Asian Legal Business (SE Asia) Mar 2009

Lawyers single out best firms to work for

EmployEr of ChoiCE:

Satyam saga Watershed for indian firms?

International firmsStrategies for a downturn

Philippines 09in search of balance

Private equityWill the downturn have a silver lining?

ISS

UE

9.3

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Employment law

Freehills’ strong reputation for delivering the best commercial legal advice has been developed over more than 150 years, becoming one of the largest and most respected law firms in Australia and Southeast Asia. Freehills has offices in Sydney, Melbourne, Perth and Brisbane. It was one of the first Australian firms to establish an Asian practice and has an office in Singapore and correspondent offices in Hanoi, Ho Chi Minh City and Jakarta.

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philippines

Founded in 1945, SyCip Salazar Hernandez & Gatmaitan is one of the most-established law firms, and the largest, in the Philippines. Principally based in Makati City, the country’s financial and business center, the firm also has offices in Cebu City, Davao City and the Subic Bay Freeport. SyCip’s practice covers all fields of law and the broad range of the firm’s expertise is reflected in its client base, which includes top local and foreign corporations, international organizations and governments. SyCip combines traditions of professional integrity and excellence with a time-tested ability to break new ground.

China

Paul, Weiss, Rifkind, Wharton & Garrison LLP is a globally oriented, full-service law firm with over 500 lawyers worldwide. Paul, Weiss is headquartered in New York and has offices in Hong Kong, Beijing, London, Tokyo and Washington D.C.

malaysia

Tay & Partners is a Malaysian law firm established in 1989 with offices in Kuala Lumpur and Johor Bahru. It is a full-service commercial law firm, advising a varied portfolio of clients across a broad spectrum of industry sectors. The firm’s vision is to be the law firm of choice to businesses investing or operating in Malaysia.

Vietnam

Indochine Counsel is a commercial law firm focusing on business law practice in the Indochina region. Our areas of practice include: Foreign Investment, Corporate & Commercial, M&A, Securities & Capital Markets, Banking & Finance, Property & Construction, Taxation, Intellectual Property, Information Technology & Internet, International Trade, Outward Investment & Offshore Incorporation, and Dispute Resolution.

india

Singh & Associates is a full service international law firm comprising of experienced, capable and dedicated legal professionals, company secretaries and chartered accountants. The firm is committed to providing exceptional legal counsel across a wide variety of local, national and international branches of law and specialises in several practice areas.

indonesia

BT Partnership is a dynamic and result oriented law firm specialized in corporate-financial restructuring and litigation practices with full-length and great detailed of experiences in safeguarding multinational clients from complex legal issues including for their M&A, FDI, Funds and Structured Finance transactions. In 2007, the firm has been awarded as Dispute Resolution Firm of the Year and further, Employer’s of Choice for Indonesia jurisdiction while its Partner has been inaugurated as one of the Asia Hot Lawyers of the Year 2008.

Singapore

Loo & Partners was founded in 1985 as a niche practice, handling mainly banking, corporate, securities and commercial work. With the support of a comprehensive network of correspondent law firms, the firm serves its clients in their regional needs. The firm has been regularly noted for its IPO, M&A and general corporate work.

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Corporate tax

KhattarWong was founded in 1974 and has grown into a regional practice providing a comprehensive range of services to a wide range of clients. Our areas of practice include banking, finance and property, corporate and securities laws, litigation and dispute resolution, tax, intellectual property and technology, shipping, construction, family and criminal law. KhattarWong is one of Singapore’s largest premier law firms with over 150 lawyers.

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Azmi & Associates is reputably known as one of Malaysia’s leading firms in the areas of Mergers & Acquisitions, Capital & Debt Market, Corporate & Commercial, Energy & Utilities, Restructuring, Projects, Construction, Privatisation and Financing, Litigation and Arbitration and is also rapidly building its reputations in the areas of Intellectual Property and information technology.

islamic finance

internation Arbitration

Established in 1889, Drew & Napier is one of Singapore’s leading law firms. Consistently rated top tier in dispute resolution, the firm has 7 senior counsel, the largest number of any Singapore law firm. The firm is headed by CEO, Davinder Singh, SC, one of Singapore’s foremost lawyers. Drew & Napier is also highly rated in Insolvency & Restructuring, IP, Tax, Banking & Corporate, Competition Law, TMT, and Shipping.

2

EDITORIal >>

Asian Legal Business ISSUE 9.3


22

in ThE firST pErSon

It’s not all about the money

In the ALB Employer of Choice 2009 survey (p38), which was distributed to over 20,000 lawyers in the Asia-Pacific and Gulf regions, only one-fifth of lawyers rated salary as the top motivating factor capable of luring them away to a new position. Proof that the stereotype of the mercenary lawyer – it if

ever was valid – should now be put to rest for good? Perhaps, but it’s far more constructive to track just how the priorities of lawyers across the region have changed within the space of a year.

Last year’s ALB Employer of Choice revealed compensation as the most important factor influencing lawyer movements. This year, however, the majority of lawyers surveyed cited non-financial factors – the opportunity to do challenging work, work-life balance and the reputation of the prospective new employer – as most important. How do we account for this change? It’s all about the global financial crisis, according to the majority of survey respondents.

“The financial crisis has altered perceptions,” said a partner at an international firm. “If I were to move now, it would only be because of the people I could work with and the work I could do. Salary is important, but I don’t want to get paid a heap of money to be bored out of my brain; I want to see real opportunities for advancement.”

Yes, the profession is grappling with the financial crisis. As much as anything, the results reveal that lawyers are not looking to short-term comforts to get them through the downtime but, rather, are using the downtime to increase their skill set, to broaden their horizons – setting themselves up strategically for when economies rebound and the buoyancy returns to the region’s employment market.

For law firms, it seems there is no time like the present to make investments in those non-material things like training and development, partner mentoring and genuine work-life balance initiatives. Those who continue to go by the principle that attracting talent is all about the money may be sadly mistaken.

“It was like riding a tiger, not knowing how to get off without being eaten” B Ramalinga Raju, disgraced chairman of Satyam Computer Services

“Under the new law, PE players will be allowed to use alternative vehicles – much different to before, when their options were somewhat limited”Yong Jae Chang, Lee & Ko, on PE in Korea (p57)

“The Philippines market will need to be more regional and perhaps global in 2009. It can no longer afford to be parochial; the world is getting smaller and smaller every day”Perry Pe, Romulo Mabanta, on the Philippines legal market (p67)

Most lawyers cited non-financial factors – work-life balance, challenging work and the reputation of the prospective new employer – as most important

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4

NEws | deals >>


CONTENTs >>

AnAlySiS

11 International firms jostle in downturnThe downturn bringing expansion opportunities for some firms

12 Government stimulus packagesWhen it comes to funding the big-ticket projects, governments may find themselves on their own

14 Cross-Strait legal cooperationImproving economic ties between the mainland and Taiwan bring promise for lawyers

16 What Satyam means for lawyersWill companies now value reliable legal advice?

fEATUrES

52 Private equityWill Asian private equity bounce back in 2009?

58 Tax & trustsCayman Islands STAR trusts offer a flexible alternative to traditional common law trusts

64 ALB Special Report: Philippines 09Beyond the “low cost jurisdiction” stereotype

70 Managing partner profile: Alastair Da Costa, DLA Piper

Can DLA Piper find organisational unity and develop a coherent Asia brand?

rEGUlArS

6 NEWS UK sweetens up to Korean legal industry•Law firms to assist in UN corporate law–human •rights study No Japanese ‘crackdown’ on foreign lawyers •Korean lawyers publish judges’ first report cards•Singapore introduces new legal industry measures•A&O confirms 9% global cuts, salary freezes•White & Case shows some gall in tough times •Dacheng innovates across the Strait •Redundancy work to rise as Gulf turns grim •Downturn claims first Middle East casualties •

rEGUlArS

18 UK report

20 US report

28 Mergermarket update

80 Sign off

INDUSTRY UPDATES

22 International arbitrationDrew & Napier

24 Employment lawFreehills

25 IPaTMD BirD & BirD


Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Asian Legal Business can accept no responsibility for loss.

27 Islamic FinanceazMi & associaTes

32 REGIONAL UPDATES China•paul weiss Philippines•sycip salazar herNaNDez & GaTMaiTaN

Malaysia•Tay & parTNers

Singapore•loo & parTNers

Indonesia•BTparTNership

India•siNGh & associaTes

Vietnam•iNDochiNe couNsel

profilES

54 Ogier

61 KhattarWong

68 Angara Abello Concepcion Regalia & Cruz

69 SyCip Salazar Hernandez & Gatmaitan

52

70

64CoVEr STory38 AlB Employer of Choice 2009 Survey

Lawyers in the Asia-Pacific name the top firms to work for in ALB’s annual in-depth survey of law firms as employers

38

CONTENTs >>

contents ALB ISSUE 9.3

http://www.recruit-legal.com

6

NEws | deals >>


| CHINA/HONG KONG/JAPAN/BELGIUM |

AsAhI BrEwEry – TsIngTAo ►BrEwEry AcqUIsITIonUs$667m

Firm: FreshfieldsLead lawyers: Robert Ashworth, Teresa Koclient: Anheuser-Busch InBev

Firm: Mayer Brown JSMLead lawyer: Patrick Wongclient: Tsingtao

Anheuser-Busch •InBev sold 20% stake in Tsingtao Brewery to Japan’s Asahi Brewery, subject to regulatory approval

Asahi Brewery will become Tsingtao •Brewery’s second largest shareholder

Lead lawyers: Andrew McGinty James Fongclient: China Merchants Property Development

Firm: Guangdong ShentianchengLead lawyer: Liao Sheng Junclient: China Merchants Property Development

Firm: WalkersLead lawyer: Andy Randall client: China Merchants Property Development

ARA acquired the Nanjing IFC, a •newly completed 51-storey office building with a leasable gross floor area of 109,196 sqm. The total purchase consideration for the transaction was RMB1.6bn

| HONG KONG/MALAYSIA |

cVM MInErALs hong Kong ►IPoUs$17m

Firm: Mallesons Stephen JaquesLead lawyer: Conrad Chanclient: Underwriters

Firm: Richards Butler client: CVM Minerals

| CHINA/UK/AUSTRALIA/HONG KONG |

chInALco – rIo TInTo sTAKE ►AcqUIsITIonUs$19.5bn

Firm: Clifford ChanceLead lawyers: Rupert Li, Simon Cooke, Kathy Honeywoodclient: Chinalco

Firm: Mallesons Stephen Jaques client: ChinalcoLead lawyer: Peter Cook

Firm: Allens Arthur RobinsonLead lawyers: Nic Tolé, Richard Kriedemann, Richard Spurio, Scott Langfordclient: Rio Tinto

Firm: Linklaters Lead Lawyers: James Inglis, Richard Goddenclient: Rio Tinto

Firm: Wachtell, Lipton, Rosen & Katz client: Rio Tinto

Firm: Fried Frank Lead Lawyers: Robert Cassanos, Stuart Gelfond, Lee Parks, Richard Steinwurtzelclient: Rio Tinto

Proposed deal includes sale of •US$12.3bn of Rio’s assets, including

rupert li, Clifford Chance

peter Cook, mallesons

deals in brief

15% of the Pilbara-based Hamersley Iron operations, 29–50% of the Weipa, Yarwun and Boyne aluminium operations and 21% of the Gladstone power station.

Chinalco will pay US$7.2bn for •convertible bonds which will increase stake in Rio from 9.3%to 18%

Transaction may face greater regulatory •hurdles as Australian treasurer Wayne Swan will seek parliamentary approval to amend Foreign Acquisitions and Takeovers Act. One notable change is that investment involving convertible notes will be treated as equity

Mallesons previously acted on •Chinalco’s 9.3% stake acquisition in Rio Tinto, along with Clifford Chance, Simpson Thacher and Sullivan & Cromwell. Linklaters previously advised Rio on BHP proposed takeover

Firm: Ben Abderrahmane & Partners (Malaysia)client: CVM Minerals

Malaysia-based CVM Minerals •Limited listed Hong Kong IPO, raising approximately HK$133m

Deal is first listing of minerals •company under Chapter 18 of the Hong Kong Listing Rules, which does not require the usual track record listing requirements

| CHINA/HONG KONG |

ArA nAnjIng IFc ►AcqUIsITIonUs$234m

Firm: Baker & McKenzieLead lawyers: Milton Cheng, Edmond Chanclient: ARA

Firm: Jiangsu G & DLead lawyer: Li Qiang client: ARA

Firm: LovellsConrad Chan,

mallesons

robert Ashworth, freshfields

Teresa Ko, freshfieldsEdmond Chan,

Baker & mcKenzie

milton Cheng, Backer mcKenzie

Andrew mcGinty, lovells

“In our view, the most challenging aspect of this settlement was to get all the parties to start negotiating after three years of litigation and to reach a settlement agreement acceptable to all the parties and also workable in all the relevant jurisdictions including BVI, Hong Kong, Singapore and mainland China”

Gareth thomas

NEws | deals >>

7www.legalbusinessonline.com

| CHINA/AUSTRALIA |

ZhongjIn LIngnAn – PErILyA ►TAKEoVErUs$30m

Firm: Cochrane Lishmanclient: Perilya

Firm: Blake DawsonLead lawyers: Roger Davies, Matthew Kwanclient: Zhongjin Lingnan

China’s •third-largest zinc producer Shenzhen Zhongjin Lingnan Nonfernet Co received all approvals needed to take over Australian zinc-lead miner Perilya

Zhongjin Lingnan's proposed •A$45.5m purchase of a 50.1% stake in Perilya was voted through by Perilya shareholders and approved by Australia's Foreign Investment Review Bureau

Zinc and ore mined by Perilya could •be sent to China for smelting as

yoUr MonTh AT A gLAncE ►Firm Jurisdiction Deal name US$m Practice

Ali Budiardjo Nugroho Reksodiputro

Indonesia, Japan, Singapore

Tanjung Jati B Expansion Project 2,300 Project finance, energy & resources

Allen & Gledhill China/Singapore/Japan

GIC – ProLogis Acquisition 1,300 M&A

Allen & Overy Thailand Bank of Ayudhya – AIG Retail Bank and AIG Card acquisitions

58.7 M&A

Philippines Republic of the Philippines global bonds issuance

1,500 Finance

Allens Arthur Robinson

China/UK/Australia/Hong Kong

Chinalco – Rio Tinto stake acquisition 19,500 M&A

Atsumi & Partners China/Singapore/Japan


AZB & Partners India Brenntag Holding GmbH – Rhodia Chemicals India acquisition

4.3 M&A

India Société BIC – Cello Group stake acquisition 161 M&A

Bae, Kim & Lee Korea Shinhan BNP Paribas – SH Asset Management merger

16 M&A

Baker & McKenzie China/Hong Kong ARA Nanjing IFC Acquisition 234 M&A

Ben Abderrahmane & Partners

Hong Kong/Malaysia CVM Minerals Hong Kong IPO 17 Equity

Blake Dawson China/Australia Zhongjin Lingnan – Perilya takeover 30 M&A

Cleary Gottlieb Steen & Hamilton

Philippines Republic of the Philippines global bonds issuance

1,500 Finance

US/Korea KEXIM bond offering due 2014 2,000 Finance

US/Korea KB Financial Group share sale Undisc Finance

US/Hong Kong/China Bank of America CCBC H-share sale 2,800 Finance

Clifford Chance China Airbus China JV Undisc JV



Singapore Columbia Capital – Global Voice stake acquisition

4 M&A

Singapore Shell divestments Undisc Investment Funds

Cochrane Lishman China/Australia Zhongjin Lingnan – Perilya takeover 30 M&A

Colin Ng & Partners Singapore BreadTalk Group – Sanpou Co JV 5 JV

Denton Wilde Sapte Indonesia, Japan, Singapore


Freshfields China/Hong Kong/Japan/Belgium

Asahi Brewery – Tsingtao Brewery acquisition

667 M&A

Fried Frank China/UK/Australia/Hong Kong


China/Cayman/Singapore

CapitaLand bond issuance 175 Finance

Guangdong Shentiancheng

China/Hong Kong ARA Nanjing IFC Acquisition 234 M&A

Holman Fenwick Willan

UK/India Rajasthan Royals share sale 15.4 M&A

roger Davies, Blake Dawson

matthew Kwan, Blake Dawson

Tsingtao Brewery Group will remain •the largest shareholder in Tsingtao Brewery, holding approximate 31% stake. Anheuser-Busch InBev will retain a minority share of approximately 7%

8

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yoUr MonTh AT A gLAncE (conT) ►Firm Jurisdiction Deal name US$m Practice

J Sagar & Associates India Blackstone Group – CMS Computers investment

58 M&A

Jiangsu G & D China/Hong Kong ARA Nanjing IFC Acquisition 234 M&A

Jia Yuan Law Firm China Airbus China JV Undisc JV

Khaitan & Co India Blackstone Group – CMS Computers investment

58 M&A

Bahrain/India Batelco – S Tel share acquisition 225 M&A

Kim & Chang Korea Shinhan BNP Paribas – SH Asset Management merger

16 M&A

Korea IBM Korea – Cognos Korea merger Undisc M&A

Linklaters China/UK/Australia/Hong Kong


Thailand Bank of Ayudhya – AIG Retail Bank and AIG Card acquisitions

58.7 M&A

Lovells China/Hong Kong ARA Nanjing IFC Acquisition 234 M&A

China/Hong Kong HK Electric China power plants acquisition 732.5 M&A

Hong Kong Hong Kong Electric Holdings – Outram acquisition

733 Investment funds

Makarim & Taira S Indonesia, Japan, Singapore


Mallesons Stephen Jaques

Hong Kong/Malaysia CVM Minerals Hong Kong IPO 17 Equity

China/Hong Kong Real Gold Hong Kong IPO 132 Equity



Mayer Brown JSM China/Hong Kong/Japan/Belgium

Asahi Brewery – Tsingtao Brewery acquisition

667 M&A

China/Singapore/Japan


Milbank Indonesia, Japan, Singapore

Tanjung Jati B Expansion Project 2300 Project finance, energy & resources

Mori Hamada & Matsumoto

Japan Mitsubishi Estate Co – Towa Real Estate Development acquisition

317 M&A

Nagashima Ohno & Tsunematsu



Nishimura & Asahi Japan Aioi Insurance – Mitsui Sumitomo Insurance Group – Nissay Dowa General Insurance merger

3,100 M&A

Paul, Weiss Japan Aioi Insurance – Mitsui Sumitomo Insurance Group – Nissay Dowa General Insurance merger

3,100 M&A



Simmons & Simmons Hong Kong RCG Holdings stock exchange listing Undisc Finance

Skadden Japan Aioi Insurance – Mitsui Sumitomo Insurance Group – Nissay Dowa General Insurance merger

3,100 M&A

early as 2010

Deal is first instance of Australian •Foreign Investment Review Board approving Chinese majority ownership of an Australian resources company since Sino Steel's acquisition of MidWest Corporation last year

Kelly Gregory, Clifford Chance

| CHINA/HONG KONG |

rEAL goLd hong Kong IPo ►Us$132m

Firm: Mallesons Stephen Jaquesclient: Real GoldLead lawyers: Dieter Yih, Anand Sundaraj

