Exit the Foreign Firms?

In this sequel to my previous post ‘Enter the Foreign Firms‘, I was a bit slow in being updated on the news that Freshfields Bruckhaus Deringer is ending its 6 years or so association with Drew & Napier in Singapore.

The Freshfields website states that it is reorganising its Asia practice by transferring its Singapore practice to Hong Kong. It will not have a firm in Singapore after 30 April 2007 and that discussions are underway to continue the relationship with Drew & Napier in a new arrangement.

The Practical Law Company was a little bit more direct in its reporting:

In arguably the most significant development in the legal market in 2006, Freshfields Bruckhaus Deringer announced its intention to close its Singapore office by April 2007 in order to focus on mainland China work, and terminated its joint venture with Drew & Napier.

Many practitioners have expressed their reservations about the success of joint venture firms. The Singapore government is still keen to make the system work and is constantly reviewing whether to open the market up to further foreign competition. However, within the current framework many observers do not expect any new joint ventures to be formed in the foreseeable future.

“If you want foreign lawyers to promote Singapore law as a law of contract, you have to be able to let them compete in that market.”

Outside the joint ventures, there is a wide array of foreign firms with a presence in Singapore. However, the majority do not have significant Singapore-focused practices and use the island as a hub for regional work, especially Indonesia-related finance and energy work.

So on the face of it, it seems that the joint law venture framework in Singapore is just not that appealing to foreign law firms. Even with the many tweaks to the system, for instance the opening up of areas of law such as arbitration, and eventually intellectual property and maritime, and a new scheme of allowing ‘High Quality Foreign Lawyers‘ to practice Singapore law, it remains to be seen whether Singapore (and Malaysia) will attract these foreign firms.

For instance, it was reported that in relation to Australian law firms tying up with Singapore firms, partners from law firms were quoted as saying that the joint law venture and formal alliance structure was just not that attractive.

“The source said he believed the joint venture structure had not achieved its objective of opening up the Singapore legal profession for exposure to more intricate and cross border transactions, while encouraging the greater use of Singapore law. “If you want foreign lawyers to promote Singapore law as a law of contract, you have to be able to let them compete in that market. Why would you promote a law you can’t advise on?”
Singapore and Australia had signed their Free Trade Agreement in 2003, which resulted in a slight relaxation of the rules for Australian firms to enter into Joint Law Ventures or Formal Law Alliances with Singaporean firms. This has not tempted any Australian firm to tie-up with a Singaporean firm though.
My fear is that with the eventual implementation of the Malaysian framework, even with the possible fanfare of the liberalisation of legal services in relation to Islamic banking, we would have lagged too far behind our regional neighbours to attract any foreign interest. Foreign firms are already exiting.

So where is the middle ground to be reached? On one hand, market restrictions still have to be put in place, ensuring a mutually beneficial relationship for local and foreign firms. On the other hand, foreign firms appear to want to have free reign in the carrying out of its legal services in a foreign jurisdiction. It is going to be a delicate balancing act of these two competing interests.

Judging the Judges

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A short review of ‘Judging the Judges’ by NH Chan, a former Court of Appeal judge of Malaysia. As stated in the back cover, the main aims of the book is to enable readers to recognise what is justice, and to recognise the Malaysian cases in which justice had not been seen to be done, and to familiarise the layman of the judge’s craft so that he knows whether a judge has been fair and unbiased in the conduct of a trial. On these counts, I would say NH Chan was only partially successfuly in the writing of his book.

It is not one of the easiest books to get through. It is not for a lack of interesting material, but my main complaint would be in the structuring of the book. It seems that sometimes the author would go off on a frolic of his own and start writing about irrelevant material. The case in point is where the author suddenly plunges into a detailed account of his experience in flying as well as in motor racing, and explains the physics of skidding and how to overcome it.

The author was scathing in his attack on the judges of Adorna Properties

The most controversial sections of this book is where the author disparages the decisions of Insas Bhd v Ayer Molek Rubber Co Bhd and Adorna Properties v Boonsom Boonyanit, in particular the then Chief Justice Eusoff Chin who sat on the bench deciding these two matters. While I will not bore you with the details of the two cases, the effects of the case of Adorna Properties still resounds until present day, as it allows a forger to forge the title of a piece of land and then sell it on. The purchaser of this piece of land would then get good title, leaving the real owner helpless. The author was scathing in his attack on the judges of Adorna Properties and it led him to conclude that it was the most outrageous injustice. Stronger words were further used in the book.

Overall, it is a book worth purchasing, only if to read the sections on Adorna Properties and Insas Bhd. I enjoyed the sections on advocacy as well, although there were a bit too many sections quoted whole-sale from other advocacy books, and the accounts of the the good and bad judges from England. The list price is RM48.

