Growth Spurts: Firms on the Rise

Whether it is for landing a prominent role on a key transaction, undergoing impressive growth, or simply upping sticks to a new location, the following firms across Asia are on the march

“For this financial year’s budgeting, we’re looking at a 30% revenue increase across Asia without really trying to sweat it. I assume that our competitors are alert to that and nervous,” DLA Piper Rudnick Gray Cary’s Asia managing director Nick Seddon informed ALB recently.

Seddon was in a bullish mood to say the least when he made the comment. And he had every reason to be. The European and Asian arms of the transatlantic firm had just managed to record a 12.6% rise in profits-per-equity-partner (or PEP) from £475,000 to £535,000, with turnover for the same region up 18% from £275m to £324m.

Recording such impressive growth figures requires both sweat and nerve, however, and there are few firms that can match the performance of DLA Piper during the last 12 months. This is what makes the firm such a prime candidate for inclusion in ALB’s inaugural review of the most ‘up-and-coming firms’ in the region.

You can almost count on one hand the number of firms that have managed to increase their headcount in Hong Kong since the financial crisis of 1997, with the London firms in particular reportedly narrowing their scope to focus increasingly on China.

Yet no review of emerging firms in Asia would be complete without recognising the staggering growth of a UK legacy firm that – following its 1 January transatlantic merger with US firms Piper Rudnick and Gray Cary Ware & Freidenrich – now finds itself the third largest firm in the world by headcount/fee income.

“We’re always interested in expanding and are constantly talking to people,” says Seddon.

It’s a strategy that one peer described simply as “astonishing”. And if not openly nervous about the rise of the firm, competitors are certainly alert to developments at DLA Piper.

“Good luck to them,” says one. “Ten out of ten for effort, but I don’t know where they get the money from,” adds another.

Seddon says the firm is able to fund the expansion due to the strength of its business model at home. “The likes of Dentons have had their problems in the UK and so have not had the strength in their core business to be able to continue to invest. But the strength of our UK practice meant that we were able to continue to invest during those difficult times, and basically continue to follow our strategy of becoming a Top Five full service global law firm.”

Not everyone is buying it. Says another peer: “There’s considerable scepticism in Hong Kong that it’s the right model to take.” And much of the scepticism centres on the firm’s aggressive hiring of laterals, and not just in Asia.

Since the turn of the year, the firm has been on something of a growth spurt. In addition to the 19 hires across continental Europe during the last financial year, the firm broke records in London with the recruitment of 11 partners, 18 lawyers, four trainees and 12 support staff from the media and IP team at former Asia tenant Denton Wilde Sapte.

Meanwhile in Asia, the firm has added eight partner laterals across corporate, telecommunications, IP, project finance and restructuring and insolvency – including Gigi Cheah, Justin Davidson, John Yeap and Matt Adler in Hong Kong.

And more recently still, the firm was strongly rumoured to be interested in the China practice of Coudert Brothers, following its untimely demise. Although the Tokyo office-led Asian practice at US firm Orrick followed the example set earlier by its London colleagues and swooped in to secure said practice, recent rumours suggest DLA Piper has not ended up completely empty-handed. Three partners from the Beijing arm of Coudert, including office head Jingzhou Tao, will now join Seddon & Co, on the DLA Piper trail.

Seddon explains: “What differentiates us from the likes of Freshfields or Clifford Chance is that they tend to be focused on capital markets work, and if there isn’t an investment banking community in centres that are thriving then there’s a lack of logic for them being there. We do our fair share of capital markets work but it’s not our sole reason for being in places. We are principally aiming at providing full service advice to corporates and being where they want us to be across the world.”

And DLA Piper wants everyone to know this. Adopting an aggressive hiring strategy is that much more effective when coupled with an aggressive marketing campaign. Utilising vehicles such as the South China Morning Post – and ALB for that matter – DLA Piper has been shouting from the rooftops.

“We have a clear strategy to be a full service commercial law firm. If our clients want us to be representing them in a particular jurisdiction then, providing the numbers stack up, that’s where we’ll be,” says Seddon, who confidently predicts that in three years time the firm will be providing global legal services to a good number of Fortune 500 and FTSE-250 companies.

“As these businesses head towards global panels, we will be on them because we will be one of the very few firms that can service them worldwide,” he adds. “And in Asia, this will mean that the quality of our client base, our revenues, our size and our reach will all increase significantly – and as a result so will our profitability!”