Firm: Latham & Watkinsclient: Real GoldLead lawyers: John Otoshi, David Zhang

Firms: King & Wood, Conyers Dill & Pearmanclient: Real Gold

Firms: Gordon Ng & Co, Hogan & Hartson, Jun Heclient: Underwriters

Real Gold Mining IPO is first sizeable •Hong Kong listing of the year. It has tapped Citi as sponsor and Macquarie as joint bookrunner on deal

Offering is comprised of 90% •tranche for institutional investors while remaining 10% will be allocated to Hong Kong's retail investors

IPO raised approx HK$1bn; the •market capitalisation of company on listing was approx HK$4.2bn

| CHINA |

AIrBUs chInA jV ►Firm: Clifford ChanceLead lawyer: Kelly Gregoryclient: Airbus

Firm: Jia Yuanclients: Chinese industrial partners

Airbus establishes JV with Chinese •industrial partners to create manufacturing centre in northeast China

Factory will produce aircraft •composite material parts and components for several Airbus aircraft

Chinese partners: Harbin Aircraft •

NEws | deals >>


JPM008_08_AsianLegalBusiness_7No1 1 11/7/08 11:47:39 AM

http://www.jpmorgan.com

10

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| CHINA/SINGAPORE/JAPAN |

gIc ► – ProLogIs AcqUIsITIonUs$1.3bn

Firm: Atsumi & Partners client: PrologisLead lawyer: Daniel C Hounslow

Firm: Mayer Brown JSMclient: ProLogis Lead lawyers: Phillip Smith, Andy Yeo

Firm: Allen & Gledhillclient: GIC Real EstateLead Lawyer: Jean Wan

ProLogis sold PRC operations and •property fund interests in Japan to affiliates of GIC Real Estate, the real estate investment arm of the Government of Singapore Investment Corporation

Net proceeds will be used to reduce •debt and for general corporate purposes

Deal is part of ProLogis' goal to •reduce direct debt by approximately US$2bn in 2009 through reduced fund contributions, asset sales and ceasing all new development starts

Industry Group, Hafei Aviation Industry, Avichina Industry & Technology and Harbin Development Zone Heli Infrastructure Development

phillip Smith, JSm

Andy yeo, JSm

yoUr MonTh AT A gLAncE (conT) ►Firm Jurisdiction Deal name US$m Practice

Stamford Law Corporation

Singapore Good Idea Limited – Contel Corporation acquisition

22 M&A

Stephenson Harwood Korea Transpetrol Maritime Services VLCC financing

Undisc Shipping

Straits Law Practice Indonesia/Singapore Nava Bharat coal mines acquisitions Undisc M&A

Sullivan & Cromwell Japan Aioi Insurance – Mitsui Sumitomo Insurance Group – Nissay Dowa General Insurance merger

3,100 M&A

Wachtell, Lipton, Rosen & Katz



Walkers China/Hong Kong ARA Nanjing IFC Acquisition 234 M&A

White & Case Japan SanDisk – Toshiba JV restructuring 1,200 Insolvency & restructuring

WongPartnership Indonesia, Japan, Singapore

Tanjung Jati B Expansion Project 2,300 PPP, project finance, energy & resources

Does your firm’s deal information appear in this table? Please contact [email protected] 61 2 8437 4700

corrEcTIons ►In ALB Issue 9.1, p8, in the deal titled ‘Rain Fall Film Financing’, lawyers Michael Leow, Suresh Khilani and Elaine Cotter should have been mentioned as being with DLA Piper In ALB Issue 9.2, on p16 of the news analysis entitled ‘Into the lion’s den’ it was stated that Gibson, Dunn & Crutcher and Baker & McKenzie had applied for (and were subsequently not granted) QFLP licences. This is incorrect. Neither Gibson, Dunn & Crutcher nor Baker & McKenzie applied for a QFLP licence. ALB regrets making this statement.

| JAPAN |

AIoI InsUrAncE ► – MITsUI sUMIToMo InsUrAncE groUP – nIssAy dowA gEnErAL InsUrAncE MErgEr Value: Us$3.1bn

Firm: Skaddenclient: Aioi Insurance Company LimitedLead lawyers: Michael Mies, Mitsuhiro Kamiya, Robert Wray

Firm: Sullivan & Cromwell client: Mitsui Sumitomo

Firms: Nishimura & Asahi, Paul, Weissclient: Nissay Dowa

Three-way proposed merger between •Japanese insurance groups – Aioi Insurance Company, Nissay Dowa

General Insurance and Mitsui Sumitomo Insurance Group Holdings

On completion, new company will •be largest non-life insurance group in Japan, and fifth-largest insurance company in world (on basis of combined net premium written)

| PHILIPPINES |

rEPUBLIc oF ThE PhILIPPInEs ►gLoBAL Bonds IssUAncEValue: Us$1.5bn

Firm: Allen & Overy client: Republic of the Philippines

Firm: Cleary Gottlieb Steen & Hamilton client: Underwriters: Credit Suisse, Deutsche Bank, HSBCLead lawyers: Robert Williams, Yong Lee

Firm: Romulo Mabanta client: Underwriters

US-registered offering by Republic •of the Philippines of 8.375% global bonds due 2019

Offering closed on 14 January, •first offering by an Asian sovereign in 2009.

Deal seeks to stem shortfall in •revenue this year due to slow economic activity

Cleary is designated underwriters’ •counsel for offerings by the Philippines, one of Asia's most frequent sovereign borrowers. Was previously involved in US$1,000 bond issuance by Philippine government in 2007

| INdONESIA/JAPAN/SINGAPORE |

TAnjUng jATI B ExPAnsIon ►ProjEcT Value: Us$2.3bn

Firms: Ali Budiardjo Nugroho Reksodiputro, Milbank, WongPartnership, Nagashima Ohno & Tsunematsu client: Lenders

Firm: Makarim & Taira S client: PLN

Firm: Denton Wilde Sapteclient: Sumitomo Corporation

Firm: Paul, Weiss client: Sumitomo CorporationLead lawyers: John E Lange, Douglas R Davis, Manuel Frey

Sumitomo Corporation’s US$2.3bn •project will expand power supply in Indonesia

Financing deal is first extended •deal on MOU between JBIC and Indonesian Government to support various independent power producer projects in Indonesia

One of very few significant primary •syndications achieved in Q4 2008 post-credit crisis

Headline greenfield power •development in Indonesia since the 1997 financial crisis

NEws | analysis >>


International firms jockey for position amid downturn

ANALYSIS

Some international firms are remaining impressively optimistic about the prospects for expanding their operations in Greater China; others are already feeling the pinch

With the global economic downturn overshadowing much of the region, many international firms

in Greater China are looking at the essentials and reassessing their business models. A majority have announced budget cuts or adopted other strategies to keep themselves buoyant, while some have decided to downsize.

However, a few firms still see opportunity to expand at this time. US firm WilmerHale, for example, is in the process of applying for a licence to open its second China office, in Shanghai. (The firm’s only Asian office, established in 2004, is in Beijing).

UK firm Simmons & Simmons is reportedly looking at a plan to set up an office in Beijing, its second in mainland China. The firm is particularly interested in serving clients in the energy sector, after hiring Brian Downie, from Minter Ellison, in Hong Kong as head of its international projects group in Asia last November.

Eversheds, another UK firm, is also on an expansion drive. Having opened an office in Shanghai in 2006, it has now lured five partners from DLA Piper and one from Fried Frank as part of its plan to launch a Hong Kong office in March.

The new partners are: banking partners King Tak Fung and Michael Yau; litigation partners Ivan Ng, Ronald Sum and William Leung from

DLA Piper’s Hong Kong office; and corporate partner Stephen Mok from Fried Frank’s Hong Kong office. In January, Eversheds opened its Singapore office and appointed Desmond Ong, formerly DLA Piper’s Singapore managing partner, to head the new office.

The firm’s Asia practice and expansion is headed by partner Nick Seddon, who joined from Heller Ehrman last October. He was formerly the head of Asia at DLA Piper.

“From a recruitment point of view, it’s a good time to expand in Hong Kong because many firms are downsizing and there’s a lot of talent available in the market,” said Seddon.

He noted that all the partners recently appointed were not part of any downsizing but valuable practitioners. Three of the new partners will be focusing on litigation, an area that will deliver strong growth prospects for 2009.

“Recruiting people who have solid business will help a firm expand profitably and weather the economic downturn,” added Seddon. The next thing on his agenda is hiring associates for the Hong Kong office.

Some industry observers believe that a new measure, recently introduced by

“Recruiting people who have solid business will help a firm expand profitably and weather the economic downturn”

Nick SeddoN, everShedS

Stephen mok, fried frank

Desmond ong, Eversheds

12

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DLA Piper, that requires all partners to make a capital contribution was part of the reason for the departure of the five partners.

In response, DLA Piper’s Asia managing director Alastair Da Costa stated: “As with many large law firms, we have a capital requirement of our partners and we see this as an important part of the status of partnership in our firm. All partners in our firm, wherever based, have this obligation to input capital.

“Those departing partners have decided to join a smaller firm and pursue other interests. They go with our good wishes.”

In the past few months, a number of other firms have also established themselves in China or announced plans to add one or more offices to their China practices. These include Proskauer Rose, Miller Canfield, Loeb & Loeb, Bird & Bird, Slaughter and May and Spanish firms Cuatrecasas and Uría Menéndez.

But as Frazer Xia, managing director of China Legal Career, pointed out, most of these firms handed in their applications last year when the crisis was less obvious and are still opening offices because of the momentum of decisions made in the past.

However, there is still an upside to the downturn. “This downturn could mean opportunities for firms to recruit a team quickly and less expensively. Were it still a booming market like that of the first half of 2008, it would be hard to imagine hiring many partners in a short period of time,” said Xia.

With uncertainty in the market, firms will continue to cut back on hiring. But Xia has predicted that lateral hires could still happen this year. In addition to new firms entering this market, there will be other drivers for partner moves.

“Some firms will take stock of valuable partners in anticipation of market turnaround in the future, while partners with a book of business in labour, litigation, bankruptcy and restructuring are looking for places where they could be better compensated,” said Xia. ALB

frazer Xia, ClC

Funding shortages may dampen stimulus package project finance work

ANALYSIS

Project finance work for Asia-based law firms will be affected by a lack of private sector financiers this year, as the financial crisis impedes

funding of new projects unveiled in government stimulus packages across the Asia-Pacific region.

Most of the stimulus packages in Asia involve new infrastructure projects to boost ailing economies. But, according to various lawyers, Asia-Pacific governments will be hard pressed to find private sector financiers for the projects. Singapore, Vietnam and Australia, countries that rely heavily on private banks for financing

infrastructure and resources, are likely to be affected by the deadlock.

Phillip Cornwell, a project finance partner at Allens Arthur Robinson, said that government stimulus package projects will not easily find commercial financiers. “Governments around the region should be applauded for their efforts to stimulate economic activity through infrastructure projects but they’re likely to find they’re often on their own when it comes to funding them over the next year,” he said.

Cornwell emphasised that, while smaller projects such as schools and hospitals will be less affected, larger

NEws | analysis >>


news in brief >>GUANTAO MARCHES INTO HONG KONG Beijing-headquartered Guantao has opened its first international location in Hong Kong, the firm’s eighth branch office to be headed by partner Yan Pengpeng who relocated from Beijing to manage the firm’s development in Hong Kong.

Yan revealed the strategic motive behind the Hong Kong opening. “The Hong Kong office will be a platform for strengthening our alliance with Ashurst and Jackson Woo & Associates. It provides a common ground enabling the three firms to collaborate closely and share resources with each other for the clients’ benefit,” she said.

The alliance offers greater access and connection to the global markets, particularly in Europe, for Guantao and its domestic clients, who are increasingly participating in overseas capital markets and making investment into foreign countries.

yan pengpeng, Guantao

POOR FINANCIALS AT LATHAM & WATKINSIt's that time of year again. Time to take stock before launching into the 2009 battle, to assess the success of the previous year’s business plan and tweak and re-tweak it, and, perhaps more importantly, to scrutinise the financial performance of your law firm. The latter, which may have been a cause for celebration in previous years, has turned into one of the more painful aspects of running a law firm, as Latham & Watkins recently found.

The firm announced that not only had its profits fallen nearly 21% in 2008, but its profits per equity partner had also taken a tumble, decreasing from US$2.27m in 2007 to US$1.8m in 2008. Predictably, the firm’s revenues were also down 4%, from US$2bn to just under US$1.9bn. The firm recently decided to freeze associate salaries in 2009.

projects will be hard hit for debt funding by hesitant Western banks. “The stimulus package and the need for infrastructure will ensure that many new infrastructure projects get started this year, but the global financial crisis means that relatively few will be funded by Western banks. There is simply far less private debt available to fund new projects,” he said.

However, Geraint Hughes, a Hong Kong-based project finance lawyer with Clifford Chance, remains optimistic about the prospect of legal work, tipping activity in the project finance market to increase and banks to continue to finance projects, although admittedly at a slower pace than in previous years. “Throughout 2009 and into 2010, we’ll see a greater share of overall commercial bank lending made available for project financing – even if total commercial bank lending will be a lot smaller than it was a year ago,” he said. “As the year goes on, banks will want to invest in more tangible, asset-based transactions with predictable revenue streams, identifiable counterparty risks, transparency and political insurance protection – as opposed to some of the more complex, synthetic-based transactions we’ve seen in different sectors over the past few years.”

One of the region’s largest plans, China’s US$570bn stimulus, is

anticipated to boost economic activity by developing infrastructure in the housing, water, electricity and transportation sectors. According to local media, Chinese banks lent a record US$175bn in new loans in January, largely for infrastructure projects such as railways and electricity grids. The figures amount to 20% of the banks’ full-year targets.

“In China, the project finance sector is dominated by PRC banks so the balance sheet problems of Western banks will have less of an impact,” said Cornwell. “However, PRC banks have recently been directed to increase their loan loss provisions, and clearly China is not immune [to] credit rationing, though the impact may be less severe.”

Smaller Asian countries, however, are likely to resist the deadlock of project finance work suffered by their larger neighbours, simply due to development needs. Vietnam, whose economy grew by 8.5% in 2007, announced a US$1bn stimulus in December last year, dedicated in part to funding infrastructure, housing, school and hospital projects. It is estimated that the Vietnamese government will need US$10bn in private sector funding for the projects.

“Looking at Vietnam ... I would agree that there will be less ‘greenfield’ project finance work this year but,

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14

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judicial exam and 37 out of over 600 Taiwanese candidates passed the exam in September last year. Many of them are now applying for internship with firms in Beijing and Shanghai.

According to the administrative measures issued by the Ministry of Justice last December, qualified Taiwan lawyers with a PRC licence can even become partners of domestic firms. PRC firms are welcoming the measures and expect Taiwan lawyers and partners to bring more business to mainland firms.

“Local firms with Taiwan lawyers can provide value-added legal services to Taiwanese companies and investors doing business in the mainland. These firms will attract more Taiwan clients and instructions on cross-strait deals,” said Dong.

mainland companies to invest in TaiwanSince the mainland let in Taiwan companies in the early 1980s, their investment in the mainland has reached US$47.66bn by the end of 2008, accounting for 5.6% of the mainland’s total FDI inflows.

Providing legal services for Taiwan companies investing into the mainland has been regarded as an established and traditional practice in many firms. The most anticipated new trend and area of growth is facilitating mainland investment into Taiwan.

The regions are expected to sign a financial industry memorandum

Cross-Strait legal cooperation strides aheadANALYSIS

Lawyers on both sides of the Strait expect to benefit from improving economic ties between the mainland and Taiwan

In what was perhaps the biggest news for the legal industries on both sides of the Taiwan Strait, the mainland lifted the ban on Taiwan residents

from becoming PRC-qualified lawyers. The move saw the first Taiwan resident, Zhu Xiangyang, permitted to practise law in the mainland in January this year.

Just as the direct transport and direct postal links, commenced last December, will give a valuable boost to the economic ties between the two sides, the opening up of the mainland legal market to Taiwan residents will stimulate more cooperation and business opportunity for law firms on both sides of the Strait.

“Permitting Taiwan residents to practise law in the mainland is a good move, which will promote positive cross-strait relations,” said Dong Xiao, partner at Beijing Lantern. “The move allows lawyers from both sides to learn from each other and better understand each other’s legal system.”

Under the general rules, Zhu Xiangyang is required to take a one-year internship in a law firm before he can be granted a lawyer certificate to be a fully PRC-qualified lawyer. He is currently a trainee lawyer with Beijing Lantern, working with partner Dong Xiao.

In April 2008, the Ministry of Justice allowed Taiwanese to sit the mainland

Dong Xiao, Beijing lantern

Ministry of Justice announced regulations giving the green light for Taiwanese to take the national judicial examination to obtain qualifications to practise law in China

April 2008 September 2008

MAInLAnd BAr oPEns To TAIwAnEsE ►

given that Vietnam is in dire need of infrastructure, some new project finance work will happen and there is likely to be some refinancing work as well,” said Christopher Muessel, a partner who specialises in Vietnam and project finance transactions at Watson Farley & Williams.

Singapore, Australia and Japan may face bigger challenges. “In Asian markets outside Vietnam, many countries will likely experience some slowdown in their project work, and so more project refinancing work for international law firms may be the order of the day,” he said. “It remains to be seen if any of the respective country stimulus packages will really be sufficient to turn the tide, or [if it’s] a case of ‘too little, too late’.”

Hughes said the likelihood of Asia’s new projects getting underway hinged on each government’s long-term versus short-term strategies. “Countries that are committed to these stimulus packages, prepared to take the longer term perspective and have the reserves to finance a large part of the capital cost or the ability to access the international debt markets will be most likely to succeed – with some involvement from the commercial banks,” said Hughes. “Commercial banks will be focused on quality projects and stakeholders, including developers, contractors, operators, offtakers and public sector, ECA and MLA participation. The quality of the commercial banks’ relationship with those stakeholders will often be the key that unlocks the financing for their projects.”

Governments adopting a wait-and-watch approach to unlocking private sector financiers for the new projects may be acting unwisely. “The lessons of the last year include that wait and see is a dangerous strategy. Clearly, recession is currently a greater risk than inflation. For government fiscal stimulus to work, the authorities must simultaneously work to restore the free flow of credit for new projects,” Cornwell said.

For some, the challenges posed by the crisis should create a unique opportunity for change in law firms’ project finance practices. “The challenges of the coming year mark another step in the evolution of the project finance model, for those in the infrastructure sector,” said Hughes. ALB

658 Taiwanese took the annual bar examination in September. For the 37 who passed, the legal certificate allows them to practise in the mainland

NEws | analysis >>


news in brief >>LOSSES AND LAY OFFS AT LOVELLSNot only is Shibeer Ahmed, head of Lovells’ Dubai office set to leave the firm at the end of April; the firm has also announced that as many as 94 staff in its London office could be cut following the conclusion of a redundancy consultation early in March.

Ahmed, who joined the firm from Allen & Overy in 2000, will be a hard man to replace, by anyone’s measure. Under his leadership, the firm became a market leader in Islamic finance closing over 15 Sukuk deals in the 2008 calendar year worth more than US$12bn, despite only opening in the emirate in 2007.

Meanwhile, 18 fee earners and six professional support lawyers have already been shown the door at the firm’s London office, with up to 43 business support staff and 27 legal secretaries expected to follow soon. Trainees are expected to remain unaffected.

