It is the biggest multi-continental tie-up in Singapore's legal industry, bringing together 7,300 lawyers across the world. But the deal inked earlier this month between Singapore's oldest law firm Rodyk & Davidson and global player Dentons was more than just a mega union for the record books, it may also be an indication of winds of change blowing through Singapore's legal industry.
As legal services globalise, and as cross-border transactions grow, it makes sense that local firms tie up with global partners.
Mr Thio Shen Yi, senior counsel and joint managing director of TSMP Law, believes the latest tie-ups signal Singapore's growing stature as a legal hub.
"The use of Singapore law is gaining traction. If you are doing business in this part of the world, you will inevitably need to use a firm with Singapore law capability. And global law firms will build access to Singapore law capacity through mergers, alliances, joint ventures," he said.
Dentons has been aggressively expanding its international footprint in the past year.
Mr Joe Andrew, Dentons' global chairman, said that the combination would create a "Pacific Rim powerhouse", and is critical for law firms chasing clients and work on major deals.
"In a globalised world, the old way law firms were organised simply doesn't work," he said.
This is especially so if Dentons wants to gain fast access to work generated by the Trans-Pacific Partnership, which is seen as affecting almost 40 per cent of the global economy; China's 21st Century Maritime Silk Road infrastructure programme; and the ASEAN Economic Community, which is to be formed by year end.
Just earlier this year, Stamford Law became the Asian headquarters of one of the world's top five law firms, Morgan, Lewis & Bockius LLP, in a merger that brought some 3,000 lawyers together.
The internationalisation of law firms is a critical part of the future, and Singapore firms can be at the heart of these moves, Mr Philip Jeyaretnam, senior counsel and managing partner of Rodyk & Davidson, said. "When law firms are interconnected globally, the ability to provide services is enhanced. Singapore can grow significantly as an exporter of legal services," he added.
IMPLICATIONS FOR LOCAL LAW FIRMS
Some believe the globalisation trend will likely continue. "Today, with barriers to the export of professional services coming down, we can expect a belated wave of combinations and alliances among law firms globally," Mr Jeyaretnam said.
For local law firms involved in such tie-ups, benefits include knowledge and technology transfers from global firms that have a lot more financial firepower, and a larger expertise pool.
"Local lawyers would be working alongside mega-financial services firms from Wall Street, London, Beijing and Shanghai, who are accustomed to working only with global law firms," said Mr Robson Lee, a partner of Gibson, Dunn & Crutcher.
"To be a global player, you need to be part of a bigger platform. Size does matter," he added.
For RHT Law, which joined forces with Taylor Wessing in 2011 to expand into Europe and the United States, the move has been largely positive.
"It allowed us to share best practices on human and knowledge resources, and technology on an accelerated basis. We have strengthened our existing intellectual property practice and added new practices such as private wealth, corporate technology, and financial crime and compliance," Mr Tan Chong Huat, managing partner of RHTLaw Taylor Wessing, said.
"The increasingly cross-border nature of many commercial transactions means that law firms without an international presence will find it hard to be involved in international deals or tenders," Mr Tan said.
Equipping its lawyers to handle the rigours of a global legal practice is another boon.
"Our lawyers, having opportunities to work in global transactions, have increased their legal expertise, and become more well-rounded professionals through international secondment and exchange programmes," he said.
Some observers envisage more mid-sized firms entering into some form of alliance with foreign legal practices.
"If a domestic law firm is going into an arrangement with an international firm, the question is what level of independence, or interdependence, is desired, and the level of economic integration," Mr Thio said.
Some may allow an international firm to own part of the domestic law firm, but it really depends on the method by which expenses are shared and billings apportioned, he said.
An enhanced joint law venture (JLV) is a very flexible structure that allows the possibility of substantial economic integration, he added.
But not all are sold on the idea of combining with global firms.
Dentons' strategy of trumping its rivals through sheer size and depth could give it economies of scale. But it has also drawn sceptics, who pointed to the potential for conflicts of interest among clients in different jurisdictions, the difficulty in maintaining consistent quality across regions, and the tendency for savvy clients to seek the best lawyers with niche expertise in a particular region, rather than simply opt for a firm with the widest reach.
It is telling that none of the Big Four local law firms are currently in alliances, although some have been in the past.
In 2012, Allen & Gledhill's merger talks with London-based Allen & Overy crumbled. Its alliance with Linklaters also ended. Drew & Napier had a joint law venture with Freshfields, which ended after seven years in 2007. WongPartnership and Clifford Chance went their separate ways in 2008. A combination or merger with a global firm may be an attractive answer for some law firms, Mr Lee Eng Beng, Rajah & Tann's managing partner, said.
But Mr Lee said the Big Four firm has chosen to "remain fully independent and Asian, and to reach out to the best lawyers in this region to create the largest and most dominant legal services network in South-east Asia".
"For us, it is a question of identity, what gives us the most professional satisfaction, and the excitement and experience of building something that we can be proud of," he added.
LOSS OF LOCAL LAW BRANDS
While long-time brand names such as Rodyk & Davidson and Stamford have been kept, and local management retained by local partners, some observers say they cannot discount the possibility that other established Singapore brands may be swallowed up in international mergers.
In Hong Kong, many of the local law firms have been swallowed up or merged with international names.
Mr Thio, however, believes Singapore will not go the way that Hong Kong did.
"In Hong Kong, there are almost no strong free-standing domestic law firms. It is different in Singapore where there continues to be strong local law firms, and I do not believe that it is in anyone's interest to hollow this out," he said.
Rodyk & Davidson and Stamford have chosen the merger path. Others are opting to wait it out. Like markets in London, New York, Hong Kong and Tokyo, the legal industry here is bifurcating to those who are able to do cross-border work, and to those whose focus is primarily domestic law.
It is notable that Chief Justice Sundaresh Menon, in his address at the Rule of Law Symposium last year, cautioned against focusing exclusively on domestic law. He said that must now be regarded as "an act of wilful blindness".
The hard truth of globalisation is that for many law firms, high-value corporate work will almost always have an international dimension.
This means there is every incentive for lawyers to start offering cross-jurisdictional work.
And through tie-ups with global firms, many of these local law brands can reposition and reinvent themselves.
In time, the international brand may even be "glocalised", or adapted to the needs of Singapore and the region, which could give local firms a higher standing globally, and strengthen Singapore's legal sector.
This article was first published on November 25, 2015.
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