated the movement towards more responsible and purpose-driven ways of doing business. We have always been a firm motivated by a strong sense of values and have been working consciously for many years to ensure those values drive the way we work – supporting our clients, staff, and communities in challenging times through investment and innovation.
Despite the challenges mentioned above, we have continued to successfully implement our strategy in Hong Kong. A prime example of this is the high-profile arrival of Silvia On, Ian Devereux and their teams in April 2021 from an existing international law firm in Hong Kong. Their arrival complemented our existing successful private wealth practice in Hong Kong and has instantly made us one of the leading international private wealth advisory teams in the region.
“It is always amazing to see how well and how quickly people adapt to the ‘new normal’ whether that
means wearing face masks, working from home or meeting over Zoom or Teams. During the past year we have actually increased our headcount, including two partners and five attorneys.”— Christopher Bickley, Conyers
BICKLEY: It is always amazing to see how well and how quickly people adapt to the “new normal” whether that means wearing face masks, working from home or meeting over Zoom or Teams. During the past year, we have actually increased our headcount, including two partners and five attorneys. I don’t think anyone would really choose to travel at the moment unless they had a good reason. Hong Kong has always been an international city and many people have ties or commitments requiring them to travel so it has been important to be understanding when people in the firm need to travel with the quarantine requirements and the like.
CHOW: For the past year, businesses including us have had to struggle against multiple challenges. In response to these challenges, we have made relevant adjustments to the way we work in the firm. The largest challenge we still face is logistics-related, such as travel restrictions and quarantine, as well as the previous courier delays. These challenges do affect how deals are run, including strict deadlines.
To adapt in the current climate, we always have to be alert to changing circumstances, we adopted flexible approaches and upgraded our use of technology to uphold the standard of our services and productivity. We have implemented the use of video conferencing and regular weekly virtual catchups to make sure that we stay in touch with each other within our firm and maintain our relationships with clients. We made effort to ensure that we constantly reach out to our clients and keep them informed with the work progress. We have also conducted virtual training sessions to enhance our team’s professional skills and organised team bonding events to step up our interpersonal interactions.
In terms of talent hiring, we have participated in the virtual law fair recently to meet with students from all over the world with a view to enhancing our talent pool. This virtual event has improved our diversity hiring and allowed us to reach across geographic barriers. We are always expanding, and on the lookout for talent who want to join this dynamic firm that is well-positioned in line with the market’s direction.
All the above initiatives have assisted us to stay on track and overcome our mental fatigue as we all adjust to this new normal.
WONG: Under the current pandemic situation, people generally are less eager to join social events and in-person meetings. Virtual meetings seem to be the preferred option, and this has a negative impact on the business development and client relationships for lack of physical interactions.
The solution does not lie in the hands of the legal profession and it is hoped that more people from different walks of life will support the vaccination program and take vaccine as early as possible so that travelling across the border to the Mainland without quarantine will be possible soon.
In the meantime, it is important to keep our colleagues safe, physically, psychologically and socially. Regular conversations and appropriate internal gatherings are still necessary. Staff are valuable assets of the firm and important to its future growth and succession. The key to success in any organisation is talent retention. The key to retention is common values. Therefore, the senior management should have talks with colleagues from time to time so that the needs and expectations of the colleagues are in line with the firm’s strategy and visions.
ALB: On the flip side, how do you perceive Hong Kong’s strengths and overall resilience during this time? Have there been any key developments to your firm’s advantage?
GREEN: We have already touched on the fact that Hong Kong’s remains an important financial hub and its strategic position within the GBA will ensure that status continues going forward. For example, Hong Kong’s interconnectivity with Greater China gives rise to huge potential opportunities from size and scale perspective.
Hong Kong’s recognised legal system is also a key strength. We have found that clients who are keen to transact with Chinese counterparties prefer to do so with the familiarity of the common-law system in Hong Kong. We anticipate that the Hong Kong SAR Government will continue to reinforce Hong Kong’s strengths as an international legal and dispute resolution services centre.
From a private wealth perspective, there has been a 20 percent increase in UHNW individuals in China in the past three years, of which more than a fifth are based in the GBA. Hong Kong is also Asia’s largest cross-border private wealth management centre, second globally to only Switzerland Therefore, our focus sits naturally with Hong Kong’s leading position in this regard and the significant opportunities that exist for local, regional, and international private client/private wealth services from our Hong Kong office.
As a consequence of the above, Hong Kong is and will remain a priority for us. An important milestone for us was when we became a Hong Kong-registered law firm last year. Since then, we have continued to invest in this market increasing the number of lawyers we have in the office and taking prestigious new office space in Two Pacific Place earlier this year - a real statement of intent for us.
BICKLEY: Hong Kong has always been an efficient city with great infrastructure. I think the whole move to adapt to work from home has made us familiar with new technologies and made us even more efficient here.
CHOW: Despite the challenges faced by Hong Kong during this time, we believe that Hong Kong has preserved its leading international financial centre status and its economy will continue to prosper in the future.