The firm’s managing partner, David Harris, says that while the firm’s overall financial performance is relatively good, additional cost-cutting measures were needed. “While overall performances across the firm have so far been reasonably good considering the economic environment, the continued uncertainty means that we need to take additional measures to manage our capacity levels and overall cost base,” he said.

HERBERT SMITH, GPA ATTORNEYS FORM SAUDI PARTNERSHIP Herbert Smith has announced a partnership with local Saudi firm Al-Ghazzawi Professional Association, also known as GPA Attorneys at Law. The partnership will satisfy local law requirements for international firms to be sponsored by a Saudi partner.

Although the two firms have been working together for some time, the arrangement was not publicised – in order to give the firms time to ascertain whether they were compatible. The announcement, therefore, is something of a coup for Herbert Smith, given the difficulties other firms have encountered in finding a suitable sponsor. Herbert Smith has signed on with what is widely regarded as one of the Kingdom’s leading firms, which has a full service offering and offices in Dammam, Riyadh and Jeddah.

Cross-Strait legal cooperation strides ahead

of understanding later this year. Lawyers from both sides are looking forward to a surge in mainland investors into Taiwan after the memorandum is signed.

Mainland financial institutions are likely to lead the new wave, as the Bank of China (BOC) and Industrial and Commercial Bank of China (ICBC) are reportedly eyeing a stake in Taiwan’s Mega Financial Holding and seek to enter the island market.

“A significant number of companies in Taiwan are in need of capital and are hoping to attract investment from mainland companies,” said Wang Guangming, managing partner of the Dacheng Shanghai office. “We expect Taiwan to allow mainland companies to enter its market soon. Letting in mainland investment will help the Taiwan economy to recover from the global financial crisis.”

Last November, Dacheng launched The Cross-Strait Legal Service Center (“the Center”) in Shanghai, a joint initiative of the firm and the Taiwan All-China Federation of Industry and Commerce (“TAFIC”).

The Center aims to provide legal services for both Taiwan and mainland clients, and has a particular focus of filling the gap in legal services for those who intend to invest in Taiwan. “With improved cross-strait relations, our domestic clients are increasingly interested in investing into Taiwan. We are proactively taking steps to facilitate client needs,” said Wang. ALB

Ministry of Justice promulgated The Administrative Measures for the Practice of Law in the Mainland by Taiwan Residents Holding the National Legal Profession Qualifications, which came into force on 1 January 2009

Zhu Xiangyang became the first Taiwan resident to be permitted to practise law in the mainland

December 2008 January 2009

16

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“Sharing of legal talent will undoubtedly increase as cross-strait trade and investment relationship grow but will not become interchangeable as a result of trade liberalisation policies”

h heNry chaNg Baker & MckeNzie

It has become too commonplace to even mention. At the first sign of corporate misfeasance an accusatory glance, a blameful gesture is flashed

in the direction of ‘the lawyers’. A stare, some idle gossip, arbitrary finger pointing are all reactions that Enron, WorldCom and Tyco have engrained in the corporate consciousness the world over. But not so much in India it seems.

When Satyam Computer Company’s B Ramalinga Raju stepped down as CEO of the company he founded 20 years ago after admitting to a fraud believed to be valued at US$1.6–2.0bn, the wrath of corporate India was directed solely at Raju, his promoter-brother and the company’s auditors whose creative bookkeeping was seemingly at the heart of the scandal. In the immediate aftermath, anger has also been directed at the regulator, lawmakers and others – everyone, it seems, has attracted the

Craving attention: Law firms in post-Satyam IndiaLaw firms may not have been embroiled in the Satyam scandal, but for once, just once, they’d like to steal a headline or two away from their financial services brethren

ANALYSIS

ire of Indian business, with the notable exception of law firms, and with good reason; law firms were not as embroiled in this scandal as they have perhaps been in other corporate meltdowns. Indeed, one could justifiably state that firms were not involved at all.

But this isn’t to say that law firms have been sitting idly by since the implosion at India’s IT outsourcing bellwether or that they haven’t been leading the charge in calling for an overhaul of the country’s corporate governance framework. In fact, for many Indian law firms the past few months have been ones in which forward planning has gone into overdrive.

Not only are they planning how to capture a share of the regulatory and corporate governance advice work that is expected to arise as a result of the Satyam episode, but they are also readying themselves for what, it seems,

1987 1991 20082001

Founded by •B Ramalinga Raju

Secondary listing on Euronext Amsterdam •through NYSE’s Euronext new ‘fast path’ process for cross-listings on NYSE and in EuropeFiscal year to March 2008, Satyam reported a •46.3% rise in revenues to US$2.1bnJan: Projected revenues for the fiscal year ending •March 2009 to increase by as much as 19–21% to US$255bn–259bn16 Dec: Announces U$S1.6bn takeover of Matyas •Properties and proposed acquisition of 51% stake in Matyas Infrastructure17 Dec: Deals to be promoted by Raju’s two sons •called off after shareholder uproar

Debuted •on the Indian stock exchange; IPO oversubscribed 17 times

Listed on the •NYSE

sATyAM: ThE sTory so FAr ►

Concerns about competitionThe ability of the Taiwan residents to take the PRC bar exam and be admitted is a welcome development. But there have been some concerns over how competition between their legal markets will develop.

The main question is whether Taiwan firms will lose more legal talent to mainland firms, as more lawyers are lured by the higher earning potential and larger market in the mainland. “The mainland legal service market is lucrative, and the new measure will attract more Taiwan lawyers to practise in mainland firms,” said Dong.

However, Baker & McKenzie’s Taipei managing partner H Henry Chang remains doubtful about the effects on the two legal markets.

“Sharing of legal talent will undoubtedly increase as cross-strait trade and investment relationship grow but will not become interchangeable as a result of trade liberalisation policies,” Chang said. “For the time being and for the short term, we will see more inter-firm cooperation in cross-strait business deals.”

Another question remains, as to whether Taiwan is likely to reciprocate and open its bar to mainland lawyers.

This seems unlikely, as an official in Taiwan ruled has out the measure, giving differences in the legal systems and an overcrowded local industry as the reasons. ALB

NEws | analysis >>


will be their increasing celebrity. If Satyam has taught corporate India nothing else, it is the need for a closer relationship with law firms.

The professional services pauperOf all the professions in India, it is arguably the nation’s lawyers whose services are most undervalued. Auditors, accountants, financial planners, investment bankers and consultants, it seems, are more trusted counsel to Indian corporates then lawyers.

“The role of corporate lawyers is not what it is in the west,” says Shantanu Surpure, managing attorney at Sand Hill Counsel. “Companies here look to cut costs wherever possible and legal bills are generally the first thing that gets slashed; companies have tended to use corporate lawyers sparingly, preferring to make use of in-house teams more.”

But it is not just all about cutting costs. Indian clients have been slower than others to realise that while advice from external corporate lawyers may cost money, instructing a good one may, in fact, save them money in the long run.

“Clients in the past may not have always been quick to understand the commercial utility of using a law firm,” said Abhishek Saxena of Phoenix Legal. “They have not understood the value that a lawyer or law firm can add to a transaction, leaving corporate lawyers greatly underutilised by Indian clients.”

Saxena, however, is quick to emphasise that it is generally Indian clients who have taken the longest to warm up to corporate lawyers. But if the attitudes of domestic clients have played a part in this process, then the fact that the ‘business of corporate law’ is still embryonic in India is another factor.

“Corporate law in India is a cottage industry. In the US or UK, corporate lawyers, transactional lawyers have been around for a long time. In India, you wouldn’t have had anyone calling themselves a corporate lawyer 10 years ago – that was unheard of,” says Suresh Shroff of Amarchand Mangaldas. And Schroff’s point is well established – as is the role that government enforced restrictions are playing in keeping it there.

“Outside India, legal services are a business, here [in India] it is a profession; we still have archaic rules,” says Rajiv Luthra of Luthra & Luthra.

That is the current status quo. But developments such as the lifting of some of the restrictions faced by Indian law firms, increased FDI into the country and a corporate meltdown are catalysts for the greater sophistication of the business of corporate law.

Short-term spikeAnd while one should not expect Indian lawyers to be catapulted to equal

footing with their financial services brethren overnight, the legalscape post-Satyam provides a telling picture of the future – a future in which, according to lawyers interviewed by ALB, corporate India cannot ignore the role that corporate lawyers can play in aiding domestic economic development.

“There is undoubtedly an upside to the whole Satyam debacle for Indian lawyers,” says Rodney Ryder, a partner at Indian firm Kocchar & Co. “Clients will want to make sure that they are in a position to avoid similar things happening to them; they will be looking to make sure that their operations are spick and span. The immediate consequence for lawyers is an uptake in corporate governance work and regulatory advice. We have already received instructions to this end, and it’s work that we haven’t really done on a large scale before.”

“A lot of work will emanate from what will be the want of the regulators to tighten things up,” says Saxena. “And while things may not resolve themselves in a Sarbannes-Oxley type way, there will be a lot of work around for those who are willing to go after it.”

And the regulators’ search for the panacea for corporate India’s ills is expected to muddy the corporate governance regime enough to keep firms busy in the near future.

Satyam will ensure that issues such as the role of independent directors and institutional investor protection remain at the forefront of regulator attention with the “demand for accountability” sure to provide firms with more than enough work to keep them busy.

“Will this mean that shareholders, institutional or otherwise, become more mobilised to the extent they are in the US? Only time will tell in that respect,” says Surpure. “But one thing is for sure; the role of independent directors, particularly where they are family members will almost certainly come in for scrutiny.”

Just as there were moves to ‘self-regulate’ post Enron, so too are Indian corporations going down this path. “Clients will reach out to lawyers more in all areas of business, I would suspect,” says Saxena. “Many are already making attempts to ‘self-regulate’ and this will also bring lawyers more instructions.” ALB

sATyAM qUIcK FAcTs ►India’s fourth largest software services exporter •based in HyderabadSpecialises in business software, backend office •outsourcing and consulting services Clients include GE, Nestlé, Qantas and Fujitsu•Has over 53,000 employees in 66 countries•In Sanskrit, Satyam means ‘speaking the truth •without distortion or deviation’

2009

02 Jan: Founder’s stake falls to 5.13%•05 Jan: Shares plummet a further 9% on fears •corporate governance could affect new business07 Jan: Raju resigns and admits to fraud; says •company’s cash and bank balance sheet has been inflated and fudged to the tune of Rs 5,040 crore (US$1.06bn)09 Jan: Raju and his brother B Rama Raju arrested •by Indian police24 Jan: Two Price Waterhouse partners – chief •relationship partner S Gopalakrishnan and engagement leader Srinivas Taluri – arrested for criminal conspiracy and falsification of accounts

23 Dec: World Bank bans Satyam from doing any •business with it for eight years due to company’s “alleged malpractices including bribery and improper benefit to bank staff and lack of documentation or invoices”23 Dec: Share price plummets 13.5% on rumours that •Raju has resigned26 Dec: Satyam Independent director Mangalam •Srinivasan resigns29 Dec: Directors Rammohan Rao, Krishna Palepu and •Vinod Dham resign29 Dec: Company announces that lenders were •possibly selling promoters pledged equity

Shantanu Supure, Sandhill Counsel

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uk report

ROUNDUPNorton Rose’s incoming chairman Stephen Parish recently revealed plans to steer the firm towards a US •merger, citing that a New York office is essential for any international law firmSimmons & Simmons has decided to split its two Portuguese offices. Simmons & Simmons Rebelo de •Sousa, a firm of five partners and about 70 fee-earners, is no longer part of the firm, although it will continue as an alliance partnerIan McDonald has been chosen to head Mayer Brown’s eight-partner insolvency team in London, taking •over from London litigation head David Allen and finance partner Ian ColesClifford Chance has decided to lease part of its Canary Wharf offices to KPMG in 2009–10 for £4m. •The accountancy firm has already moved around 1,000 staff from its tax and people services practice into 93,000sq ft on the 16th–19th floors of 10 Upper Bank Street. Full relocation set for autumn 2010

Linklaters tops renewable deals tally Magic Circle firm Linklaters recently made its mark in the renewable energy sector, coming in at the number one spot on the Infrastructure Journal deals list after advising on 13 deals worth US$5.87bn (£4.09bn). Top Spanish firm Garrigues came in second on the value rankings, but took first place on the largest volume of deals in the sector overall with 33 transactions. US firm Milbank took third place, advising on 15 deals worth US$3.8bn (£2.62bn).

Norton Rose and Allen & Overy were the highest-placed UK firms in the market by volume, with 17 renewables deals each, worth US$2.78bn (£1.91bn) and just over US$3bn (£2.06bn) respectively.

Slaughters slashes rates Slaughter and May has switched to a ‘value billing’ system and abandoned hourly rates in an effort to provide clients with a fixed fee. The new fixed rate method sees the client and firm agreeing on fees in advance, whereby an estimate is agreed on based on “realistic assumptions”.

The Magic Circle firm, which won a place on ITV’s fixed fee-only panel (the first to be made up of firms that do not charge by the hour) in October 2008, is also trialling a discount policy, eg, by offering lower rates for deals that fail to complete.

DLA set to cut again DLA Piper initiated a redundancy consultation in February set to slash 30 lawyers and 110 support staff from the firm’s UK offices.

Although no trainees will be affected, the firm has requested a number of those due to start in 2009 to defer their start dates until 2010.

KOREA

UK sweetens up to Korean legal industry

The British Embassy in Korea held a seminar for local lawyers and

law firms as part of a campaign to ensure the UK a place in the Korean legal market, which is edging closer to liberalisation following bilateral trade talks with the EU.

The seminar was co-hosted by the Law Society of England and Wales and the Korean Bar Association, focusing on ways local lawyers and firms can compete in the global legal market. Lawyers from Clifford Chance and Kim &

ASIA/AUSTRALIA

Law firms to assist in UN corporate law–human rights study

The United Nations has selected four law firms in the Asia-Pacific region

to investigate the relationship between human rights and corporate law across 40 countries.

Law firms – including India-based Amarchand & Mangaldas, Australia-based Allens Arthur Robinson, Magic Circle firm Clifford Chance and Malaysia-based Mah Kamariyah & Philip Koh – will work with the special representative of the UN Secretary-General on business and human rights, Professor John Ruggie, on a project to identify the relationship between national corporate laws and human rights. There are 15 Asia-Pacific firms working on the project, examining existing corporate laws

Lovells launches redundancy program Lovell’s has joined the list of UK firms making redundancies in early 2009, despite a steady financial performance going into the recession.

The firm recently launched a redundancy consultation which will see up to 94 members of London staff lose their jobs: these could be 18 lawyers, 43 support staff, 27 secretaries and six professional support lawyers.

Those lawyers in the dispute resolution, business restructuring and insolvency, IP and pensions practices escape the cut, but support staff across the board will be affected and the firm is said to be retaining 78% trainees from the spring qualifiers.

Freeze hits White & Case London Following a 4.8% drop in global profit per equity partner (PEP) during the 2008 calendar year, White & Case’s London arm recently implemented a hiring and salary freeze in a bid to reduce costs.

The firm has decided to keep associate salaries at current levels – even associates moving from one year’s post qualification experience (PQE) to two will not receive any pay rise. So far it seems to be working – White & Case’s London office saw a 4% hike in revenue early February – up to US$245.9m.

Second redundancy consultation hits Simmons Simmons & Simmons recently began a second round of redundancy consultations, putting 20 associates and up to 49 secretarial and support staff at risk of losing their jobs.

The main areas to be cut from are capital markets, banking, projects and real estate; 35 secretaries and 12–14 professional support staff roles are also under threat of redundancy.

NEws >>


news in brief >>OFFICIAL LAUNCH FOR DLA PIPER KUWAIT DLA Piper has formally launched its joint venture with Kuwaiti firm Al-Wagayan, Al-Awadhi and Al-Saif. The joint venture, which was foreshadowed by the firm last October, will operate under the name DLA Piper Kuwait and satisfies local law requirements restricting the operation of foreign firms without a partner local firm.

Nigel Knowles, DLA Piper’s joint CEO, described Kuwait as having “one of the best and secure environments in the Gulf”. The firm also has a presence in the UAE, Qatar, Oman, Egypt and Saudi Arabia, where it has recently acquired a new partner firm.

KOREA

UK sweetens up to Korean legal industry

Chang discussed skills needed by young lawyers to compete internationally, while local law firms were briefed on ways to service clients in a global marketplace by representatives from Eversheds and Ernst & Young.

The timely initiative comes as bilateral trade talks between the EU and Korea approach finalisation. The pact will pave the way for the liberalisation of the legal services market, a move which the Law Society of England and Wales has been keeping a close watch on.

The Society is involved in lobbying campaigns to secure UK firms a place in the Korean legal market, in competition with US firms, hoping that the US–Korea trade pact will open the market soon in a three-stage process. According to the Society’s newsletter, the seminar was a move by its international division that is campaigning to “work closely with governments and Bar Associations in other countries to open new markets for lawyers”.

ASIA/AUSTRALIA

Law firms to assist in UN corporate law–human rights study and their application by courts and regulators, and whether they comply with human rights principles.

Ruggie said that the firms’ pro-bono participation demonstrated their appreciation for how human rights were relevant to their clients’ needs.

The Allens Arthur Robinson team will be led by partner Craig Phillips and senior associate Rachel Nicolson, who are researching the Asia-Pacific region over a period of eight weeks, starting in February. The firm was chosen through its long-standing relationship with the UN, having worked with Professor Ruggie since 2005. Nicolson clarified that the firms’ clients will not be directly contributing to the research or funding of the

TROWERS & HAMLINS ANNOUNCE SYRIAN TIE-UPUK-based law firm Trowers & Hamlins has become the first international firm to enter the Syrian legal market after establishing an association with domestic firm Sultans Law of Syria.

In a statement, the firm said that the decision to enter Syria comes on the back of increasing demand for international commercial and corporate law advice as the government there steps up efforts to grow its private sector by tapping the project finance and tourism markets and attracting more foreign direct investment.

Adrian Creed, a partner at Trowers, said: “We are delighted to have signed this association with Sultans Law. We’re keen to continue the growth of our international practice from its base in the Gulf and Egypt. We have spent a lot of time getting to know [the team at Sultans Law] and to us it looks like a great fit.”

Sultans Law was established in 1998 and focuses on commercial law. It is headed by Samer Sultan, the vice chair of the Arab Regional Forum of the International Bar Association. He has advised clients such as Nokia Siemens, Cargill, Ssangyong Corporations, Picanol and Italferr on their investments into Syria.

NORTON ROSE PARTNERS SIGN UP FOR NEW ABU DHABI OFFICE The Middle East may be losing some of its lustre but is still faring better than the UK. That, perhaps, may be the lesson to be drawn from the relocation of three London partners who are set to converge on the firm’s Dubai and Abu Dhabi offices later this month.

Neil Miller, former head of the firm’s Bahrain office and global head of Islamic finance, will move across to the Dubai office. London-based asset finance partner Emma Giddings will move to Abu Dhabi, as will corporate finance partner Alan Bainbridge. While the opening of the Abu Dhabi office was announced last May, operations only commenced this year and will benefit from the improved proximity the two new partners will have to their clients. Norton Rose now has offices in Abu Dhabi, Bahrain, Dubai and Riyadh, the latter being an associate office with local firm Abdulaziz Al-Assaf Law Firm.

project, and will not be named in connection with the project; however, the firm may seek to draw on their experience for anecdotal data.