Collegiate

One of the few firms to be growing at a faster rate than DLA Piper – albeit on a much smaller scale – is Hong Kong firm Tanner De Witt. Winner of last year’s Boutique Law Firm of the Year Award at ALB’s Hong Kong Law Awards, Tanner De Witt has moved on since then; and at some pace.

Doubling its partner headcount to six, the firm hired Nicholas Longley in July 2004, Robin Darton in April 2005 and Paul Westover in June 2005. Partners in other prominent law firms beforehand, the three were part of an overall staff injection of 29 since July 2004. This included 14 fee earners and 15 administrative staff, giving TDW a growth rate in the region of 127%.

But although the six-partner, 24-other fee earner firm remains a relatively young and upcoming firm, its rate of growth has not gone unnoticed by its local peers.

“It’s sprouting quite a bit,” says one. “A young and growing firm, which is more than just boutique these days as it has expanded so fast.”

Short-listed this year for Hong Kong Law Firm of the Year at the ALB Awards, TDW leased additional office space in the Lippo Centre in April and is hoping to move offices within the next nine months to larger premises.

“We have found that there were a lot of opportunities in Hong Kong over the last 12 months. Some of the larger firms have contracted, some very good people have come on the market, and we’ve picked some of them up,” says name partner Richard Tanner. “But employing a growth strategy is not a mathematical question. If the right person comes along we’ll look at it.”

Tanner believes the secret to the success of the firm he runs with colleague Ian De Witt is that they pitched it at the right level. That is to say that since launching the firm in 1999, TDW targeted clients who did not require the mighty muscle of the Hong Kong and UK heavyweights – nor the cost – but wanted the same level of expertise.

“We perceived a gulf in the market,” says Tanner. “That was our thinking from the very start and we haven’t really wavered from that. We practice what we know and refer work on that we don’t.”

The firm focuses on the eight core areas of corporate/commercial, commercial litigation, insolvency, construction, insurance, employment, tenancy law and leisure, travel and aviation.

And because it is not a perceived threat to the larger UK firms, says Tanner, TDW picks up more than its fair share of referral work.

“One thing that’s surprised me since we began running our own business is how much work we’ve had referred on to us from the larger city firms,” he says.

Despite welcoming three new trainee solicitors on 5 September, it will be some time before the larger city firms do consider TDW to be a serious threat to their respective slices of the pie. In the meantime, says De Witt, the firm will continue to use its size to its advantage.

“The firm will grow. We haven’t reached our optimum size yet. We want to be bigger because we need a certain size to be able to effectively service certain clients. But equally we don’t measure success by the number of lawyers we have. We are very different in style to the larger city firms,” he says.

Tanner and De Witt are keenly aware of what can happen if a firm grows too quickly. They are both adamant that their firm will not also evolve into “a bit of a revolving door”.

To guard against such an outcome, they make a point of hiring people they know well. “This may sound a bit corny,” says De Witt, “but we were all friends before becoming partners. That’s not essential to the successful running of a law firm, but it helps. We like each other and we enjoy coming in to work.”

Adds Tanner: “We attract nice people and we have a lot of fun here. It’s important that people fit in. At the end of the day we all want the same thing, and you’d be surprised how much we all agree. We’re probably not what you might call profit maximisers. Profit is certainly very important, but it’s not everything. And our strategy seems to be working for us.”

Responsiveness

Nowhere in Asia is more synonymous with the pursuit of profit – and wealth – than Hong Kong. Yet if there is one characteristic that each of our up-and-coming firms possess in abundance, it would be the ability to stay responsive to their client’s needs.

“A lot of people forget that this is a service industry,” says De Witt. “We don’t make anything useful like radios or medicine. And TDW is now working for some of the largest conglomerates and airlines in the world. So we have been tested and we passed the test.”

Another firm quietly going about its business in Hong Kong is Australian heavyweight Minter Ellison. In contrast with its domestic cousins over at Mallesons Stephen Jaques – which has aggressively pursued the leading investment houses in the region, as well as bedding down its union with Kwok & Yih in Hong Kong – the seven-partner office at Minters has remained focused on its areas of strength, which include the IT and telecommunications area and construction. The firm has tripled in size in recent years as a result.

“They’re bigger than I thought they were in Hong Kong,” says one peer.

And it is in the construction area where – for a relatively small office – the firm wields significant gravitas. In addition to hiring partner Ian Cocking, past chairman of the Society of Construction Law and current chairman of the Environmental Law Association in Hong Kong from Simmons & Simmons, the firm also recently appointed its first Chinese partner, Wan Li, in July.

