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
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.