For key developments to our firm’s advantage, the GBA’s development plan that was recently released by China’s central government will bring service opportunities for legal service practitioners. In particular, the recent commercial development in Qianhai, Shenzhen in the GBA with the goal to develop Qianhai into the demonstration area of Guangdong-Hong Kong innovation cooperation in the modern industry will attract entrepreneurs to establish their business there. These businesses will require and seek legal assistance to protect their rights.
“As the GBA cities transform into a city cluster, business opportunities for law firms can be expected to rise. With our strong network with our PRC offices, we are optimistic that our capital markets work will remain strong. We have recently set up new PRC offices in Hangzhou and Chengdu.”
— Eric Chow, Eric Chow & Co.
As the GBA cities transform into a city cluster, business opportunities for law firms can be expected to rise. With our strong network with our PRC offices, we are optimistic that our capital markets work will remain strong. We have recently set up new PRC offices in Hangzhou and Chengdu and are planning to expand into Wuhan and Hainan this year.
“Hong Kong is undoubtedly a bridge between the East and West and this remains true today. We believe that Hong Kong’s future developments will be linked more closely to the Mainland’s rapid developments. This is particularly important to the Hong Kong legal industry.”
— Philip Wong, Gallant
WONG: Hong Kong will remain an important international city under the “One Country, Two Systems” principle and Hong Kong’s role is unique and it cannot be replaced by other onshore cities or provinces in the Mainland. Hong Kong is undoubtedly a bridge between the East and West and this remains true today. We believe that Hong Kong’s future developments will be linked more closely to the Mainland’s rapid developments. This is particularly important to the Hong Kong legal industry since China business represents an important portion of business in many major law firms in Hong Kong.
Our firm will continue to have a strong presence in the Mainland, and this is what we are best known for.
ALB: What kind of goals have you set the firm for the rest of the pandemic period and beyond?
GREEN: Our goals for the Hong Kong office reflect our strategic objectives.
We will continue to lead our office with a private client/private wealth focus, an area in which we are now recognised as being a market leader following our Band 1 ranking in Chambers High Net Worth 2021.
The pandemic has led to HNWIs and family offices in Hong Kong and Greater China reviewing their existing structures to ensure that they are still “fit for purpose,” potentially rationalising and simplifying their existing structures and portfolios as well as a greater emphasis on wealth protection and succession planning for future generations. Given our trusted advisor status with our clients, we are very well placed to support our clients in relation to the abovementioned trends we have seen over the last 12 months.
We will also build out adjunct services to our private client/private wealth strategy. For example, we have leveraged off our strong reputation for litigation and dispute resolution so as to be able to provide private wealth dispute work from our Hong Kong office. As part of this offering, and as a consequence of a significant proportion of Asian wealth being held via offshore trusts and structures (particularly BVI), we are one of very few firms in Hong Kong that can undertake both the Hong Kong and BVI aspects of any dispute.
Finally, we now have a 360-degree property capability that focuses on both residential and commercial property. Importantly, and uniquely, we are able to advise on Hong Kong as well as UK property matters (both from teams within our HK office).
BICKLEY: I still think the pandemic has a few more twists and turns to go so it will be important to be flexible and adjust. The last 18 months or so has shown us that it is very difficult to plan too far ahead. Hong Kong has had a couple of difficult years. The city has seen so many ups and downs since I have been here but when things change, they tend to change pretty quickly. It will be important to continue to engage with clients so we can find the best way to help them when they do.
CHOW: The pandemic has exposed the inefficiencies in law firms’ traditional ways of working and forced us to learn to respond to crises efficiently over a period of days. As a result, law firms have undergone adaptations and have integrated clients’ changing expectations into their business strategy.
For the rest of the pandemic period and beyond, our firm has upgraded systems and provided our employees with the option of teleworking to ensure that we deliver our services seamlessly to our clients. If remote working is needed again in the future for the safety and wellbeing of our people, we have implemented flexible working arrangements and work-from-home setups for a smooth transition.
Further, we are encouraging our employees to vaccinate against the pandemic. With fewer restrictions on social and physical interactions, we will be able to operate our business swiftly with the least disruption once the pandemic is mitigated and when the border reopens. WONG: Under the GBA initiatives, as far as the Hong Kong legal industry is concerned, China business may be divided into two parts, namely the GBA and the rest of China. These two parts present two separate opportunities to the legal profession in Hong Kong. We believe that within the next five years or so, there will be various integration between Hong Kong and the rest of GBA. Hong Kong will certainly have a major part to play in this process.
Our firm will take an active part in the GBA. It is expected that some lawyers in Hong Kong will soon be qualified to practise Chinese laws in the GBA. This will be an important step to lead to the successful integration between the Hong Kong legal talent and their counterparts in the GBA. As a result, the standard of the legal profession in the GBA will soon be raised to the international professional level that we are used to seeing in Hong Kong. This will certainly help the internationalisation of the GBA to the benefit of Hong Kong and the Mainland.
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