The Clifford Chance team will be headed by London-based partner Michael Smyth, who was involved with the project previously. A Bombay-based team from Amarchand & Mangaldas will cover the Indian jurisdiction. Partner Vandana Shroff said that the firm will aim to work with corporations and regulators as intermediaries to advocate for change and raise awareness. “As a law firm, we believe that if and when corporates are made aware of the plight of those suffering they will step up and do something to make the change,” said Shroff.

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us report

ROUNDUPDewey & LeBoeuf has closed the curtains on its San Francisco office and is set to combine its Bay Area legal •and support staff following the shutdown Baker Botts has defied the odds and posted a 6.16% increase in global revenue for the past financial year from •$577.7m in 2007 up to $613.3m in 2008. PEP at the firm is also up 4.6% from $1.3m to $1.36m in 2008.US firm Debevoise & Plimpton recently recruited George W Bush’s final attorney general Michael Mukasey and •also former UK attorney-general Lord GoldsmithNew York firm Kramer Levin Naftalis & Frankel has announced it will be making 18 lawyers and 21 support •staff redundant due to the impact of current economic conditionsSimpson Thacher & Bartlett is ready to launch in Brazil following the find of a permanent office space for lead •partners Todd Crider and Jaime Mercado, with room for a further five associates and one more partner Dechert lost 10 staff lawyers to redundancy last month, in the firm’s second round of layoffs, giving insufficient •workflows as the cause Morrison & Foerster recently put a freeze on associate salaries and cut its associate discretionary bonuses to as •low as US$6,000 (£4,200) for 2008

Dewey revels in revenue increase While average profit per equity partner at Dewey & LeBoeuf has remained relatively motionless at US$1.57m, the firm recently revealed a minor revenue increase for the 2008 financial year.

Gross revenue for the US firm grew 2.1% from US$1.008bn in 2007 up to US$1.03bn despite office closures in Austin, Charlotte, Hartford and Jacksonville.

Ashurst enters the US Ashurst has revealed plans to launch fee-earning offices in Washington DC and New York, following the hire of a 11-partner structured finance team from long-time US niche-ally McKee Nelson.

This will be a first for the UK firm, that until recently had a non-fee earning presence in New York.

Orrick set to slash jobs Just a few months after slashing 75 associates, counsel and support staff across its US, Asia and Europe networks, Orrick has revealed plans for another redundancy program that could see up to 12% of the firm’s associates and of counsel laid off.

It is reported that about 300 across the firm’s US, Asia and Europe offices are in the firing line, with the firm citing the world economic crisis, its impact on clients and levels of activity in the world market as catalysts for the cut.

McDermott slashes staff McDermott Will & Emery recently let go of associates and 89 support staff across its US offices as the credit crunch continues to make its mark. The layoffs follow reports of static profit per equity partner (PEP) figures at US$1.52m, and a 1.2% drop in revenue from US$978m in 2007 to US$966m last year.

PEP falls among US firmsUS firms are feeling the effects of the economic downturn, with profit per equity partner (PEP) figures at a number of firms below par. Average PEP at Latham & Watkins last year stood at US$1.8m compared with US$2.27m in 2007 and the firm posted a 21% drop in average profit per equity partner (PEP) for the 2008 financial year.

The collapse of Davis Polk & Wardwell’s core financial services markets has hit hard, with average profit per equity partner falling 15% to US$2.05m in 2008, despite post flat revenue growth for the same, remaining at US$767m. Similarly, while revenue at Paul Hastings increased by 1% to US$986m (£696m), the firm’s 2008 financial results revealed profits per partner fell by 1% to US$1.9m (£1.3m).

Profit per equity partner at Sullivan & Cromwell remained at around the US$3m mark, despite a decrease of 4%, cementing the firm as the current most profitable full-service US law firm.

JAPAN

No crackdown on foreign lawyers, says Bar Association

KOREA

Korean lawyers publish judges’ first report cardsA Korean law society’s report rating

the performance of local judges has been published, intensifying debate among the country’s legal fraternities.

The Seoul Bar Association (SBA) made headlines last year after moving to record score-based evaluations of judges based on the following criteria: attitude, integrity, fairness and knowledge. The evaluation system is the result of a rise in complaints by local lawyers against “aggressive” judges.

The first report was handed to the Supreme Court in Seoul by former SBA president Ha-Chong Woo in January. The survey was conducted between December 2008 and January 2009. Around 491 lawyers assessed the performance of 456 judges across eight courts in Seoul. The results showed the top judge received 93 points, while the lowest received 45. Overall, Seoul’s judges averaged 75 points.

The report also named the highest and lowest ranking judges, but the SBA will not make this available to the

NEws >>


public – or even its members. The report is released solely to the courts to improve internal management. Woo said that, despite the controversy created by the report, it was necessary to improve the courts system. “There are many cases of unfair trials in Korea,” Woo told ALB. “There have been judges making insulting remarks to the lawyers and the parties concerned, and they have disgraced the dignity of the court. The Seoul Bar Association is promoting a system that makes objective outside evaluations of judges so that appropriate changes can be made in court personnel.”

Woo clarified that, while the evaluation committee currently only consists of lawyers, judges will also be involved in the committee in the long term. The report has caused raging debate in Korea’s legal industry, and some judges are criticising it as a threat to the independence of the courts. But lawyers say that the measure will bring Korea in line with international systems.

“We are trying to promote fair, dignified trials in Korea,” said Woo. “When the judge evaluation system goes into effect, the quality of trials will rise. The courts are criticising the bill for infringing upon the independence of judges. If the citizens support this system, the courts’ objection will be overcome and the judge evaluation system will become firmly institutionalised.”

news in brief >>

NIxON PEABODY LAUNCHES ISRAEL BUSINESS PRACTICE Nixon Peabody has launched an Israel practice group aimed at advising those doing business with Israeli companies. The group is comprised of attorneys working from offices in the US, China and France and is multidisciplinary, having experience in advising clients on matters ranging from technology to interactive media. The group will be co-chaired by Nixon Peabody partners Sam Feigin and Mark Kass.

JAPAN

No crackdown on foreign lawyers, says Bar Association

reports of an impending regulatory crackdown on unregistered

foreign lawyers are incorrect, according to the Japan Federation of Bar Associations (JFBA).

Media reports began stating last month that a letter issued by JFBA required all law firms to register all foreign lawyers with the bar, regardless of position.

However, Shiro Yanagi, deputy secretary general of the JFBA, has denied this, saying that the letter was simply a reminder of existing requirements and not intended to foreshadow changes to the system.

Not all firms were swayed by this. Tokyo-based registered foreign attorney, Bonnie Dixon of Atsumi & Partners, described the reaction as “overstated”: “[The letter is] a reminder of the limitations on legal services that non-registered people can handle. I’m not aware of any enforcement actions, and my own firm has always been

careful to adhere to the regulations to the best of our understanding of them,” she said.

Similarly, a Tokyo-based managing partner of an international law firm said that the letter was a request to firms to keep in line with regulatory requirements, and that the Bar did not identify any specific problems that needed to be addressed under current law firm practice. “The ministry of justice as well as many members of the Bar are saying to us [that] the new letter is simply intended to restate the existing law, and make sure that people don’t interpret a prior bar letter – which encouraged all the firms to register all their partners – as implying that non-partners who are actually practising law within the meaning of the rules also have to register. In our view, this has always been clear, and we have a number of non-partners who we registered previously.”

KOREA

Korean lawyers publish judges’ first report cards

BURGES SALMON ON LOOKOUT FOR NEW FRIENDS UK-based law firm Burges Salmon is seeking to expand its international reach by establishing ‘better friends’ with law firms in India and China.

Following a review of its international strategy, the firm established a series of subcommittees to manage and initiate ties with up to three referral firms, in India, China and the Middle East. The firm has already established such a relationship with Delhi-based firm Kochhar & Co and is on the lookout for more, especially in China where it is still friendless.

However, Chris Seaton, head of international at the firm, feels this is about to change. “We’ve identified emerging markets as an extremely important area and we’re keen to create links. We’re looking closely at China and we’re having meetings with potential candidates,” he said.

SINGH & ASSOCIATES TO LAUNCH INDIA’S BIGGEST LPODelhi-based law firm Singh & Associates is on the threshold of launching India’s largest Legal Process Outsourcing outfit (LPO). In what is believed to be a first in the Indian legal sector, the firm has paired with Cosmos Infra Engineering (India) Pvt. Ltd to start an LPO operation with 500 staff in Dwarka, New Delhi.

Manoj K Singh, managing partner of Singh & Associates, said that the decision to get into the LPO sector was influenced as much by the size of the industry as it was by the increasing importance it is assuming in the current global economic downturn. “The legal budget of large corporations is in tens and often hundreds of millions of dollars and directly affects the bottom line of these companies. Today, corporations outsource more than US$250bn worth of legal services to law firms globally,” said Singh. “The legal industry

across the globe is gradually turning towards outsourcing for gaining efficiencies and staying profitable in a highly competitive marketplace. The LPO will be recognition of the fact that companies need to focus on their core competencies and leave back-end legal processes in the hands of competent outsourcers.”Ph

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SINGAPORE

Singapore introduces new legal industry measuresS ingapore is set to join Australia, Hong Kong and England

in requiring lawyers to undertake continuing legal education, while overseas-qualified lawyers no longer have to complete a compulsory course to practise locally.

Law minister K Shanmugam announced the changes in parliament as part of a broad raft of “essential measures” to improve the legal industry. “A comprehensive and holistic legal education framework is necessary, because most essential for a vibrant legal sector are good quality lawyers,” he said. “Therefore, ensuring that legal education and training is top notch is extremely important.”

The minister’s proposals came after a report on the legal industry submitted by Justice VK Rajah found that regulatory restrictions were acting as a deterrent to joining the profession, which in turn could lead to a future shortage of lawyers.

Overseas-qualified lawyers will no longer have to complete the mandatory one-year Diploma of Singapore Law course in order to practise locally. This requirement has been scrapped in favour of an optional examination. Schemes allowing foreign lawyers to practise local law after completing a one-year stint with a domestic law firm have also been simplified, with the qualifications streamlined into a single examination.

Meanwhile, education for fledgling lawyers is also set to be revamped. Firms taking on graduates will be required to provide more hands-on experience, and will also have more responsibility for supervising and mentoring new trainees with the introduction of new training contracts.

The changes were welcomed by industry commentators. “The ministry should be applauded for its decisiveness. I fully agree that the one-year DipSing course had outlived its utility, because you have very good legal minds qualifying

ASIA

Allen & Overy confirms 9% global cuts, salary freezes

UPdATE >>

International Arbitration

setting aside an arbitral award

There are two separate regimes of laws governing the setting aside of arbitral awards: domestic awards are governed by the Arbitration Act (“AA”), while international awards are governed by the

International Arbitration Act (“IAA”) and the Model Law on International Commercial Arbitration (“Model Law”). The principal difference between the AA and the IAA is that under the IAA, there is no right of appeal against the award so that the finality of awards in the international context is preserved.

The grounds for setting aside a domestic award are listed in s 48 of the AA. Under s 49 of the AA, it is also possible to appeal to the court on a question of law arising out of a domestic award. This is permissible only if all the parties consent, or with the leave of the court, and where there has been no prior agreement to exclude the court’s jurisdiction (see s 49(2) and (3) of the AA). Under s 50(3) of the AA, any appeal must be brought within 28 days after the award has been made. Leave to appeal will only be granted if the court is satisfied that the grounds in s 49(5) are met.

An international award can be set aside by a Singapore court only if the award is ‘made’ in Singapore i.e. the place/seat of arbitration is Singapore. The grounds for setting aside an international award are listed in Art 34(2) of the Model Law, namely:

incapacity of the parties or agreement is invalid under a. chosen law;party has no proper notice of appointment of arbitrator b. or arbitral proceedings or otherwise unable to present his case;dispute outside scope of arbitration;c. composition of tribunal/arbitration procedure not in d. accordance with agreement of parties; andsubject matter not arbitrable under Singapore law or e. against public policy.

In PT Garuda Indonesia v Birgen Air [2002] 1 SLR 393, it was recognised that Section 24 of the IAA sets out additional grounds for setting aside an international award, namely, if the award was induced by fraud or corruption, or breached rules of natural justice. These grounds are exhaustive. The court hearing an application to set aside an award under the IAA cannot investigate the merits of the dispute or review any decision of law or fact made by the tribunal.

Ms Indranee Rajah, SC is a Director of Drew & Napier’s International Arbitration Group. The cross-border disputes she has handled include arbitration related to energy and utilities agreements and multi-jurisdictional frauds. She can be contacted at +65 6531 4100, or [email protected]. For her full CV, please visit www.drewnapier.com/directors.html

indranee rajah, SC

NEws >>


news in brief >>SINGAPORE

Singapore introduces new legal industry measuresin overseas universities deterred from returning, as they had to do the DipSing,” said Lee & Lee litigation partner Christopher De Souza .

De Souza, who is also a local member of parliament, had suggested that regulations be revised after attending a conference in London, where he met with overseas-qualified lawyers who expressed their concerns about restrictions.

The broader aim of the measures is to address an anticipated decline in lawyers. Overall, it is projected the measures will seek to increase lawyer numbers by up to 70%. However, this surge in lawyers into the profession has attracted criticism for potentially decreasing the quality of candidates.

“Criticism can easily be answered with a high standard bar exam – so that the people who do get through and qualify are fully able and equipped to practice,” said De Souza. “The [measures] will increase the supply of lawyers who are well qualified. Market forces will then recruit top talent. This can only benefit law firms’ clients, because you’ll have a number of good lawyers working on your case, rather than a few.”

ASIA

Allen & Overy confirms 9% global cuts, salary freezes Allen & Overy has confirmed it is

axing 9% of its global partnership and associate numbers in a detailed review of its finances, but refused to say whether Asia offices will be affected.

The firm announced late February it will be shedding 47 global partners by April, and another 35 will have their equity partner status “reviewed”. An additional 9% of fee earners and associates will also be made redundant. Salaries will be frozen at 2008 levels. The firm will also separate its private client practice group into an independent firm named Maurice Turnor Gardner, but staff in the practice group will still be subject to redundancy reviews.

“We reached the inescapable

conclusion that there is simply not enough work to keep all of our people sufficiently busy, and we do not see that changing in the near to medium term,” said global managing partner, Wim Dejonghe. “We must act decisively to get the business to the right size, with the right skills, in the right places and minimise the need for any future similar announcements.”

While most of the cuts will affect the firm’s two London offices, a spokesman from the firm refused to confirm whether the Asia branches would be part of the review. However, the firm is understood to be undertaking a restructure of the Hong Kong office, following the departure of seven partners last year.

TURKMENISTAN: DENTON WILDE SAPTE ENTERS CENTRAL ASIA Denton Wilde Sapte has announced its entry into the Turkmen market after cementing an association with domestic firm AK Counsel.

“We’ve been committed to Central Asia for over 15 years with offices in Almaty and Tashkent,” said the firm’s Central Asia managing partner Marla Valdez. “Turkmenistan holds enormous energy potential and is set to become one of the world’s leading natural gas producers.” The firm’s JV partner AK Counsel is located in capital city Ashgabat and headed by managing partner Kerim Akmamedov. The firm has 11 lawyers, including four partners, and focuses its advice on project work and foreign investments in Turkmenistan. Under the terms of the association, Denton Wilde Sapte and AK Counsel will combine their resources to provide legal advice to clients wishing to enter this emerging market.

GOLDEN GOODBYES AT HOGAN & HARTSONThose who have been watching international law firms grapple with the pressures of the global financial crisis will have noticed a few peculiar things. Apart from the ironic prospect of laid-off lawyers suing their erstwhile employers, it seems that most firms are falling over themselves to prove that their response to the financial crisis is superior.

This furore over the crisis is evident in US-based Hogan & Hartson’s recent announcement that it will cut staff in its US offices. Instead of announcing a grand streamlining plan, the firm has announced that it will seek to ‘buy out’ staff by offering golden handshakes to roughly 240 of its support staff. The buyout is aimed at employees who have racked up at least five years’ service. ALB understands that the scheme will not apply to fee earners.

IP LITIGATION ON THE RISE IN CHINALaw firms in China have seen a significant reduction in demand for patent filings and prosecutions, but expect to see growth in IP litigation, enforcement and licensing work.

“The volume of IP litigation has increased in recent years. And, more importantly, the damage awards in infringement cases are rising and increasingly punitive,” said Gordon Gao, a partner of Fangda Partners. “The positive changes in IPR enforcement will attract more foreign investment, particularly R&D investment, into China and facilitate the development of an innovative and knowledge-based economy,” Gao said.

According to a recent report on IP litigation in China, the highest damages award in the last five years were: US$2.78m (mid-2008), US$44.3m (2007), US$210,000 (2006), US$1.1m (2005) and US$50,000 (2004).

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HONG KONG

White & Case shows some gall in tough times White & Case has formed an alliance with Hong Kong

boutique firm Laracy Gall in a move anticipating a rise in work flowing from corporate failures.

The alliance will see Laracy Gall’s co-founder Nick Gall and his 12 insolvency specialist litigators working closely with White & Case’s banking, capital markets and private equity teams.

“With White & Case’s non-contentious practice combined with Laracy Gall’s contentious practice, the alliance is set to provide a more comprehensive service in financial

CHINA

Dacheng innovates across the strait Beijing-headquartered Dacheng has taken steps to

assist clients in cross-strait trade, investment and business development.

Three months after the firm established The Cross-Strait Legal Service Center in Shanghai, a joint initiative of the firm and the Taiwan All-China Federation of Industry and Commerce, Dacheng has masterminded a new approach for expansion.

As part of the expansion plan, a firm named Taiwan Dacheng has been established in Taiwan, managed by Dr Lai Laikun, dean of the Institute of Law at Hsuan Chuang University. The Taiwan local partnership is a separate legal entity from Dacheng but will serve as the Taiwan branch of Dacheng. The two will share resources, branding, and IT

MIddLE EAST

Redundancy work to rise as Gulf turns grim

While legal work in the Gulf is usually associated with big-ticket resources and infrastructure projects,

another area that is beginning to gain momentum is employment law, particularly advice on redundancies. Samir Kantaria, partner at Al Tamimi & Company, said that the UAE has had its fair share of redundancies to date, and that further layoffs are inevitable.

“The UAE has almost never experienced such mass job losses across the board and certainly not in recent times,” he said. “Human resource managers and legal practitioners alike have been furiously researching laws to ascertain the process, regulations, and provisions applicable to redundancies in the UAE.”

The challenge, according to Kantaria, is that the laws of the UAE and the Dubai International Financial Centre do not specifically provide for the concept of redundancy. “Consequently, there is a degree of confusion and lack of uniformity in their interpretation and application with respect to compensation payments that an employer is legally obliged to make,” he said.

UPdATE >>

Employment

government responses to economic downturn

A s we enter 2009, governments around the region have implemented a range of creative measures which are designed to alleviate the effects of the global economic crisis on businesses and their employees and

promote employment security. For the most part, government responses have involved

funding and support for training opportunities and programs promoting job creation/retention, rather than legislative measures. In many cases, governments are working closely with peak employer bodies and unions in developing and implementing various strategies.

