Invest in Law looks East to Singapore
Posted by Ben Holmes, managing director of Invest in Law
It is difficult to overstate the strategic advantages of Singapore to UK and US law firms. Singapore’s economic rise has been meteoric; nurtured by a savvy political environment, it has become a model for attracting foreign investment.
For many decades the Singapore government has encouraged and embraced foreign investment, offering lower tax rates and accessible work visas. In 2013 Singapore topped the global ranking for ease of doing business for the seventh consecutive year.
Part of the attraction lies in the security and sophistication of Singapore. It is a very easy place in which to live and work. On a per capita basis Singapore enjoys one of the highest standards of living and it has one of the lowest crime rates. Economic prosperity has made the country’s infrastructure and transport among the best in the world.
As an English-speaking independent country with a common-law legal system, Singapore has strength in finance, real estate, shipping, commodities and insurance and is an increasingly popular choice for arbitration (SIAC). The legal system is certain, consistent, efficient, effective and highly protective of private property, which is why many businesses choose to transact and finance their deals in the country and opt for Singapore law and arbitration in their contracts.
Finally, and perhaps most importantly, it’s Singapore’s geographic, cultural and linguistic positioning. With the shift in global business activity, Singapore is a very obvious gateway to Asia and opens up lucrative opportunities in China, Taiwan, Indonesia, Vietnam, Thailand and Malaysia. From Singapore, firms can expand their business into Asia and attract new clients.
Indeed, over the past two decades it is clear that Western firms have been restructuring their businesses in order to meet the demands of globalisation, to enter the Chinese market and to position themselves so that they are best placed to undertake multi-jurisdictional work.
Traditionally pioneering law firms that came to Singapore were barred from practicing Singaporean law. Over the past decade, to get around this restriction, various elite law firms from the US and UK have been partnering with domestic Singaporean law firms.
Joint law ventures began to emerge. The opportunities for both joint venture partners were palpable: foreign firms were given access to the highly desirable and lucrative domestic and Asian markets and, in turn, Singapore law firms could take advantage of the global branding, reputation, scope and client contacts offered by their UK and US counterparts. From economies of scale alone, joint ventures should notice increased profit margins.
Legal market in Singapore
Until 2013 only six international firms held Qualified Foreign Law Practice licenses (Allen & Overy, Clifford Chance, Herbert Smith, Latham & Watkins, Norton Rose and White & Case). In recent months, Linklaters, Sidley Austin, Gibson Dunn & Crutcher and Jones Day have also been granted licences, with 23 applications pending.
An alternative, but equally effective, option is to enter into a joint law venture with a local firm: Baker & McKenzie, Duane Morris, Hogan Lovells, Pinsent Masons and Watson Farley & Williams have all bolstered their practices this way. Other law firms, such as Wikborg Rein and Ince & Co, have entered into formal law alliances with local firms, a slightly looser relationship, which still enables them to offer comprehensive English and Singapore legal services.
In the current climate, having a foothold in Asia is an effective hedge against an uncertain outlook in Europe. Firms can relocate their personnel at little more than a moment’s notice. If they have enough horsepower the work can be done in Singapore. Alternatively, it can be fed back to London so that lawyers can be working on a transaction around the clock.
By virtue of the compact size of Singapore and the density of the commercial development, the city is a rich feeding ground for lawyers. Business development is the key and UK firms are sending their brightest and most dynamic associates to schmooze.
For those less comfortable with aggressive marketing, client contacts are made more passively in your condo, at your son’s school and over a casual beer at Boat Quay. Everyone can be a rainmaker.
For expats the lifestyle is good: home help is affordable, the weather is a constant 30 degrees (if a little humid) and, with Changi being the world’s second best airport, the travel opportunities are phenomenal. Rented accommodation is expensive and you may have to forego your car, but the 20% tax rate (or less) should make up for it.
With redundancies looming in the City and the current strength of the Singapore dollar, many lawyers would rather jump on their own terms, whilst they have some negotiating leverage, before they are pushed.
The Singapore bar recognises law degrees from the UK, Australia, New Zealand and Malaysia, amongst others, so for firms looking to build their empire, the talent pool is good.
Local law alliances rise and fall on the strength of their relationships. Like any marriage there can be ups and downs which can be avoided through transparency, trust, realistic expectations and similar goals and best resolved through communication, patience and tolerance. Pay differentials are likely to be the most contentious issue, so the financials should be scrutinised from the outset.
How we can help
It is our view that presence in Singapore should be a consideration for all UK top 100 firms with international ambitions. With our expertise in London, and on-the-ground insight into the Singapore legal market, Invest in Law has cleared the path for your entrance into Asia.
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