Baker & McKenzie vs Boing Boing

In the midst of my blawg research, I came across an interesting episode involving the law firm Baker & McKenzie and a blog called Boing Boing.

Brief introduction of the parties: Baker & McKenzie is a massive global law firm, with branches in virtually every leading legal jurisdiction. Boing Boing is a large blog, run very much like a weekly newspaper, linking to interesting stories across the internet.

Last year, in the leadup to the Fifa World Cup 2006, Baker & McKenzie issued a letter on behalf of its clients to Boing Boing as a pre-emptive warning Boing Boing to to prevent the dissemination of copyrighted video clips of the World Cup.

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Extract of the letter. The full letter is over here.

Boing Boing immediately posts its reply online. It may not be the most mature of replies, especially when it mischievously links to this story regarding the ‘saucy email shame of city lawyer‘, thus forever ‘immortalising’ Baker & McKenzie.

A google search using the terms “baker mckenzie” shows that the Boing Boing story is on the second page. More telling however, is that a google search on “baker mckenzie blog” reveals a number of blogs picking up on the Boing Boing story.

Is this a case where a firm did not take into account the nature of the blogosphere and the reaction that such a heavy-handed letter would generate. Still, there are others who theorise that the whole point of this letter was to generate added publicity on the enforcement of the World Cup copyright.

Undoubtedly though, this episode did generate negative publicity for the firm, both within the blogosphere and outside of it. I read somewhere that the The Times law section picked up on the story as well.

Enter the Foreign Law Firms

It is inevitable that the Malaysian legal market will be liberalised and that foreign law firms will be allowed to practice, in some form or another, here in Malaysia.

It was in the news recently about how foreign law firms would be allowed into our legal market, although confined to practicing in the high-end ‘Tier-1’ corporate work. Due to Malaysia’s obligations under GAT and other free-trade agreements, our legal market will have to open up, and it is just a matter of when.

The legislation allowing the entry of foreign law firms is still a bit hazy, with no Bill having been tabled. But from the little information that we have, it appears that foreign law firms will be allowed into Malaysia through the Joint Law Venture (JLV) vehicle. This is similar to the JLVs and the foreign law alliances allowed in Singapore (more info on the Singapore framework here). If identical to the Singapore legislation, the JLV would involve a separate partnership being formed, consisting of local and foreign partners.

This JLV vehicle could then assist in the transfer of expertise and knowledge from the foreign firms over to its local partners. For instance, a local boutique firm in Malaysia already enjoys a strong association with a global law firm (albeit not in a formal JLV form), and it is able to harness the use of the foreign firm’s knowledge management system and training opportunities. Through the opening up of the legal market, local lawyers may then be able to enjoy secondments or even employment in foreign firms, not to mention gaining valuable experience in working on international transactions. The advantage offered to foreign firms is that they would then be able to truly offer a “one-stop” service on cross-border and international transactions, as well as enjoy cost-savings through the outsourcing of work.

Foreign firms would be limited to practicing in the ‘Tier-1’ corporate advisory work. Areas such as conveyancing and litigation would remain the exclusive right of Malaysian lawyers. Since such areas are so procedurally and locally confined within a jurisdiction, it may not be worthwhile for foreign firms to branch into these areas in any event.

I personally welcome the liberalisation of the legal market, although there have to be restrictions put in place. The areas of law such JLVs or foreign firms would be allowed to practice in would have to be set out clearly. Aside from corporate work, there may be strong arguments to allow areas such as arbitration or intellectual property to be gradually opened up as well. Presumably, foreign lawyers would also have to adhere to ethical rules governing the profession on a whole. Disciplinary proceedings would still have to apply to foreign lawyers.

I don’t foresee a flood of foreign law firms rushing in to form JLVs in Malaysia. It may be more of a case where the foreign firms gingerly assess whether to tread in. With the downturn in the economy over the past few years, many foreign firms had already cut down on its offshore presence in Singapore and in South-east Asia. There are also only 6 JLVs in Singapore, down from the original 8. Even with the improving economic climate, would these same Magic Circle firms want to set up shop here in Malaysia?

It will be interesting to see the developments that occur with the eventual liberalisation. There has been much talk but still no concrete steps forward yet.

Blawgs – fad or future?

I’ve been asked to write an article on law blogs (dubbed ‘blawgs’) and whether it is merely a fad or will it be the future?

Will law firms increasingly use blogs as a form of marketing and publicity, as opposed to the standard website or client newsletter? Will individual lawyers themselves be able to harness blogs as a tool to put forward their own views or to discuss and highlight developments in the law?

Or will ‘blawgs’ merely be personal journals of lawyers who rant and rave at their working hours or the legal system in general?

An interesting blog I’ve come across before is the Anonymous Lawyer, a fictional account of a partner at a large American law firm. The real-life author behind the blog had secured a book deal to publish his blog entries.