The following initiatives from Malaysia and Singapore provide a good example of the range of responses adopted across the Asian region.

The Singapore government’s response consists of three key measures:

Skills Programme for Upgrading and Resilience (SPUR) •involving funding for a range of subsidised training courses, an increase in the employer’s absentee payroll cap for workers undertaking training, and the provision of training allowances for eligible participants;Job Credit Scheme by which employers are given a quarterly •credit on contributions to the Central Provident Fund for the benefit of their local employees, as an incentive to preserve jobs held by local employees in the private sector; andpublishing the ‘Tripartite Guidelines on Managing •Excess Manpower’, which promote options other than retrenchment and encourage cooperation with unions and relevant government bodies where retrenchment cannot be avoided.

The Malaysian government’s response has consisted of:setting up a dedicated committee (the Workers’ •Retrenchment Operations Room), supported by 80 centres around the nation, to monitor and manage retrenchment in Malaysia; this committee has recently released a set of guidelines for employers and employees on the management of retrenched workers and has an ongoing role assisting the redeployment of retrenched workers through Jobs Malaysia (a government portal for job seekers); allocating funding to alleviate the high levels of •unemployment due to retrenchment by funding retraining schemes, including a monthly allowance for trainees, and providing loans to support cottage industry entrepreneurship; providing relief to certain industries particularly affected by •the crisis by granting a 6 month exemption from their human resources development levy obligations; andallowing certain businesses to implement a three day working •week, with workers’ consent, to avoid plant closures.Employers who are experiencing

difficulties and considering retrenchments should carefully consider any options offered by their government to alleviate the pressure to reduce headcount.

George Cooper, Practice Leader Workplace Law & Advisory – Asia Freehills Direct +65 6236 9941 Telephone +65 6236 9939 Facsimile +65 6538 2575 http://www.freehills.com

George Cooper

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HONG KONG

White & Case shows some gall in tough times restructuring and insolvency,” John Hartley, head of White & Case’s Asia banking, finance and restructuring practice, told ALB. However, he said that there were no plans for further alliances with other firms in Asia.

Nick Gall also refuted media claims that the arrangement would see White & Case subsume Laracy Gall. “It is just an alliance. Laracy Gall will keep its own brand and own team. We are a small firm but we have one of the largest insolvency teams in Hong Kong,” he said.

CHINA

Dacheng innovates across the strait infrastructure, and will have the same standards for client service and quality control procedures.

“The two sides will work seamlessly as one firm to provide a one-stop service for clients in cross-strait trade, investment and business development,” said Wang Guangming, Dacheng’s managing partner in Shanghai and vice-director of the The Cross-Strait Legal Service Center.

“With improved cross-strait relations, our domestic clients are increasingly interested in investing into Taiwan. We are proactively taking steps to facilitate client needs,” said Wang. “A significant number of companies in Taiwan are in need of capital and are hoping to attract investment from mainland companies. We expect Taiwan to allow mainland companies to enter its market soon,” he said. ALB

MIddLE EAST

Redundancy work to rise as Gulf turns grim

Kantaria says that while local UAE law firms have not traditionally had specialised employment practices, they have always provided employment advice. “Given the current economic downturn and resultant redundancies, there is naturally going to be a greater demand for employment advice, not just in the region but worldwide,” he said. ALB

UPdATE >>

Intellectual Property

Identical marks may contain insignificant differences

The Singapore High Court has recently decided a case which gives a test for whether 2 marks are “identical”. In Louis Vuitton Malletier v City Chain Stores (S) Pte Ltd and Another Matter [2009] SGHC

24, the Honourable Justice Tay Yong Kwang (“the Judge”) considered Section 27(1) of the Trade Marks Act (Cap. 322) (“TMA”) and held that the mark used by the Defendant, known as the Sovil Flower Device, was identical to the registered trade mark used by the Plaintiff, known as the Flower Quatrefoil, even though there were certain differences between the marks.

Section 27 of the TMA sets out the acts which amount to infringement of a trade mark. It has 2 limbs, namely the identical mark limb in section 27(1) and the similar mark limb in 27(2). According to section 27(1), there is infringement where there is use in the course of trade of a sign identical to the trade mark, without the consent of the proprietor of the trade mark, in relation to goods or services which are identical with those for which the trade mark is registered.

The requirements of section 27(2) are identical to those of section 27(1), except that the sign need not be identical to the trade mark, but merely similar, and that the goods need not be identical to those for which the goods are registered, but merely similar, and because of such similarity, there exists a likelihood of confusion on the part of the public.

The Judge affirmed the formulation of the test for identical marks as stated in Kerly’s Law of Trade Marks and Trade Names (14th edition, 2005) at paragraphs 14-051 to 14-053, that “[a] sign will be identical with the registered mark where it reproduces, without any modification or addition, all the elements constituting the mark or were (sic), viewed as a whole, it contains differences so insignificant they may go unnoticed by the average consumer.” [emphasis added]

The Judge then found that the Sovil Flower Device did not contain any circle or any round object in its center, whereas the Flower Quatrefoil contained a circle in its center, and that the proportions of the petals contained in the Flower Quatrefoil and the rounded tips were not completely identical with the Sovil Flower Device. Nevertheless, the Judge held that the Sovil Flower Device was identical to the Flower Quatrefoil, as the differences were too minute.

Nathanael Chua Associate Intellectual Property and Technology Group ATMD Bird & Bird LLP Phone +65 6428 9889 Email: [email protected]

nathanael Chua

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MIddLE EAST

Downturn claims first Middle East casualties

Trowers & Hamlins has made seven Middle East lawyers redundant –

five in Dubai, one in Muscat and one in Riyadh. Although these are the first confirmed Middle East redundancies, it is likely that there may have been earlier layoffs, although other international

firms which have announced global cutbacks have been coy about the exact geographical spread of such cuts.

However, it is clear that Trowers, which has had an association with the Gulf spanning 50 years, is still optimistic about its future in the region. The firm

sIngAPorE LEgAL sALAry sAcrIFIcE: AnnUAL sALAry PAcKAgEs ►Experience International law firm 2009 (S$) / on 2008 (S$) Domestic law firm 2009 (S$) / on 2008 (S$) In-house 2009 (S$) / on 2008 (S$)1 Year PQE $160,000–205,000 $55,000 $42,000–54,000 0 $48,000–60,000 0

2 Year PQE $175,000–225,000 $55,000 $48,000–66,000 $6,000 $52,000–80,000 $8,000

3 Year PQE $190,000–280,000 $40,000 $54,000–72,000 $6,000 $56,000–100,000 $28,000

4 Year PQE $205,000–315,000 $35,000 $66,000–84,000 $6,000 $68,000–120,000 $36,000

5 Year PQE $220,000–345,000 $55,000 $78,000–96,000 $6,000 $96,000–140,000 0

6 Year PQE $235,000–375,000 $65,000 $90,000–108,000 $6,000 $108,000–156,000 0

7 Year PQE $250,000–420,000 $60,000 $102,000–120,000 $6,000 $108,000–168,000 0

8 Year PQE $265,000–450,000 $70,000 $114,000–132,000 6,000 $108,000–180,000 0

9 Year PQE $280,000–480,000 $80,000 $126,000–250,000 0 $120,000–240,000 0

10 Year PQE $295,000–525,000 $75,000 $138,000–300,000 0 $132,000–260,000 0

11 Year PQE $310,000–570,000 $70,000 $150,000–350,000 0 $144,000–280,000 0Source: Hudson Salary Information – Asia, Legal 2009

SINGAPOREInternational firm salaries wane, in-house and domestic firms on the rise

There was one clear message to come out of Hudson’s 2009 salary survey:

if you work in a domestic firm or in-house in Singapore, your bank balance may now be comparatively looking a little healthier than it would if you were employed by an international firm. According to Hudson’s detailed report of salary trends across the Asian region, the top end of salary packages for lawyers employed by international firms fell on average by around 18–25% across all levels of PQE. For example, a five-year PQE lawyer in an international firm was said to be averaging S$220,000–345,000 this year, while in 2008 this figure was S$220,000–400,000.

The news is much better if you are employed by a domestic firm or work in-house in Singapore. Lawyers with two to eight years’ PQE will receive a rise of about S$6,000 per year, while corporate counsel with two to four years’ PQE stand to gain S$8,000.

But do not expect an exodus of Singapore lawyers from international firms to domestic firms or in-house. Despite these annual salary decreases, international firms still pay a lot better at all levels of PQE. The Hudson report shows that international law firms in Singapore pay, on average, two and a half times better than domestic firms and 2.3 times better than companies

pay their in-house lawyers.Elsewhere across the region, the report

showed that legal salaries remained relatively static. In Hong Kong, lawyers in international firms with five, six and 11 years’ PQE saw a slight increase in the top-bracket salary packages (HK$1m). In-house salary packages fell marginally. Lawyers with four and five years’ PQE saw the lower end of their salary packages fall by HK$60,000 and HK$80,000 respectively, while for lawyers with eight and 10 years’ PQE salaries fell by HK$50,000 and HK$200,000 respectively. In Japan, international and domestic firm salaries remained unchanged. ALB

recently became the first international firm to enter the Syrian legal market, after striking an agreement with domestic firm Sultans Law of Syria, a move which was said to be driven by increasing demand for international commercial and corporate law advice.

NEws >>


UPdATE >>

Islamic Finance

Islamic Banking: Trend and developmentof transparency, Shariah compliance, excellent customer service and efficient delivery channels’ capability. Regulators on the other hand, should continue with efforts to ensure the Islamic Banking industry is operating within an effective legal and risk management framework.

Recently, Malaysia’s leading bank i.e. Malayan Banking Berhad (Maybank) has been selected by a top Japanese firm to participate in a joint venture in developing new Shariah compliant capital market products. Maybank is determined to explore the non-existent Sukuk market in Japan to enhance its portfolio as the leading Islamic Banking solutions. It is a manifestation of how Malaysian Banks have improved over the years by being a perfect example to local and foreign investors.

Assets for Islamic Banking in Indonesia have increased by up to 30% to IDR30 trillion (US$2.4 billion), or 1.7% of

Islamic Banking industry is broadening its ownership base and building a strong value proposition for it to reach wider acceptance and richer value. There are several factors which

differentiate Islamic Banking from conventional banking. Main factor is risk sharing where each participant in the transaction will share both the risk and the benefit of the transaction, which is an antithesis of interest-based transaction. Islamic Banking also provides no exploitation to their customers, whereby neither party to the transaction should be exploited on its operation.

To ensure the growth of the industry, both bankers and regulators should strive to reduce the gap between Islamic Banking and its conventional counterpart. Bankers should strive to build credibility by improving earning power, creating a culture

the country’s total banking assets, reflecting huge growth potential. More recently, there were Singapore’s first Shariah-compliant Exchange-Traded Fund and its first local-currency sovereign sukuk issued by the Monetary Authority of Singapore.

With the emergence of Malaysia, Singapore and Indonesia as the main players in Islamic Banking, Asia is predicted to become the next big growth area for Islamic Banking.

Ahmad Lutfi Abdull Mutalip Azmi & Associates Partner/Head of Global Financial Services and Islamic Banking Email: [email protected] | www.azmilaw.com 14th Floor, Menara Keck Seng, 203 Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia Tel: +6 03 2118 5000 Fax: +6 03 2118 5111 14-02, Jalan Padi Emas 4/1 (Johor Bahru Branch) Bandar Baru Uda 81200 Johor Bahru, Johor Tel: +6 07 232 5000 Fax: +6 07 232 5111

As Chinese investment into Europe and Latin America grows, Spanish

firms, facing increasing competition from UK and US rivals at home, have found China an increasingly attractive market for future growth.

Spanish giant Cuatrecasas has established a significant presence in Shanghai, headed by senior associate Omar Puertas, who has been based in Shanghai since the end of 2006 to manage the firm’s development in China. According to Puertas, the aim of this new office is to accompany clients in their expansion strategies while attracting Chinese investment to Europe and Latin America.

The firm has hired senior lawyer Jimmy Tsui, formerly a partner with Dacheng, to increase its knowledge of the country’s market and legal system, and two Chinese junior lawyers. It is also relocating a lawyer from Spain.

may be generated by combining our Asian and Latin American practices,” said Perrotto. “We feel that current asset prices, combined with Chinese demand for natural resources, will turn Latin America into the main destination of Chinese foreign investments in the coming years.”

Being aware of the competition it faces, the firm has adopted a strategy of operating from a Beijing office co-located with European “best friends” Slaughter and May and De Brauw Blackstone Westbroek, after the model established in its Brussels office. It will work closely with local firms to ensure strong legal representation for its European clients and keep market frictions to a minimum. ALB

INTERNATIONAL

Spanish firms venture into China

Juan martín perrotto, Uría menéndez

Shortly after Cuatrecasas announced its plan to open in Shanghai last year, Uría Menéndez, another leading Spain-based international firm, decided to add Beijing to its existing 15-office global network.

The Beijing office will be Uría’s first in Asia and the first Iberian representative office in Beijing. “Shanghai – home of clients’ operating divisions – is a good location for those willing to provide operational legal support on an ongoing basis. Instead, Beijing, where government and business headquarters are located, is a more suitable location when it comes to inbound and outbound investment work,” said Uría partner Juan Martín Perrotto, who will be heading the Beijing office.

Uría’s Beijing office intends to leverage strength in Latin America for the benefit of Chinese investors. “We see huge potential and synergies that

28

NEws | deals update >>


mergermarket M&A deals update

NEws | deals update >>


30

NEws | appoinments >>


LATErAL hIrEs ►Name Leaving Going to Practice Location

Masayoshi Takashina

Linklaters Atsumi & Partners Finance Tokyo

Chie Kasahara Hayabusa Asuka Atsumi & Partners Corporate Tokyo

Qing Hua Guo Undisc. Atsumi & Partners Corporate Tokyo

Vishal Anand Hemant Sahai Trilegal Energy disputes Delhi

Megha Sen Hemant Sahai Trilegal Energy disputes Delhi

Philip Payne Blake Dawson Ali Budiardjo, Nugroho, Reksodiputro

Mining, oil & gas Jakarta

Soo-Jeong Ahn Kim & Chang Yulchon Tax Seoul

Graham Ridler BHP Enterprise DLA Piper Insolvency Hong Kong

Sherry Yin Orrick Morrison & Foerster Corporate Beijing

Christopher Muessel

Duane Morris Watson, Farley & Williams

Corporate Singapore

Linda Martin Maples and Calder Walkers Hong Kong/London London

Dong xiao Anli Partners Lantern International trade, arbitration

Beijing

Nancy Zhang Hylands Kingfield Real estate, M&A Beijing

Rainer Burkardt Beiten Burkhardt Squire Sanders China practice Shanghai

Serge Fafalen SG Fafalen & Co King & Wood International practice Hong Kong

Giles White Linklaters Jardine Matheson Banking Hong Kong

Jonathan Gould Allen & Overy Linklaters Corporate Hong Kong

King Tak Fung DLA Piper Eversheds Banking Hong Kong

APPOINTMENTSBHP Enterprise DLA Piper

DLA Piper appoints new insolvency head DLA Piper has appointed former UK-based insolvency lawyer Graham Ridler to head its Hong Kong insolvency practice.

Ridler joins the firm as a consultant from UK law firm BHP Enterprise, where he was a partner resident in the Newcastle office. Heading the DLA Piper Asia debt and corporate restructuring team, Ridler will focus on cross-border corporate debt restructuring and insolvency matters.

The firm’s Asia managing director, Alastair Da Costa, said that the appointment will strengthen the firm at a time when insolvency & restructuring enquiries in Asia is on the rise. “As more and more clients seek insolvency, restructuring- and recovery-related advice, we want to have the strongest team in place to provide this crucial support for the business community,” said Da Costa.

various Morrison & Foerster

Former Orrick managing partner joins MoFo in Beijing Morrison & Foerster has reeled in corporate specialist Sherry Yin as a partner in its Beijing team. MoFo also has named Paul McKenzie as the new managing partner of its Beijing office, succeeding Steve Toronto, who has joined the executive team of one of the firm’s top clients in China.

Toronto had been the Beijing managing partner since 2000. During his term, the firm acted as the international counsel for the Beijing Organizing Committee for the XXIX Olympiad.

Graham ridler

White & Case

White & Case promotes more partnersWhite & Case has elevated another four Asia-based lawyers to partnership. They bring the firm’s total regional promotions to 10, following the Asia-based six partners elevated late last year.

The four lawyers include Tokyo-based Michael Shikuma, who advises on cross-border transactions, Hong Kong-based corporate finance lawyers John Shum and Anna-Marie Slot, and Beijing-based Vivian Tsoi.

The Singapore office will also gain a partner, William Kirschner, from the Washington DC office. He specialises in emerging markets in Asia, notably with a focus on India.

michael Shikum

FIrM ProMoTIons ►

Name Firm Promotion Practice Location

Anna-Marie Slot White & Case Partner Corporate finance Hong Kong

John Shum White & Case Partner Corporate finance Hong Kong

Vivian Tsoi White & Case Partner M&A Beijing

Paul McKenzie Morrison & Foerster Managing partner Corporate Beijing

Pham Si Hai Quynh

VILAF Partner Finance Ho Chi Minh

Nick Kershaw Ogier Group chief executive officer

Corporate Jersey

Clive Chaplin Ogier Non-executive group chairman

Corporate Jersey

rELocATIons ►Firm Partner From To

Maples and Calder Richard Grasby Cayman Hong Kong

White & Case William Kirschner Washington DC Singapore

John Shum

NEws | appointments >>


Beiten Burkhardt Squire Sanders

Squire Sanders strengthens Sino-German practice US law firm Squire, Sanders & Dempsey has expanded its Sino-German practice with the addition of Rainer Burkardt, a veteran German lawyer who has 11 years’ experience in China.

Before joining Squire Sanders, Burkardt was the head of Beiten Burkhardt’s Shanghai office. He is a member of the board of directors of the German Chamber of Commerce in Shanghai and the vice-chair of the legal working group of the European Chamber in Shanghai.

“Lawyers in our Frankfurt, Hong Kong, Beijing and Shanghai offices already work together very closely to advise clients doing business in China, and Rainer will help us serve our clients even more effectively,” said R Thomas Stanton, chairman of Squire Sanders.

Maples and Calder Walkers

Martin heads for WalkersWalkers’ global expansion continued this week with the announcement that Linda Martin will join the firm as a partner in its London office. London-based Martin,

Maples and Calder relocation

Maples and Calder strengthens trusts expertise in Asia Maples and Calder has announced that trusts specialist Richard Grasby has relocated to its Hong Kong office from the Cayman Islands. Grasby is the first dedicated Cayman and BVI trusts specialist in Asia.

Grasby joined Maples’ Cayman office in 2008 and spent six months working for the specialist trusts team. Previously, he had stints with Ogier in Cayman and SJ Berwin in London. Grasby advises institutional trustees and private clients on all areas of trusts law.

Duane Morris WFW

Watson Farley Singapore gains strength with Muessel Watson, Farley & Williams has boosted its Singapore office with the appointment of corporate partner Christopher Muessel.

Muessel joins the firm from Duane Morris’ Singapore office.Qualified in the US, Muessel focuses in project financing across Asia, specialising in Vietnam-related transactions. He currently acts as vice chairman of the American Chamber of Commerce in Ho Chi Minh City. The Singapore office head, Christopher Lowe, said Muessel will act as the firm’s “Vietnam specialist”.

