This published by the Singapore Business Times today
Here’s how they introduce the piece…
Foreign law firms pose challenge for locals
(SINGAPORE) The six foreign law firms granted licences to practise Singapore law – the biggest liberalisation so far of the traditionally protected industry – have quietly started operations here ahead of the July deadline. But their entry couldn’t have come at a worst time for local law firms which, like many of their clients, are reeling from the global recession.
‘It’s a double whammy,’ admits a partner at a large local practice. Fees from corporate work – especially capital market deals, banking and finance – are down between 30 and 80 per cent, lawyers say, amid anecdotal evidence of a looming price war. ‘I’m shocked at some of the fees being quoted by the bigger firms,’ says a partner at a mid-sized firm.
Shrinking legal budgets and appetite for action mean the moderate increase in litigation, insolvency and restructuring work hasn’t been enough to compensate, especially for firms with a heavy corporate focus. ‘The ongoing recession has already exerted downward pressure on fees,’ says Quek Li Fei, partner at Colin Ng & Partners, a 60-lawyer firm. ‘You are having to work 1.5 to 2 times more to earn the same dollar.’
‘Most firms are in lock-down mode as we were between 2001 and 2003,’ admits the partner of a leading Singapore law firm. Salaries for newly qualified associates at the big local practices are down to $4,000 a month – $500 less than a year ago. There have been no mass layoffs, but fewer pupils have been retained as associates this year and some fear that ‘stealth layoffs’ – lawyers being told to leave for performance issues – could happen if bad times persist.
Officially, law firms say that despite the recession, they welcome the entry of foreign firms. Under the Qualifying Foreign Law Practice (QFLP) scheme, all areas are permitted except domestic areas of litigation and general practice – for example, criminal law, retail conveyancing, family law and administrative law. Foreign firms would be able to attract offshore legal work to Singapore and also provide top quality support to the finance, corporate and maritime sectors, Law Minister K Shanmugam said last December when he announced the awarding of the six licences.
Manoj Sandrasegara, director at Drew & Napier, a local 250-lawyer giant, says that to compete, his firm has been progressively expanding its regional practice, particularly in China and Indonesia. ‘We’ve had the privilege of handling some very high profile matters, where we had to compete with offshore practices.’
And the smaller firms should benefit as more legal talent is drawn to Singapore, says Ng Kim Tean, who heads Nanyang Law, a boutique practice with eight fee-earners. ‘It could hopefully elevate our local legal skills and our exposure to international deals; such ‘cross-pollination’ could hopefully benefit both parties on a win-win basis,’ he says.
But unofficially, the fear is palpable. Even if the economy recovers as expected, and fees and deals get back to the level they were at, the perennial concern is that the best and brightest Singapore-qualified lawyers will be lured away by the massive pay cheques and opportunities for top quality work on offer at foreign firms. Associates can double their salaries by moving to the top foreign firms, lawyers say, and partner-level hourly rates are as much as 50 per cent more at foreign firms.
Clifford Chance, Allen & Overy, White & Case, Herbert Smith, Norton Rose and Latham & Watkins – the six firms given licences under the QFLP scheme – have been vigorously scouting around to boost their numbers here.