(SINGAPORE) The rising tide of cross-border deals and infrastructure projects has led a growing number of local law firms to set up offices in the region - and mid-size firms are following suit.

Almost all of Singapore's top law firms have branch offices overseas that account for up to 20 per cent of total revenue. Shanghai is the most popular destination. Drew & Napier, KhattarWong, Wong Partnership, Rajah & Tann and Rodyk & Davidson all set up there between 1996 and 2004.

'China was a clear choice for us to commit substantial resources,' says KhattarWong managing partner Tan Chong Huat.

'The heady economic growth of the country spawned numerous in-bound and out-bound transactions and we were well-placed to help clients from both sides of the fence. The workload is only getting bigger, with second-tier cities coming into their own as manufacturing, property or tourist hubs.'

Legal work from China has been mainly driven by Chinese firms seeking to list here, Singapore companies looking to set up operations there and merger and acquisition deals. As Rajah & Tann managing partner Steven Chong notes, local law firms are increasingly having to position themselves as 'trans-national' entities, as clients expand in the region and a wider scope of capabilities and geographic knowledge is needed.

'Moreover, some of the investment destinations are new markets with less-developed legal sectors, and our clients found it more efficient and effective to seek our advice and services as opposed to instructing local counsels directly,' says Mr Chong.

Vietnam and the Middle East are beckoning as well. KhattarWong recently obtained a licence to operate in Vietnam, while Wong Partnership has become the first Singapore law firm to enter both Doha and Abu Dhabi.

While existing clients spurred the move into China, Wong Partnership's venture in the Middle East was due to the potential there.

'The Middle East was a natural place, given the tremendous growth fuelled by the oil prices and the current interest in the area,' said the firm's partner and head of international projects, Tan Chee Meng.

'We are looking at projects worth US$2-3 trillion in the Gulf region. It is not just a question of Singapore companies moving into the Middle East, there is also a tremendous flow of funds and investments from the Gulf region. With Shanghai, Singapore and two offices in the Middle East, we provide an effective bridge between China and the Middle East.'

Even smaller players like Kelvin Chia Partnership (KCP) and Colin Ng & Partners (CNP) have got in on the act. According to their websites, KCP has offices in Japan and North Korea, while CNP operates in Beijing and Hong Kong.

But some say that setting up overseas may not be the best way to go - because it is hard to assess the quality of lawyers for hire in foreign countries, and also to convince Singapore lawyers to move there. Plus it's not cheap. An industry source says it would cost 'in the millions' to set up a branch office in the region, including relocating lawyers and hiring local ones.

Due to faltering market conditions then, Rodyk & Davidson closed its offices in Yangon and Vietnam between 1999 and 2001. It is now reconsidering Vietnam and keeping an eye on the Middle East. The company continues to maintain its Shanghai office, which only became profitable from 2002.

'Hiring and retaining the lawyers with the required skills and the same values is the main challenge,' said Rodyk & Davidson managing partner Helen Yeo. 'The second challenge is persuading clients to pay the fees that make our regional efforts worth our while.'

For other markets, some law firms have set up country-specific groups to handle work involving foreign transactions. In the case of India, where no foreign law firms are allowed yet, the practice is to have dedicated teams advising from Singapore.

Bucking the trend is Allen & Gledhill, which does not have any offices overseas. The firm prefers to work with alliances in respective countries when it comes to cross-border transactions. It has a strategic alliance with Malaysia's Zaid Ibrahim & Co, which also provides links to Roosdiono & Partners in Indonesia and LCT in Vietnam.

Similarly, another top local law firm prefers to rely on its overseas network in the long term.

'We engage and work with the top firms in that jurisdiction for our clients,' said a spokesman for that firm. 'This ensures that our clients receive the best advice available to them in that jurisdiction. It also helps us to manage our risks, if something goes wrong.'

He added: 'We may seem a bit conservative but we'll know in the long run whether it's a good strategy.'

This article was first published in The Business Times on May 12, 2008

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