And on 27 August, Minters received the major award at the Hong Kong-Australia Business Association 2005 Victorian Business Awards. The Golden Pearl Award for Excellence was given to Minters for “sustained excellence over the year in the delivery of either Australian products or services in Hong Kong or Greater China”.

A key factor in the nomination, says Hong Kong office head Sam Farrands, was the firm’s ongoing role in the US$240m Las Vegas Sands Casino Macau development.

“Our construction group in Hong Kong has had a particularly good year,” says Farrands. “With the push to make Macau the Asian equivalent of Las Vegas, there has been a lot of casino related construction work and we have acted on a number of these new developments.”

Acting for Las Vegas Sands Inc on its mega resort development in Macau, Minters’ growing involvement in this area is another illustration of how a successful hire can reap dividends.

Although head of construction Julian Hill is leading the Australian firm’s team on the deal, it was partner Fred Kinmonth who – as principal adviser to The Venetian in its bid for the concession when at previous firm Paul, Weiss, Rifkind, Wharton & Garrison – brought the deal across when he joined Minters in 2003.

Other prominent work involving Minters includes representing the consortium of North West Shelf Sellers on their US$13bn LNG supply contract to the Guangdong LNG Terminal – making the firm a worthy entrant in this year’s list of up-and-coming firms in Asia.

Around the region in 80 seconds

While opportunities for growth are fairly restricted in the tight and competitive legal market that is Hong Kong, elsewhere around the region firms in the top tier are nervously looking over their shoulder at a number of rising stars.

For example in Japan – where recent regulations permitted enhanced cooperation between western and Japanese qualified lawyers – a traditionally under-lawyered jurisdiction is more fluid today than it has ever been.

And one of the more significant laterals of recent times was undoubtedly the appointment by Atsumi & Partners of US attorney Bonnie Dixon, who became the first non-Japanese partner of a Japanese law firm.

While most commentators assumed it would be the international firms that would utilise the 1 April regulation changes, Hiroo Atsumi and his partners have shown considerable faith in Dixon and the firm is well on the way to creating the first truly international domestic Japanese law firm. It also opens the way for a new partner track career option for non-Japanese associates looking for employment in Japan.

And Atsumi & Partners is no one-hire-wonder. The firm has built up a formidable reputation on securitisations, and this year won an award at the ALB Deals of the Year Awards in Japan for its role of the Global Hospital Limited securitisation. The firm represented Tokushukai Medical Corporation (TMC) on the deal, which although a private transaction, was the largest, most innovative and most ambitious whole business securitisation ever executed in Japan (innovative because the deal implemented the classic UK whole business securitisation model, but had to be adapted to deal with Japanese legal and regulatory issues).

Other firms to have caught the eye in Tokyo recently are Multilaw and the Employment Law Alliance representative firm Ushijima & Partners, as well as Simmons associate TMI Associates.

“Those are the firms we see in various transactions from time to time,” confirms Anderson Mori & Tomotsune partner Kenichi Nakano.

Meanwhile in Korea, the firm to have created the biggest buzz over the last couple of years is Kim & Chang spin-off firm Woo Yun Kang Yeong & Han. Known for its capability across corporate, tax and antitrust, Woo Yun has recently focused on sizing up in preparation for competition with international firms and is pushing hard the top-tier firms of Kim & Chang, Shin & Kim, Lee & Ko and Bae Kim & Lee.

“They might not be as widely known as the Big Four in Korea, but a lot of clients recognise the high quality of legal work that they do,” says former Woo Yun partner Eugene Chang, who recently played a role in Korea’s first Japanese-yen denominated securitisation deal to be offered and sold in the Japanese market, and who more recently joined the Tokyo office of US firm Orrick.

Alongside Kim & Chang and Shin & Kim, Woo Yun is frequently the firm of choice for investment houses such Goldman Sachs and Citigroup. Senior corporate and antitrust partner Sai Ree Yun is commended for being a very well recognised and highly regarded lawyer, and did many of the deals involving the SK Group.

“I know foreign private equity firms and investment houses that are very choosy when it comes to selecting external advice, and they have started to recognise the name of Woo Yun,” says Chang, “Many of them complain about the lack of alternatives in Korea – primarily to Kim & Chang. They have been looking for a very good alternative and many think Woo Yun is it.”

Key work the firm has been involved in includes advising STX Pan Ocean on the Korean law aspects of its SGX listing, which raised US$360m in July and was at the time the largest public offering in Singapore this year. Before that, the firm advised – and was “intimately involved with”, says Chang – Standard Chartered on the local law aspects of its US$3.3bn acquisition of Korea First Bank. Closing on 10 January 2005, the deal constituted the largest-ever foreign investment in Korea.