Christopher mussel

Linklaters In-house

Linklaters’ Asia MP leaves for in-house roleIf you’re going to lose your managing partner, you might as well lose him to one of your long-standing clients. Linklater’s Asia managing partner, Giles White, is to quit the firm in April and move to an in-house role at Asian multinational, Jardines Matheson.

As group general counsel, White will join the management board and succeed the position held by former Allen & Overy partner, Jonathan Gould. White said that his move was motivated by the strong relationship and the conglomerate’s historical links to Asia.

White said he felt privileged to count his 21 years at Linklaters. “It was a tough decision to leave but this was a rare opportunity to change tack and take on a new challenge in a part of the world that my family and I love,” he said.

Giles White

DWT US Sec’y of Commerce

Obama puts a Locke on his cabinet Gary Locke, co-chair of the China practice at US firm Davis Wright Tremaine, has left the firm. However, he didn’t head in-house – he has become the US Secretary of Commerce. US President Barack Obama formally nominated Gary Locke to join his cabinet as Secretary of the Department of Commerce, and Locke accepted the nomination, returning to public service upon confirmation by the Senate. Locke had joined Davis Wright Tremaine in 2005 after two successful terms as the Governor of the State of Washington.

Hemant Sahai Trilegal

India’s Trilegal acquires competitor’s energy lawyersIndian law firm Trilegal has picked up four lawyers from fellow Delhi-based law firm, Hemant Sahai Associates.

Trilegal’s new additions will boost its energy disputes practice. Dispute resolution lawyer Sitesh Mukherjee joins the firm as equity partner, and is accompanied by associates Sakya Singha Chaudhuri, Vishal Anand and Megha Sen.

Trilegal managing partner, Anand Prasad, said that the firm had been scouting for a suitable group of lawyers in the last few years to build up the energy dispute practice. “We’ve been looking around for some time now, to take a more direct approach to the energy disputes practice,” he said.

who specialises in structured finance, asset financing, general banking, corporate matters and debt and equity markets, will lead the firm’s London and Middle East finance and corporate practices. Martin joins from the Hong Kong and London offices of Maples and Calder.

According to the firm’s global head of finance and corporate, Antonia Hardy, Martin’s appointment comes on the back of a global spike in restructuring and litigation work. “Many transactions are either currently in a state of default or have required restructuring work to avoid that scenario,” she said.

Christine Chang, managing partner of the Hong Kong office, said: “With the increasing demand for trusts legal services in Asia, particularly in this economic climate when wealth preservation and security are uppermost in everyone’s minds, it’s important to respond to clients’ needs by providing the required expertise on the ground and in real time.”

http://www.cmjoshi.us

32

NEws | regional update >>


Reg

ional

updat

es

Each month, ALB draws on its panel of country editors to bring readers up to date with regula-tory developments across the region

CHINAPaul Weiss

PHILIPPINESSyCip Salazar Hernandez & Gatmaitan

MALAYSIATay & Partners

INDIASingh & Associates

INDONESIABT Partnership

SINGAPORELoo & Partners

VIETNAMIndochine Counsel

transaction; (3) the term of any M&A loan should not exceed five years; (4) adequate security has been obtained from the borrower and (5) internal review procedures have been instituted to monitor the performance of the M&A loans. In addition, the lending banks must analyze the industrial or strategic correlations between the acquirer and the target to the proposed transaction before extending such loan. Thus it is questionable whether M&A financing is available to non-strategic investors, such as private equity or venture capital funds.

It is expected that the Guidelines, which came out at a critical time, will encourage business consolidations in China by strengthening financial support for M&A transactions. While the Guidelines seemingly open the door for leverage buy-outs in China, there are still many practical questions left unanswered. Doubts and concerns remain on the immediate effects of t he Guidelines on China’s M&A market, as most Chinese banks lack the sophisticated risk evaluation, pricing and management system to take up the M&A lending business.

Written by Qi Xu and Iris WangPaul, Weiss, Rifkind, Wharton & Garrison

Unit 3601, Fortune Plaza Office Tower A No. 7 Dong Sanhuan Zhonglu Chao Yang District, Beijing 100020 PRC Email: [email protected] [email protected] Beijing Ph: 8610-5828-6300 Hong Kong Ph: 852-2536-9933

To facilitate Chinese companies in their domestic and international expansions through merger and acquisition (“M&A”) activities in light of the global financial crisis, the China Banking Regulatory Commission (“CBRC”) promulgated the Guidelines on Risk Management for Loans Extended by Commercial Banks for Mergers and Acquisitions (the “Guidelines”) on December 6, 2008.

The Guidelines lifted the prohibition on the provision of acquisition loans by commercial banks in a M&A transaction set out in the PRC General Lending Rules issued in 1996. Qualified PRC incorporated commercial banks are now permitted to conduct M&A loan business and provide acquisition financing to PRC incorporated purchasers, whether such purchasers are purely domestic or foreign-invested.

An “M&A transaction” means a transaction in which a Chinese incorporated company acquires or obtains actual control of a “going concern”, whether through purchases of existing equity interests, subscription of newly issued capital, acquisitions of assets or assumption of debt. Thus banks are continued to be prohibited from extending financing to greenfield investments or non-control type acquisition.

Before extending an M&A loan, the lending bank must meet, among others, a number of risk management requirements such as the following: (1) the outstanding amount of M&A loans should not (a) exceed 50% of the lending bank’s core net capital, or (b) 5% of the bank’s core net capital for any single borrower; (2) the loan should not account for more than 50% of the total funding for any M&A

CHINA

China’s New Guidelines on M&A Loans



It is often misunderstood that during an economic crisis or when a company decides to reduce expenses, it is the company’s sole prerogative to retrench workers according to rights provided

PHILIPPINES

MALAYSIA

contractually or according to the company’s policy. On the contrary, retrenchment is not something as of right despite such right being provided in employment contracts. The principle that “termination simplicitor has no application in Malaysia” is also applicable in a retrenchment exercise.

At the outset, a retrenchment exercise is distinguished from closure of business. The latter describes a situation when all employees are discharged as a result of cessation of operations. In a retrenchment exercise, the employer terminates the services of employees it considers surplus to its business requirements, subject to fulfilling some stringent requirements imposed by law, collective agreements and also under accepted practices according to the Malaysian Code of Conduct for Industrial Harmony.

The Code of Conduct for Industrial Harmony, while it may not be legally binding, the Industrial Court encourages compliance with the code and any blatant disregard of the code may result in the Court concluding that the retrenchment exercise was carried out mala fide or perhaps for other collateral purpose. Hence, issues that have to be considered before implementing a retrenchment exercise in Malaysia includes the status of the employees (whether they are protected by legislations based on their wages or nature of their work), the accepted justification for retrenchment, the provisions of the code, the applicable collective agreements and the requirements for prescribed forms, notices and benefits.

As our industrial relations laws are noted to be over zealously protective of workmen or employees, any failure to comply with the strict and stringent requirements before and while implementing a retrenchment exercise may result in claims for wrongful dismissal or even fines under our local legislations. To reduce the risk of such potential liabilities associated with retrenchment, many companies are opting for voluntary separation schemes or mutual separation arrangements.

To sum up, while the global economic crisis may result in companies justifying the enforcement of cost cutting measures, retrenchment, as the code says, should be

and harnessed to the fullest so as to create more and better opportunities for economic growth for the nation and the improvement of the quality of life of the greater number of Filipino people.”

The approval of the Committee on Constitutional Amendments serves as a recommendation for plenary deliberations of House Resolution No. 737. Once the bill is approved by the House of Representatives, the same would be forwarded to the Senate for possible adoption.

The proposal to lift the equity limitations on foreign ownership of land entails the amendment of certain constitutional provisions. Under the Constitution, such amendments may be proposed by the Congress, upon a vote of ¾ of all its members, or by a constitutional convention, and shall be valid when ratified by a majority of the votes cast in a plebiscite called for that purpose.

Written by Christine Joy K. Tan

Sycip Salazar Hernandez and Gatmaitan SSHG Law Centre, 105 Paseo de Roxas Makati City, Manila, Philippines Tel: +63-2-817-98-11 loc. 261 Fax: +63-2-817-38-96 E-mail: [email protected], [email protected] Website: www.syciplaw.com

Global Economic Meltdown – When can

a company retrench workers?

In a bid to attract long-term foreign investments into the Philippines, the Committee on Constitutional Amendments of the House of Representatives approved Resolution No. 737, which seeks to lift foreign equity limits on land ownership.

House Resolution No. 737 calls for the amendment of Sections 2 and 3, Article 12 of the 1987 Constitution “to allow the acquisition by foreign corporations and associations and the transfer or conveyance thereto of alienable public and private lands.”

Under the economic provisions of the present Constitution, the exploration, development and utilization of natural resources shall be under the full control and supervision of the State, allowing only co-production, joint venture or production-sharing agreements with corporations at least 60% of whose capital is owned by Filipino citizens. Likewise, ownership of private land is reserved to Filipino citizens or to corporations or associations at least 60% of whose capital is owned by such citizens. Foreign corporations exceeding the equity limitations are allowed only to lease private land for a period not exceeding 25 years, renewable for not more than 25 years, and not to exceed 1,000 hectares in area.

According to the author of the Resolution, House Speaker Prospero C. Nograles, “implementing this policy initiative shall not only encourage, facilitate and strengthen synergistic partnerships of Filipino entrepreneurs and foreign investors, but shall also catalyze conditions where the immense potential of our country’s vast land resources as development capital would be unleashed

House Passes Resolution Lifting Constitutional

Limitations On Foreign Ownership of Land

34



operational risks and maintain adequate business continuity arrangements. Member must document its business •continuity arrangements in a business continuity plan (“BCP”). Member’s senior management shall be •responsible for the Member’s business continuity plan. Sufficient awareness of the risks, mitigating measures and state of readiness must be demonstrated by way of an attestation to the Member’s Board of Directors. Member must review and test its •business continuity plan regularly.

In addition, SGX Members are required to appoint “Emergency Contact” persons and to provide the Exchange with their contact details within three weeks of the effective date (by 12 February 2009).

Please refer to www.sgx.com.sg for full details.

Written by Ms Kitty Lo and Mr Gerald Cheong

Ms Kitty LoSenior Corporate Finance ExecutivePh: (65) 6322-2231Fax: (65) 6534-0833E-mail: [email protected]

and

Mr Gerald CheongCorporate Finance ManagerPh: (65) 6322-2232Fax: (65) 6534-0833E-mail: [email protected]

Loo & Partners LLP 88 Amoy Street, Level Three Singapore 069907

On 21 January 2009, Singapore Exchange Limited (the “SGX”) issued a press release announcing the introduction of new rules requiring SGX member firms to develop robust “Business Continuity Management (BCM)” arrangements. This follows a public consultation in May 2008, on proposed BCM requirements. The BCM requirements are implemented under the SGX-Securities Trading Rules, Futures Trading rules, CDP Clearing Rules and the SGX-Derivatives Clearing Rules.

In the event of any operational disruptions or major disaster, the marketplace will be more assured of member firms’ ability to resume critical business functions in the shortest time possible with these BCM arrangements.

The new BCM Rules will be in effect from 22 January 2009, and SGX Members firms will have period of12 months to comply with the new rules, which cover the following key points:

a Member must assess its business and •

Singapore Exchange introduces new business

continuity rules

SINGAPORE

Since 2005, when Bank Indonesia regulation on derivative transactions in Indonesia was issued, Bank Indonesia has been prohibiting commercial banks to do foreign currency

Speculative Derivative Transactions

INDONESIA

margin trading against Rupiah currency while maintaining its position that foreign currency margin trading with speculative nature (speculative derivative products) could become one of many factors which affect Rupiah currency stability.

However it is not until the end of 2008 that BI sets prohibition to enter into speculative derivative products and structured product. Regulation of Bank Indonesia No.10/28/PBI/2008 and Circular Letter of Bank Indonesia No. 10/42/DPM/2008 (BI New Regulations) provide that any purchase of foreign exchange against Rupiah currency may only be conducted for non speculative transactions. Therefore now, only derivative transactions for hedging that are allowed to be transacted by commercial banks.

Speculative transaction may be in the form of structured product being product issued by banks which is a combination of assets and derivative of foreign currency against Rupiah currency, for the purpose of gaining return enhancement, which in turn could encourage foreign currency selling transaction with speculative objective and which could cause instability in Rupiah currency. Foreign currency selling transaction against Rupiah currency is prohibited in any value if such selling transaction relates to structured product.

The worst is, in order to sell these foreign currency derivative products, many commercial banks do not fully disclose to its customers the characteristic of the products hence customers do not aware that they actually enter into a derivative transaction. These commercial banks mostly explain the customers that their transaction is only foreign currency purchasing and selling transaction while in fact these transactions are actually derivative products with speculative nature. Whereas Article 4 paragraph (1) of Regulation of Bank Indonesia No. 7/31/PBI/2005 requires that banks provide full and complete explanation to customers who are about to enter derivative transactions.

Derivative transactions that were entered into prior to, and that have not yet expired after, the effectiveness of the BI New Regulations are not subject to the said BI New Regulations. In this matter the Banks are not required to terminate the On going Transactions and may continue them until each

viewed as the very last option and must be handled with proper advice.

Written by Leonard Yeoh, Partner Head of Employment & Industrial Relations Practice Group

Tay & Partners 6th Floor, Plaza See Hoy Chan Jalan Raja Chulan 50200 Kuala Lumpur, Malaysia Tel: +603 2050 1888 DID : + 603 2050 1973 Fax: +603 2026 0995 Email: [email protected]



Amendment in SEBI Takeover Code, 1997

INDIA

Market watchdog SEBI (Securities and Exchange Board of India) has in a span of month announced two amendments in SEBI (Substantial Acquisition of Shares and Take overs) Regulations, 1997 better known as Takeover code. A brief sum up of the amendments is as follows:-

1) Disclosure of pledged SharesRegulation 8A has been inserted in the code which says that a promoter or every person forming part of the promoter group of any listed company shall within seven working days from the date of creation of pledge on shares of that company held by him, inform the details of such pledge of shares to that company. Similarly from the date of invocation of pledge of shares also the promoter will inform the details of invocation of such pledge to the company. The company shall thereafter disclose the information received to all stock exchanges, on which the shares of company are listed:-a) Aggregate number of pledged

shares of a promoter or every person forming part of promoter group taken together with shares already pledged during that quarter by such promoter or persons exceeds twenty five thousand; or

b) Aggregate of total pledged shares of the promoter or every person forming part of promoter group along with the shares already pledged during that quarter by such promoter or persons exceeds one percent. Of total shareholding or voting rights of the company, whichever is lower.

A promoter often chooses to pledge shares when it has exhausted all other resources for raising funds. Since pledging is often a last resort, this is a clear indication that it is not an ideal method of

expiration. However any subsequent roll over of the On going Transactions must comply with the BI New Regulations.

Alternatively, these On going Transactions could be settled without any movement of funds based on written agreements between the parties thereto by way of among others as follows:1) Early termination or unwinding of the

foreign exchange transaction against Rupiah currency;

2) Restructuring of the foreign exchange transaction; and

3) Use of loan funds from the Banks.On related case, recently, PT Elnusa,

Tbk., a company with business activities in integrated oil and gas services filed law suit against PT Bank Danamon, Tbk. to the District Court of South Jakarta. Elnusa claimed that Danamon has misled Elnusa and did not fully disclose and explained Elnusa when offering its foreign currency derivative transaction. The relationship goes back to June 2008, when Elnusa and Danamon entered into a sharia financing facility in US$ currency to finance Elnusa’s operational equipment investment with rental also in US$ currency thus no hedging or foreign currency derivative transaction would be called for by Elnusa.

But then Danamon offered its products for US$ currency selling transaction (i.e. Trade) Redemption Forward and Cancelable Forward Transaction) and explained to Elnusa that these are common US$ currency purchasing and selling transaction with no speculative nature.

Elnusa, then found out in around October 2008 that such transaction contain speculative nature and requested Danamon to terminate it. Danamon responded Elnusa by stating that the transaction could only be terminated if Elnusa paid Danamon unwinding cost in amount of US$ 9,000,000.00. The existence of this unwinding cost was never disclosed before and is not provided under the BI New Regulations. The dispute was finally settled out of court by BI as mediator. Settlement terms are not disclosed by Elnusa and Danamon.

Written by Tyana Asri Martianti

BRI Tower II, 19th Floor Jl. Jend. Sudirman No.45 Jakarta 10210, Indonesia Tel. 62 21 5700 777 Fax. 62 21 5700 877 Email : [email protected] Web : http//www.btpartnership.com

financing a company. Pledging of shares dilutes the equity of founders, which could lead to potential takeover situations.

2. relaxation from the strict compliance of provisions of Chapter iii in Companies whose boards have superseded by Government.Regulation 10 to 29 A of Chapter III of Takeover code provide for the provisions of disclosure on crossing the prescribed limits of 15% to 55%/75% by making a public offer of shares after complying with prescribed norms such public announcement, etc.

An amendment has been introduced in Regulation 25 of takeover code wherein a new sub clause 25B has been inserted which says that no public annocument for a competitive bid shall be made after an acquirer has already made the public announcement pursuant to relaxation granted by SEBI in terms of newly inserted regulation 29A of takeover code. Earlier, public announcement for a competitive bid was required to be made within 21 days of the announcement of first offer or an exemption was available for no public announcement for a competitive bid if an acquirer (i.e. the first offer) has been made by entering into a share purchase or shareholder’s agreement with the Central Government for acquisition of shares or voting rights or control of a Public Sector Undertaking.

Newly inserted regulation 29A gives relaxation from the strict compliances of provisions of Chapter III in certain cases, especially with respect to competitive bid as mentioned in regulation 25 of the code. Regulation 29A says that SEBI may, on an application made by a target company, relax any or more of the provisions of Chapter III subject to such conditions as it may deem fit, if it is satisfied that:-a) the central government or state

government or any other regulatory authority has removed the board of directors of the target company and has appointed other persons to hold office as directors thereof under any law for the time being in force for orderly conduct of the affairs of the target company;

b) such directors have devised a plan which provides for transparent, open, and competitive process for continued operation of the target company in the interests of all stakeholders in

36



securities comprising shares and convertible bonds on the Hanoi Securities Trading Centre (HASTC) and public company securities delisted on the Ho Chi Minh City Stock Exchange (HOSE).

Under Decision 108, unlisted securities may be registered for trading on HASTC when they satisfy all of the following conditions: (1) They are securities of a public company as defined in article 25 of the Law on Securities and are unlisted on HASTC or have been delisted on HOSE; (2) They are securities which have been registered for depository at a Securities Depositary Centre (SDC); and (3) They are securities for which one Member (a securities company with permission from HASTC to conduct trading on the registered trading system of HASTC) undertakes to provide assistance.

HASTC shall apply the trading method of reaching agreement on a transaction of securities traded

Regulation on organization and

management of trading unlisted public company

securities on Hanoi Securities Trading Centre

On 20 November 2008, the Ministry of Finance of Vietnam issued Decision No.108/2008/QD-BTC (effective from 18 December 2008) providing for organization and management of trading unlisted public company

the target company and such plan does not further the interests of any particular acquirer;

c) the conditions and requirements of the competitive process are reasonable and fair;

d) the process provides for details, including the time when the public offer would be made, completed and the manner in which the change in control would be effected;

e) the provisions of this Chapter are likely to act as impediment to implementation of the plan of the target company and relaxation from one or more of such provisions is in public interest, the interest of investors and the securities market.”

