16 ASIAN LEGAL BUSINESS – DECEMBER 2023 WWW.LEGALBUSINESSONLINE.COM COVER STORY Singapore is the golden pie that everyone wants a slice of, and the proof is in the pudding. According to the Law Society of Singapore, in 2020, there were 937 Singapore law practices. Data registered on the Legal Services Regulatory Authority website showed that figure had shot up to nearly 1,200 in 2023 - representing a 20 percent increase in the space of four years. Meanwhile, international law firms continue to pour into the increasingly saturated market from all directions, coveting booming cross-border investment activities in Southeast Asia. Han Kun Law Offices recently became among the first PRC firms to establish a Singapore beachhead, with other new entrants including Korea’s Shin & Kim and Portugal’s Morais Leitão, Galvão Teles, Soares da Silva & Associados, and offshore firm Mourant. “Singapore remains a magnet for foreign firms, not all of whom are looking for a slice of the existing market; some are merely following clients as part of a wider retention effort. Indeed, there is a growing number of outposts here, staffed by only a few (foreign) lawyers, with no plans to expand within Singapore,” says Jeremiah Huang, director at Icon Law, a member of the ZICO law network. However, as global economic turbulence and high-interest rates continue to buffet deal flows, it’s challenging even for Singapore, dubbed the regional finance hub of tomorrow largely insulated from geopolitical malaise, to remain unscathed. As a result, “not all international firms are consistently busy, particularly those with niche practice areas or whose primary focus are large cross-border deals. In the same way that they can be simply floored with work, they sometimes find themselves with little to do during lull periods, owing to the nature of their files,” says Huang. Fatim Jumabhoy, Singapore managing partner at Herbert Smith Freehills, agrees that it’s been a relatively slower year for corporate deals in the city-state. “The headwinds have definitely impacted the amount of business that’s being done; the value of assets on demand has dropped by around 10 percent.” Certain firms, though, Jumabhoy believes, are better placed to weather the storm. “What is putting some firms in a stronger position than others is if they had already refocused and centralised their efforts, particularly those that have a strong capability, focus and growth in the private equity, energy transition, and the arbitration space,” she says, adding that it’s also been easier for firms to navigate this period if they have a regional platform rather than a smaller, Singapore-specific domain. Despite the challenges and the accompanying pressure for outposts of SINGAPORE: MORE THE MERRIER? to be negative for big firms to pull out from the market.” With the presence of international firms waning, Chow believes it’s just a matter of time before PRC firms begin to play a dominant role in Hong Kong’s legal market. “It is now increasingly common to see two PRC firms acting on both sides of a deal as both cost and quality of the legal services provided (including tapping into their mainland offices’ resources and know-how) have proven more attractive to clients,” says Chow, adding that his firm is now well-placed when competing for deals. An unnamed lawyer working in the Hong Kong office of a PRC firm recalls that senior lawyers in big international firms once told them, “if all the big Chinese red circle firms having offices in Hong Kong work together - similar to what those U.S. firms such as Cleary Gottlieb and Davis Polk did around 2008, 2009 - PRC firms will be the next wave here, because the clients are all yours.” Speaking of what to expect in 2024, feelings are mixed. For Plowman, more uncertainty lies ahead. “There is hope that the market will turn around in Hong Kong and China on the equity capital markets and the debt markets side, but the reality is that 2024 will likely be difficult as well, unless we get a bump from the U.S. in terms of deal and capital market activity,” he notes. Chow, on the other hand, sees a thaw in the IPO winter as deals delayed from this year finally see the light in 2024. “A lot of pitches and opportunities arose after Lunar New Year. The actual kick-off of those IPO projects was in the second half of this year, aiming to be listed in the second half of next year,” he says while admitting that the current market is still softer compared to pre2019 times. For Hong Kong more broadly, Hwang - also vice chairman of the Singapore Chamber of Commerce in Hong Kong - sees the Asia’s World City, once thriving on transactions with a heavy Western focus especially American, now pivoting towards clients from the global South, including Middle East, Latin America, and Eastern Europe. “Contrary to how it’s sometimes portrayed, Hong Kong hasn’t gone from being a very free economy to a gulag overnight,” he says. — SW
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