Finally in Taiwan, LCS & Partners continues to enjoy a rising profile for capital markets work – mostly on the issuer side. With one of its former partners now part of the team at the Taiwan Financial Supervisory Commission, the firm has strengthened its ties with the regulatory body and is currently advising the Commission on its capital market reform act.

The firm was also involved in Taiwan’s largest ever telecommunications merger in 2003, when it advised KG Telecom on its union with Far EasTone Telecommunications.

And LCS has just boosted its ranks with the hire of former Lee and Li counsel and Zurich Financial Services’ CEO Dean T Chiang.

Baker & McKenzie partner Wen Yen Kang – who recently led the Bakers team advising manufacturing technology company Chi Mei Optoelectronics Corp (CMO) on its US$751m offering – says that LCS’ links with the Commission is a useful asset in a jurisdiction like Taiwan, where personal relationships drive cultural achievements.

Alongside the domestic heavyweights of Lee and Li and Tsar & Tsai, Bakers has been able to retain an iron grip on the legal scene in Taiwan. But that may be about to change, says Kang.

“The demand for corporate lawyers is increasing in Taipei,” he says. “And I don’t think the competition here is that competitive. If you have a very capable lawyer, you can expand your business quite easily.”

And with Morgan Stanley managing director and Asia-Pacific general counsel Greg Terry recently commenting to ALB on the uneven performance and uneven service given by many firms currently feeling the profitability pinch, there may well continue to be opportunities for firms in Asia to emerge and fully blossom “without really trying to sweat it”.

Firms in bloom … in China

One of the firms keen to penetrate the Red Circle is Shanghai firm Llinks Law Office. Recording an approximate 125% increase in its staff numbers since the end of 2003, Llinks has boosted its revenue from last financial year by 30%. The relatively young firm attributes its success to its “investment in people”.

Four other firms that, if they’re not already members of the Red Circle would certainly like to join the likes of Jun He Law Offices and King & Wood, are Commerce & Finance Law Offices, Fangda Partners, Haiwen & Partners, and Zhong Lun Law Offices.

As the only PRC firm specialising in the corporate finance area, Commerce & Finance has fully exploited its market niche. In ALB’s recent IPO survey, the firm recorded 10 IPOs on the main board of the Hong Kong Stock Exchange between June 2004 and June 2005 with a value of US$5.23bn – ranking the firm second overall by number of deals and third by value.

With the second highest total revenue of any law firm in China, Fangda Partners is clearly doing something right. Averaging a 50% increase in revenue year-on-year, the firm has accrued an impressive portfolio of deals recently. These include: Royal Bank of Scotland’s US$3.1bn strategic investment in Bank of China; Baosteel’s RMB28bn (US$3.47bn) follow up equity offering, which was the largest ever follow-up offering in China; TPG and Newbridge’s US$350m strategic investment into Lenovo; and Focus Media’s US$150m IPO.

Described as “mysterious” by one peer due to its reluctance to engage the media, the firm of Haiwen & Partners can also cite some impressive deals of late. These include advising the underwriters on the US$2.9bn IPO of China Shenhua Energy Company, which debuted on the Hong Kong Stock Exchange as one of the world’s largest IPOs of 2005, as well as acting on the US$1.14bn IPO of China’s second-largest fixed-line telecommunications operator China Netcom. The firm was also a finalist for Beijing Law Firm of the Year at this year’s ALB China Law Awards.

Meanwhile, with 52 partners and more than 150 fee-earners, Zhong Lun Law Offices is one of the larger firms in China. Recording an average revenue increase of 20–30% per year, the firm is ranked the fourth highest in China in terms of total revenue – posting RMB120m (US$14.83m) last financial year. The firm has its sights firmly set on a greater slice of the cross-border pie – targeting a 60% deal-flow involving foreign parties, up from its current level of 40%.

Two other firms very much on the radar in China are Richard Wang & Co and Jin Mao PRC Lawyers. Comfortably associating with those that roam the corridors of power in government, Richard Wang & Co is small in size but large in stature. With a clientele that includes the likes of Adidas, Kodak, Phillips, Dell, Siemens, HSBC, General Motors and Goldman Sachs, it’s little wonder founder Richard Wang confidently predicts his firm will be a Red Circle firm before long.

Jin Mao PRC Lawyers has averaged a 20% growth rate over the last few years and is emerging fast. With revenue of RMB40m (US$4.94m) recorded last year the ambitious firm has recently ventured overseas, opening an office in Singapore.

Copyright 2005, Asian Legal Business