Written By Mr. Manoj K Singh (Managing Partner) For more information, please contact:- Singh & Associates, Advocates and Solicitors N-30, Malviya Nagar, New Delhi-110017 Ph: 91-11-26680927, 26687993, 26680331 Fax: 91-11-26682883 Website: www.singhassociates.in Email: [email protected]

VIETNAM

http://www.maharajas.com.sg



Written by Phan Anh Vu, Partner

Indochine Counsel Unit 4A2, 4th Floor, Han Nam Office Bldg. 65 Nguyen Du, District 1 Ho Chi Minh City, Vietnam (Tel) +848 3823 9640 (Fax) +848 3823 9641 [email protected] www.indochinecounsel.com

on the registered trading system, which trading method shall take two forms: Electronic agreement; and Conventional agreement.

The price fluctuation range on any one trading day shall be plus or minus (±) 10% in the case of trading shares (this range may be changed pursuant to a decision of the SSC depending on the market situation). Price fluctuation range shall not apply to trading bonds.

The minimum transaction volume shall be ten (10) shares or ten (10) bonds with par value of VND10,000 and VND100,000 respectively (any public company whose securities have a par value different from this, must convert the par value prior to registering for trading). Under Decision 108, the ownership ratio of foreign investors of shares registered for trading shall be implemented in accordance with a decision of the Prime Minister of the Government. Procedures for foreign investors to participate in trading will follow

guidelines provided by HASTC.When an investor places a securities

selling order, the investor must have the full amount of the securities for which the order is placed in the securities trading account which the investor has opened with a member. When an investor places a securities purchase order, the investor must provide a monetary deposit at the level agreed with the member, and must ensure ability to make payment for the transaction within the stipulated time-limit.

Any one investor shall be permitted to open only one securities trading account with only one securities company. An investor who has already opened a listed securities trading account may immediately use such account to trade [unlisted] securities which have been registered for trading. An investor shall not be permitted to purchase and then sell the same class of shares on the same trading day.

http://www.guidancesoftware.com

38

FEaTuRE | employer of choice >>


Employers of Choice by jurisdiction

jAPAn: doMEsTIc FIrMs ►1. Atsumi & Partners2. Nishimura & Asahi3. Mori Hamada & Matsumoto

jAPAn: InTErnATIonAL FIrMs ►1. Davis Polk & Wardwell2. Bingham McCutchen3. Milbank

chInA: InTErnATIonAL FIrMs ►1. Skadden2. Jones Day3. Paul Hastings4. Allen & Overy5. White & Case

IndIA ►1. Amarchand & Mangaldas2. AZB & Partners3. Luthra & Luthra4. J Sagar & Associates5. Trilegal

AUsTrALIA ►1. Mallesons Stephen Jaques2. Corrs Chambers Westgarth 3. Swaab Attorneys4. Thynne & McCartney5. Blake Dawson

IndonEsIA ►1. Melli Darsa2. Hadiputranto Hadinoto & Partners3. Ali Budiardjo, Nugroho, Reksodiputro

chInA: doMEsTIc FIrMs ►1. King & Wood 2 Jun He 3. AllBright 4. Wang Jing & Co =5. Llinks =5. Shangdong Deheng

hong Kong ►1. Clifford Chance2. Linklaters3. JSM4. Slaughter and May5. Deacons

TAIwAn ►1. LCS & Partners2. Tsar & Tsai3. Formosa Transnational

sIngAPorE ►1. Drew & Napier2. WongPartnership3. Baker & McKenzie.Wong & Leow4. Allen & Gledhill5. Rodyk & Davidson

PhILIPPInEs ►1. Romulo Mabanta Buenaventura Sayoc & De Los Angeles2. Sycip Salazar Hernandez & Gatmaitan

MIddLE EAsT ►1. Denton Wilde Sapte2. Fichte & Co3. Simmons & Simmons4. Norton Rose 5. Al Tamimi & Company

VIETnAM ►1. YKVN2. Freshfields Vietnam3. VILAF

MALAysIA ►1. Zul Rafique & Partners2. Zaid Ibrahim & Co3. Shearn Delamore & Co

KorEA ►1. Kim & Chang2. Yulchon3. Lee & Ko4. Shin & Kim5. Bae Kim & Lee

nEw ZEALAnd ►1. Russell McVeagh2. Chapman Tripp3. Buddle Findlay

mEThoDoloGy ►This online survey was conducted between December 2008 and February 2009. It was sent to more than 20,000 lawyers in the Asia-Pacific and Gulf regions, including Australia, Hong Kong, mainland China, Singapore, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Thailand, Vietnam, and the UAE.



5 – 5.5 hours

6 – 6.5 hours

7 – 7.5 hours

8 – 8.5 hours

FIgUrE 1: dAILy BILLABLE hoUrs TArgET ►

Redundancies, salary freezes, equity contributions.

With these buzz words circulating in the legal industry

lately, it’s no wonder that lawyers and firms alike are anxious about the employment landscape.

Some form of cost-cutting seems inevitable. The challenge for firms over the last few months has been how to address firm finances without damaging staff morale.

With this in mind, the ALB Employer of Choice 2009 survey has never been more poignant.

The firms that led the pack this year, as the region’s top employers, have come to the forefront for various reasons but, as the data clearly demonstrates, compensation (at least in the current environment) may not be as important as it once was. The quality of work firms can give to lawyers, the partners and senior lawyers who will train them, the programs they provide to ensure their professional development and what they can give in terms of a ‘work–life balance’ have become just as important in the still crucial quest to attract and retain the region’s top talent.

Bills, bills, bills As last year, most lawyers are content with what they believe to

The global financial crisis-induced need to keep a close eye on resourcing levels and expenditure is making it harder than ever for firms to balance the books while ensuring their staff are happy. The huge number of responses to this year’s ALB Employer of Choice Survey have revealed which firms are meeting this challenge most effectively. Rashida Yosufzai presents the findings

be ‘reasonable’ billing hours target. Across the Asia-Pacific and Middle East regions most lawyers said their targets were around five to six and a half hours. While most Australia- and New Zealand-based lawyers recorded a target of seven hours, it seems the two heavyweight economies of

Excessive

Too low

Too high

Reasonable88%

9%

2%1%

FIgUrE 2: BILLABLE hoUrs TArgETs Too ►hIgh or Too Low

coMPEnsATIon ►1. Mallesons Stephen Jaques (Australia)2. Clifford Chance (Asia-Pacific)3. Slaughter and May (Asia-Pacific)

ProFEssIonAL dEVELoPMEnT ►& TrAInIng

1. Linklaters (Asia-Pacific)=2. Drew &Napier (Singapore)=2. Atsumi & Partners (Japan)3. Corrs Chambers Westgarth (Australia)

FIrM rEPUTATIon ►1. Freshfields (Asia-Pacific)2. Linklaters (Asia-Pacific)3. Clifford Chance (Asia-Pacific)

qUALITy oF worK ►1. AZB & Partners (India)2. Freehills (Australia)3. Skadden (Asia-Pacific)

worK–LIFE BALAncE ►1. Corrs Chambers Westgarth (Australia)2. Denton Wilde Sapte (UAE)3. Luthra & Luthra (India)

Top firms by criteria

23%31%

25%

21%

40



rEsPondEnT ProFILE ►Forty-three per cent were female and 57% male. Their level of experience and position titles varied across jurisdictions, but the majority categorised themselves simply as ‘lawyer’, followed by (in order) associates, partners and junior/trainee. Lawyers’ length of service with their current firm was either long or short. More than half of respondents said they had spent one to two years with their current firm, while 21% said they had spent more than six years.

India and mainland China house the region’s most hard-working lawyers, clocking over eight billable hours daily. “Billable hour targets are too low for employed solicitors, but could be reduced for salaried partners, like me, with extensive marketing and practice building responsibilities,” suggested an Australia-based partner.

To move or not to move: what motivates lawyers

Management take note: lawyers said that a firm’s reputation was built on whether it fosters a firm culture, quality of work, and better work-life balance. This far outweighed other factors such as partnership prospects or firm size. Teamwork, assertive colleagues and positive work environments scored well on lawyers’ agendas. One respondent in particular summed it up: “Fit is all important. Meshing into the culture of a firm can make your life either a misery or a delight, given the number of hours you spend at work.” For some lawyers, there were other issues to motivate their move: “The support and independence available to me in managing my work and assignments, and developing client relationships is also very important,” said one. Surprisingly, in India, despite salaries and compensation being low compared to other jurisdictions, most lawyers rate remuneration (66%) below quality of work (77%). “Quality of work is the most important factor; however, my personal growth as a professional would be the other thing that I would consider,” said one India-based respondent. Mainland China and Korea lawyers, however, made clear that they would be motivated to

It seems that most lawyers this year will be seated firmly in their current positions to ride out the financial crisis. Across the board an adamant “unlikely” was given by 75% of lawyers when asked if they would consider moving firms in the current market. Seventeen per cent of lawyers were undecided, while a bold but tiny 8% said they were likely to move, although some of these noted they would only do so for an absolutely secure opportunity. The overall sentiment was captured

move based on a firm’s reputation, with 79% choosing reputation over quality of work (76%). Meanwhile, Gulf-based lawyers remained undecided as to their primary motivating factor, rating firm reputation and quality of work equally (69%). However, balancing work and life was the clear motivating factor for lawyers based in Australia, New Zealand, Indonesia, Hong Kong and Japan.

An Australian lawyer provided their own reasoning as: “Firm culture can be perceived by the type of people firms take in. So, if you know a few people working at the firm already, and they seem to be your type of people, that’s a great sign.”

making the regional jump

MoVIng In cUrrEnT joB MArKET ►

Not sure

Likely

Unlikely75%

8%

17%

rEsPondEnTs By LEngTh oF sErVIcE ►

2 years

3 years

4 years

5 years

6+ years

1 year

33%

23%12%

5%

6%

21%

rEsPondEnTs By PosITIon ►

Associate

Senior associate

Partner

In-house

Other

Lawyer

Counsel / consultant

Junior lawyer

29%

24%17%

14%

8%

3%

2%

PrEFErrEd jUrIsdIcTIon ►

in one particular response: “While I would be interested in moving, with the current economic downturn there do not appear to be too many law firms recruiting and, as a result, a move may not be possible.”

Nevertheless, if they were to move most lawyers would chose Asia (59%) as their preferred jurisdiction, followed closely by the UK, US, Europe and the Middle East. The UK is still a desirable destination for Australia- and New Zealand-based lawyers, topping their lists of preferred jurisdictions. Middle East and Asia-based lawyers were content in their current jurisdictions, most preferring Asia as their potential region of choice.

Qua

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ill

be w

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or

Size

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firm

Part

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hip

pros

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FAcTors MoTIVATIng MoVE ►

0%

10%

20%

30%

40%

50%

60%

70%

80%A

sia

UK US

Euro

pe

Mid

dle

East

59%

42%

26%23%

16%

0

10

20

30

40

50

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77%

62% 60%52% 51%

29%

19%

http://www.drewnapier.com

42



Employers of Choice: top-ranked firms SinGAporE ►

Drew & Napier attributed its ranking to a high quality of work in key practice areas maintaining enthusiasm among lawyers. But the firm also recognises that internal culture can make all the difference.

“The reality of legal practice is that it can be very hard work,” said Kelvin Tan, director of the firm’s litigation group. “So it’s important for colleagues to have the opportunity to spend time together apart from work, and for the junior lawyers know that there are friendly faces to talk to. Even among lawyers who have decided to move on, I see many former colleagues who remain very close to people in the firm.”

The firm also rated highly for its training and professional development initiatives (see the ‘Top firms by criteria’ table p39), which Tan said are implemented through its dedicated knowledge management program. “In any law firm, intellectual capital is your greatest asset. Our lawyers are dealing with clients’ expectations and complex commercial transactions. Our training prepares our young lawyers beyond being excellent at the law, and develops their ability to be practical and commercially astute. Having said that, we try to provide not just training and mentorship but also understanding and empathy.”

The firm welcomes the introduction of compulsory legal education (see pp22-23), and competition for top talent which the advent of Qualifying Foreign Law Practice program firms will provoke. “It’s undeniable that there will be competition for lawyers,” said Tan.

“We are prepared to compete for the best and the brightest. At the end of the day, we believe that our lawyers are proud of the work that they are doing here and we will continue to provide opportunities which are different from any other firm.”

mAlAySiA ►While firms have all emphasised their endorsement of cultural initiatives, for Malaysian lawyers job security was the top priority. “In the current economic climate where everyone is worried about their jobs, we let our people know that we have our internal ‘cushions’ that will help break any fall, should that ever happen,” said Mariette Peters-Goh, Zul Rafique’s knowledge management partner.

The firm’s ‘cushioning’ strategies include propping up practices in better shape than others. The firm also recognises that remuneration drives its younger lawyers. “A couple of years ago, we adjusted our salary scheme and we saw a huge difference not only in retention but also from the recruitment exercises that we had. Loads of applications were sent to us, even when we did not advertise for positions,” said Peters-Goh.

philippinES ►For Romulo Mabanta Buenaventura Sayoc & De Los Angeles, supporting staff helps to keep turnover low. “We put an emphasis on teamwork and team building,” said senior partner Ricardo Romulo. “We are in dialogue with our lawyers so that we have a

Offices also at Banglore,Hyderabad and Kolkata

http://www.darsalaw.com

44



good feel for their concerns, and adapt when necessary. As a result of these programs, we have the lowest drop-out rate by our associates among the big firms in the Philippines.”

Romulo foresees several changes to the future of the legal industry and legal employment in the Philippines. “Internally, we have worked out systems wherein lawyers should be able to adjust to any downturns in order to be ready for the next economic upturn,” he said. “Also, we anticipate that billings will probably be based less and less on per hour charges, given the economic downturn.”

inDonESiA ►Leading by example is something which managing partner Melli Darsa of Melli Darsa Law ensures is implemented at the partner level to maintain equality in the workplace. “It’s important for our lawyers to know the partners work just as hard as them, if not harder, as this fosters respect. In terms of work ethics

and standards, I push the partners quite hard on this,” she said.

For a relatively smaller firm, Darsa said it’s important to keep track of all employees, starting with learning employees’ names. “I make time for all the associates, particularly where they are already a third-year associate upwards, to understand his or her uniqueness, strengths and weaknesses, as well as psychological makeup so we can help them achieve their best. We never want to be a firm where we do not know everyone who works here.”

And while international firms may be eyeing the Indonesian legal market, Darsa provides a humble response to the impact of competition. “Where international firms take a more business-like and impersonal approach to employee initiatives, domestic firms such as ourselves take a more personal approach, and understand that what you need to do first is make the employees believe in themselves, not accept mediocrity and always push themselves to their personal best. We

want each of our lawyers to become a leading lawyer in due course, not only as a rainmaker, but also as someone who is acknowledged by peers and competitors, and of course contributes to the country.”

inDiA ►In India, where many graduates tend to seek a career outside of law firms, the issue of fitting in has become primary – something which AZB & Partners, a seven-year-old firm with an average lawyer age in the early 30s, emphasises as being what separates them from its competition. “We are really informal in our approach internally. There is a higher degree of motivation among our people, which comes from our flat organisational structure, as we have no hierarchy,” said partner Abhijit Joshi.

“This apolitical environment is a source of internal motivation,” he explains.

The firms’ best-friends alliance with fellow EOC winners Clifford Chance will guarantee it a flood of

http://www.apap.gr.jp

SINGAPORE80 Raffles Place

#33-00 UOB Plaza 1Singapore 048624

Telephone: +65 6225 2626Facsimile: +65 6225 1838Email: [email protected]

SHANGHAIUnit 23-09 Ocean Towers

No. 550 Yan An East RoadShanghai 200001, China

Telephone: +86 (21) 6322 9191Facsimile: +86 (21) 6322 4550

Email: [email protected]

rodyk & Davidson llp> Corporate> finance> intellectual practice & Technology> litigation & Arbitration> real Estate

We thank ALB readers for making us an Employer of Choice

http://www.rodyk.com

46



We’d like to thank our people for scoring us sohighly in this year’s Employer of Choice awards.

We couldn’t be the firm we are without yourcontribution.

www..cliffordchance.com

Clifford C

hance

Making it work

interest from budding lawyers. It is currently in the process of establishing a joint training program with the Magic Circle firm, which will see it “importing” practices. “That will keep us busy. Our lawyers will go across to their offices on training programs. Clifford Chance has opened up those resources to us, including online training programs and others where training partners come here. There’s a lot of interaction in these fields.”

The ALB EMployer of Choice survey indicates that average lawyer salaries in India are much lower than in jurisdictions further east, but AZB is unfazed. “In our seven years, we’ve had a number of people elevated to partner and there are also several instances where they’ve moved into equity. It’s not just on paper; people can see these movements year-on-year,” said AZB senior partner Bahram N Vakil. “Our compensation ranks top of the class; there’s no firm that pays better. Part of it is reward for hard work and quality. We are market [leaders].”

honG KonG ►In a market where competition between firms for the cream of the crop is always intense, it seems that Magic Circle firms prevail. Clifford Chance, which ranked top as Hong Kong’s employer of choice, had some timely views on the shape of the current market. “It has become an employer’s market very quickly,” said Rosie Lynn-Jones, the firm’s regional head of HR (legal) and development. “There are good quality CVs around but we are seeing firms becoming cautious about hiring. From the individual lawyer’s perspective, they should be developing a flexible skill set to make the most of the rapidly changing environment.”

The firm said it invests heavily in training initiatives and, like its Indian best friend AZB & Partners, makes sure lawyers know where they’ll be in a few years. “It helps to have a clear career structure with appropriate recognition and development reviews at the major

milestones, such as promotion to senior associate or counsel. We also expect all our associates to get involved in client and business development at an earlier stage than they may do in larger offices overseas,” said Lynn-Jones.

But maintaining a firm’s position in the top rank is about more than just numbers. “Our reputation as a firm is a highly valuable asset, and our people are its living advertisement. It cannot be created overnight; it’s the result of many years of work in this region and we guard it jealously,” added Lynn-Jones.

mAinlAnD ChinA ►Gong Jun, managing partner of EOC winner, Jun He, provided some insight into just how his firm has met the HR challenges of rapid growth. “In the past, when we had a lower number of staff, we behaved very much like a family. We ate together, worked together, had fun together,” he said. “And now that

http://www.cliffordchance.com



we are becoming much bigger it’s difficult to behave like before. Now we pay more attention to the strategy, to make sure our employees are happy to work here. We pay the maximum social welfare, and when we have a good year we make sure we share the profits, and increase salaries and benefits. We make sure they grow with the firm.”

But, in a downturn, how does a firm maintain morale? “We thought about this at the beginning of the year, and held a meeting to give all employees’ representatives a promise to ensure that we will not cut their benefits first. Rather, partners will take losses in the beginning, unless it was threatening the survival of the firm. You want to make sure the people want to work here. They won’t produce quality unless they’re happy.”

Llinks partner Michael Mei said that another effect of the crisis has been that lawyers from international firms are knocking on domestic firms’ doors. “As the downturn in the economy has

affected China in every sector, we have had more candidates from foreign law firms’ representative offices in China approach us, especially from the junior to mid-level associates,” he said. With competition still heated between domestic firms, why should lawyers choose Llinks over another? “Llinks offers a better picture for our employees to be promoted,” said Mei. “Everybody working at Llinks has a very clear picture of their professional training – what level they are at and where they will be in the next year.”

An attractive salary package doesn’t hurt either, it seems. “We provide an above-average generous salary package, I believe, among the high end of the domestic firms. Also, only a few domestic firms have regular training. We believe in a very good training system – weekly, relevant and updated,” he said.

ViETnAm ►While Vietnam’s legal market has fewer players than other

http://www.zulrafique.com.my

48



jurisdictions, competition seems to have infiltrated firm HR policy as well, although it is justified.

“We don’t encourage an atmosphere of competing with other law firms,” said VILAF managing partner Tung T Ngo. “Our tip to staff and lawyers is to improve and learn from colleagues from both international and local law firms. We want to move forward by self-eliminating the pressure of competition.”

Improving rapport with other firms also helps the seconding of lawyers by overseas firms such as Clifford Chance and Kim & Chang, both of which are fellow EOC winners. This has proven successful for the firm, which now has five lawyers who have received the coveted Fulbright scholarship.

KorEA ►Last year, a Korean law society held a fundraiser for its cash-strapped members, so it is clear that compensation was a major issue for local lawyers. Kim & Chang

was proud of its ranking, receiving the most number of votes of Korean firms for its compensation. “Our policy is to provide the highest possible compensation based upon the quality of service provided for fair value,” said a firm spokesman. Yulchon’s response to the compensation issue was similarly confident. “Because we also recruit foreign lawyers, we think our wages and benefits are comparable to those paid by major international law firms in the US and elsewhere,” said recruitment partner, Hyo Young Kang.

The firm’s high ranking quality of work criteria was attributed to its belief that high quality services and teamwork are two sides of the same coin. “Given the size and diversity of our clients, our practice no longer depends on the expertise and client relationship of individual partners working independently,” said Kang. “But we do rely heavily on our partners, associates and staff working as a team to provide the best quality services that we are capable of providing as a firm.”

JApAn ►In a culture which values hard work over work-life balance, Atsumi & Partners tries to maintain a healthy level of quality of life for its lawyers. “Associates are required to report to an internal system whenever they work beyond midnight so that partners can monitor to see if anyone is being overworked,” said foreign registered partner, Bonnie Dixon. “When an associate appears to be overworked, we speak with them about it and in some cases have recommended reallocation of work or vacation or sick leave for the affected attorney.” The firm is also an equal opportunity employer for women, and values the diversity of its lawyers. “There are many women here, even among partners and at the management committee level, so we attract intelligent and skilled young women to join the firm,” said Dixon. “The presence of foreign lawyers provides an international atmosphere otherwise available only at a non-Japanese firm, while at the same time we retain Japanese management.

http://www.mayerbrownjsm.com

http://www.romulo.com

50



So associates have the opportunity to work in English with senior non-Japanese lawyers.”

miDDlE EAST ►For Denton Wilde Sapte, it is a case of a reputation cultivated through a long presence in the region ensuring good clientele. For the firm’s lawyers, that means higher quality of work. “It’s the people that make the difference,” said the firm’s human resources manager, Theresa Wong. “We choose the right people to come work for us, recruiting by their positive personality and their fit into the firm.”

While currently on a hiring freeze due to the economic climate, the firm has not resorted to redundancies. Wong attributes this to an effective recruitment strategy which disperses talent across offices. “We’re quite large by office numbers, not people. We borrow lawyers from the practice areas that are quieter, relocating lawyers

across offices, for example London to Dubai,” she said. “We’re not a Magic Circle firm in London but we are here in the Middle East. Those that leave us don’t leave for firms in the region.”

AUSTrAliA AnD ►nEW ZEAlAnD

Keeping an ear to the ground is one of Mallesons Stephen Jaques’ initiatives to maintain its lead as Australia’s employer of choice. “Our people tell us they want to work closely with clients, be involved in planning matters and have opportunities to learn and stretch on the job,” said managing partners Stuart Fuller and Tony O’Malley. “As a result, our leadership development programs over the last few years have placed a strong emphasis on delegation and coaching skills, and involving junior lawyers from the outset in understanding a client’s business, their priorities and challenges, not just the legal issues.”

Solidifying this over the next

few years has become a priority for the firm, which will launch an International Graduate Program in 2010 in response to demand for more graduate opportunities.

A similar approach is adopted by Thynne & McCartney; the firm emphasises the importance of knowing what employees want. “We encourage our staff to take an active role in deciding what remuneration they deserve,” said the firm’s human resources manager, Lyn O’Neil. “Our staff are not paid in bands or years of experience, but rewarded based on merit and performance.” ALB

http://www.yulchon.com

ALB has named us an Employer of Choice in Japan.It is an honor to be recognized by our peers.

We are proud to add this to a growing list of global accolades.

NotEd for rEstruCturINg/INsoLvENCy ANd ANtItrust Work Chambers Asia

oNE of fortuNE’s ‘100 BEst CompANIEs to Work for’ fortune magazine

fINALIst for LoNdoN offICE of tHE yEArLegal Week

rECogNIZEd oN ‘BEst pLACEs to Work’ LIsts Boston Business Journal • Boston globe • California’s Best places to Work program Crain’s New york Business • East Bay Business times • Los Angeles Business Journal san francisco Business times • silicon valley/san Jose Business Journal Washington Business Journal

A top 100 LAW fIrm for dIvErsIty multiCultural Law magazine

A top 50 LAW fIrm for WomEN Working mother magazine

Bingham mcCutchen LLp We have approximately 1,000 lawyers working in offices throughout the United States and in the world’s financial centers — London, New York, Hong Kong and Tokyo, where we are known asBingham mcCutchen murase, sakai mimura Aizawa — foreign Law Joint EnterpriseWe serve clients in cross-border restructurings and insolvencies; complex securities and financial regulatory matters; high-stakes litigation; and sophisticated corporate, financing and technology transactions.

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52

FEaTuRE | private equity >>


It won’t come as a surprise to learn that during the fourth quarter of 2008, levels of private equity (PE) investment across the Asia-

Pacific region hit their lowest point in nearly five years. The figure for the first quarter of 2008 was US$19.6bn and during the final three months of the year PE investment slumped to just US$8.4bn. Also unsurprising is the fact that deal flow was similarly depressed; LBOs, MBOs and PIPE deals evaporated, along with sponsors’ and institutional investors’ appetite for venture capital. What may surprise is just where the remaining activity came from.

Australia and New Zealand claimed the biggest share of PE activity in Q4 2008 while the boom economies of China and India performed poorly. Australia closed over US$1.68bn worth of deals in the period and New Zealand US$1.25bn. China and India disappointed with US$1.13bn and US$799m respectively. Japan fared a

little better with US$999m, but this was still far below expectations.

Can we expect more of the same in 2009? While it may be true that PE players are now resigned either to sitting on the sidelines for much of this year or accepting low-multiple and lower-margin deals, there is enough cash in Asia, enough value to be had, to excite PE lawyers across the region. There is widespread expectation that PE activity in Asia will bounce back and bounce back hard. ALB’s close examination of the PE landscape in China, India and Korea reveals lawyers busily preparing for this rebound. Despite the slow-down, the wheels at most PE practices are still spinning.

China: smaller exposure but quicker rebound?China is certainly not immune to the effects of the global recession. Its venture capital and private equity markets slowed to just below broader

Although private equity, like all markets, has felt the effects of the global financial crisis, it also has possibilities not found in other fields. ALB looks at PE in three countries and its golden promise of ‘value-add’

The private equity ‘value-add’




economic growth in 2008 and the amount of capital under management of most PE houses hit record lows. However, lawyers there contest that PE activity will rebound more quickly than other forms of investment, as funds in China are less exposed to the international financial crisis and, for some companies, a PE injection may be the difference between sinking or swimming in 2009. “PE funds are relatively less exposed to the financial market meltdown than hedge funds; China is seen by many as the hope behind an early rebound,” says Jonathan Zhou, a partner at Chinese law firm Fangda Partners. “Historically, large buyout funds have been relying more on their limited partners’ funds and less on borrowed money. Therefore, their China investments are less impacted by the tight debt market.”

Add to this the government’s decision last year to allow the country’s National Social Security Fund and other types of financial institutions to carry out equity investment and the increase in RMB funds and alternative investment sources this has brought for venture capital and PE firms, and a mid-term rebound looks a sure thing.

However, when activity does bounce back, says Zhou, it will be of a different nature. More attention will be focused on assets already under management. This isn’t to say small-size deals won’t be on the cards; it simply means that investors will be looking cautiously and conservatively at long-term, steady growth rather than the once-popular ‘jump-in, jump-out’ pre-IPO financings. “Clients will shift their strategies away from buying in anticipation of a quick IPO towards maintaining their investments in companies for much longer periods and turning around the business when the credit circle turns,” says Zhou.

So should we expect to see PE investors in China acting more like value investors and less like arbitrageurs? The early signs indicate a change in PE players’ behaviour is

already under way. Instances such as China International Corporation’s establishment of a US$2.9bn RMB fund JV with Shanghai International Group and an unnamed Chinese PE player’s interest in acquiring GM’s Hummer brand indicate this shift.

The potential Hummer deal is also evidence of another type of PE activity we should expect in the short term – PE’s continued investment in distressed companies, both abroad and in China. “For those companies in China that are suffering, PE injections are definitely welcome and may, in the short term, be necessary,” says Jeanette Chan, a partner at Paul, Weiss and head of its China practice

group and Asia communications and technology practice group.

With the pre-IPO investment avenue closed off (for now) and the possibilities for minority growth capital investments diminishing, the PE investment industry in China could get a boost. The number of control transactions effected are likely to increase, bringing the sector more into line with PE in developed economies in the region such as Hong Kong, Japan and Australia.

mass exodus: pE disputes to increase in indiaThe situation is markedly different in India, where, according to lawyers to

rMB FUnds In chInA – VcM Vs PEM ►Year Venture capital

marketTotal value Private equity

marketTotal value

2007 29 US$1.09bn – –

2008 88 US$2.34bn 20 US$21.33bn

Source: Zero2IPO Research Centre

Vc/PE-BAcKEd IPo ExITs – gLoBAL-Vs-chInA ►Year Global* VC/PE-backed

valueChina** VC/PE-backed

value)

2007 725 US$152.35bn 92 US$9.91bn

2008 277 US$56.85bn 35 US$3.42bn

Source: Zero2IPO research centre*Based on listings in major global financial centres**Includes both domestic and international listings

Jonathan Zhou, fangda partners

“PE funds are relatively less exposed to the financial market meltdown than hedge funds; China is seen by many as the hope behind an early rebound”

JoNathaN zhou, FaNgda PartNerS

54 Asian Legal Business ISSUE 9.3

As offshore legal counsel based in Hong Kong, we commonly deal with the book ends of inbound private equity investment into

the People’s Republic of China (“PRC”), that being, the initial establishment of the offshore investment fund structure, typically structured as a limited partnership and domiciled in either the Cayman Islands or British Virgin Islands (the “PE Fund”) at one end, and at the other, investments made by PE Fund’s in certain offshore target entities (“Offshore Target”), indirectly holding strategic PRC assets which are subject to such acquisition.

Book End One: Establishment of certain offshore tax structures for PRC investment purposesThe following tax driven acquisition structures of PRC assets have arisen from recent changes to the tax laws in the PRC which took effect from 1 January 2008.

In scenario one, a minority investment has been made by a PE Fund in a PRC target. In this scenario, provided the Hong Kong Special Purpose Vehicle (“HK SPV”) holds less than 25% of issued share capital of the PRC target entity, at the onshore PRC level there will be no withholding tax (“WHT”) on any disposal of these shares by the HK SPV under the PRC-HK Double Taxation Arrangement which became effective on 1 January 2007, however there will be 10% WHT on dividends paid down by the PRC target to the HK SPV. At the Hong Kong level, stamp duty will be payable in the amount of 0.2% of any consideration paid for the sale of shares in the HK SPV by the British Virgin Islands SPV (“BVI SPV”). Any disposal thereafter shall not be subject to any tax at the BVI level.

In scenario two, the PE Fund is electing to indirectly enter into a joint venture (“JV”) arrangement with a PRC JV partner through either a PRC equity joint venture (“EJV”) or a PRC cooperative joint venture (“CJV”). In this scenario, provided the HK SPV holds greater than 25% of issued share capital of the PRC target entity, it will be subject to a reduced dividend WHT treatment of 5% (reduced from 10%). Provided the BVI SPV owns 100% of the HK SPV, no tax shall be paid on any distributions at the Hong Kong or BVI level. In this context, ultimately the preferred exit for the PE Fund would be the sale or disposition of the shares in the BVI SPV.

In scenario three, provided there is no round tripping of investment by the PRC founders (i.e. the classic “Red Chip” structure which now requires approval of the China’s Ministry of Commerce (“MOFCOM”) and registration with the State Administration of Foreign Exchange (“SAFE”)), the PE Fund and the PRC founders will typically invest into the Offshore Target (typically a Cayman Islands exempt company for Hong Kong listing purposes), with the PRC founders holding ordinary shares and the PE Fund being issued Preference Shares (discussed below). If newly established, the Offshore Target will require MOFCOM approval as well as SAFE registration if it has PRC domestic investors. In order to avoid these regulatory hurdles, there have been more recent structures established whereby the Wholly Foreign Owned Enterprise (“WFOE”) does not acquire equity interests in the PRC operations company, but rather relies on certain contractual arrangements between the PRC founders and the WFOE. The tax advantages to this structure are that there will be reduced dividend WHT of 5%, assuming

the HK SPV owns 100% of the WFOE. There will also be no Hong Kong tax paid on distributions made by the HK SPV, assuming central and management and control of the HK SPV is held outside of Hong Kong, nor any Cayman Islands taxation on any disposition by the Offshore Target to the PE Fund.

Book End Two: Structuring the Offshore Target at the time of investmentIn the context of scenario three, there are various instruments available to a PE Fund through which to secure its investment in an Offshore Target including convertible preference shares (“Preference Shares”), convertible or exchangeable debt, warrants and/or options. For PRC investments, the favoured investment instrument for PE Funds is the acquisition of Preference Shares in an Offshore Target.

Broadly speaking, Preference Shares provide the PE Fund with preference rights (relative to other classes of shares issued by the Offshore Target) on “liquidation”, and further, are convertible at the option of the PE Fund to common shares in the Offshore Target. While the rights attaching to Preference Shares will ultimately be subject to negotiation between the parties, we have highlighted certain relevant issues that PE Fund’s consider when negotiating the rights attaching to these Preference Shares. The rights attaching to Preference Shares are typically provided for in the shareholders’ agreement entered into between the PE Fund and other shareholders’ of the Offshore Target and enshrined in the memorandum and articles of association (“M&A”) of the Offshore Target. It is necessary that the provisions of these documents replicate each other in order to ensure

Offshore book ends: utilising Cayman Islands and British Virgin Islands entities for private equity investment into China

1 Ogier’s role is specifically limited to the offshore legal aspects of any private equity transaction and it does not provide Hong Kong or PRC legal or tax advice.


Bahrain • British Virgin Islands • Cayman Islands • Guernsey • Hong KongIreland • Jersey • London • Montevideo • New Zealand • Tokyo

www.ogier.com

Excellence. OffshoreOgier is one of the largest providers of offshore legal and fiduciary services and advises on BVI, Cayman, Guernsey and Jersey law. Ogier has over 800 people providing legal advice and bespoke, professional trust and company administration services in all time zones and key financial markets to companies, investment funds, trusts, real estate holding structures and numerous other types of structure.

Recent awards and recognition:

Private Funds Law Firm of the Year 2009 ACQ Finance Magazine, Global Awards 2009

Offshore Law Firm of the Year 2008 British Legal Awards

Offshore Law Firm of the Year 2008 The Hedge Fund Journal Awards

Offshore Law Firm of the Year 2007 The Lawyer Awards

Offshore Law Firm of the Year 2007 Citywealth Magic Circle Awards

Top Offshore Law Firm 2006 and 2007 Alpha Awards

Duncan Smith, Partner, Hong Kong+852 3656 [email protected]

appropriate remedies are available to the PE Fund in the event of default. If there is a breach of a term of the shareholders’ agreement, only damages for breach of a contractual term can be sought, however, assuming the relevant term is enshrined in the M&A, specific performance of a shareholder’s constitutional rights will also be available as a remedy.

relevant considerations when negotiating certain fundamental class rights attaching to preference Shares

(i) DividendsPreference Shares shall be afforded preferential rights in relation to any dividends payable in cash or in kind to the PE Fund, based on certain agreed preference thresholds. Generally, dividends are not paid during the life of PE Fund’s investment in the Offshore Target.

(ii) liquidation preference Preference Shares will typically be afforded down side protection with regard to any payment of liquidation proceeds by the Offshore Target. This will typically be based on a multiple of the initial acquisition price of

the Preference Shares. It is key to ensure that the trigger for the liquidation preference is defined broadly enough to consider not only preferred liquidation rights for the PE Fund in the event the Offshore Entity is wound up, but also preferred rights in any proceeds resulting from the sale of assets by the Offshore Target, or its merger which will in turn provide upside protection for the PE Fund.

(iii) Conversion rightsPreference Shares will also be afforded conversion rights which allow the PE Fund to convert its holding to common shares in the Offshore Target. Anti-dilution provisions are necessary to ensure that the PE Fund does not suffer any shareholding, economic or price dilution on conversion. Of fundamental importance is the price adjustment mechanism employed to determine the value ascribed to the converted shares, with a weighted average conversion price adjustment mechanism generally providing a better outcome for the PE Fund.

(iv) redemptionPreference Shares will generally attach a right of redemption. Usually a PE Fund’s right to

redeem its investment from the Offshore Target will be characterised by an agreed mandatory redemption triggered by the happening of a specified event, such as a failure to IPO within an investment timeframe. A frequent issue faced by a redeeming PE Fund is what remedy is available in the event the Offshore Target fails to honour the redemption. Generally speaking, the remedies available to the PE Fund are limited to rights afforded in the M&A, given the PE Fund will not be deemed a creditor in this context.

(v) VotingPreference Shares will attach voting rights with respect to certain fundamental issues for the PE Fund. To ensure effective management and control of the Offshore Target, the PE Fund will generally also insist on board representation. This is fundamental to the PE Fund’s ability to ensure its influence and direction in the affairs of the Offshore Target.

By Nicholas Plowman, Senior Associate, Ogier, Hong Kong

nicholas plowman

Firm Profile Ogier

http://www.ogier.com

56



whom ALB spoke, investors are said to be pulling out of their PE investments in the country’s real estate sector in record numbers.

According to Akil Hirani, managing partner of Indian firm Majmudar & Co, many international and domestic PE houses are trying to get out of committed deals by invoking material adverse change and condition precedent clauses in deal contracts – a phenomenon he has seen more of in the last few months than throughout his entire career.

“PE firms are looking at various exit options to get out of partly completed deals,” says Hirani. “In transactions where the promoters have agreed that they will cause the company to effect a buyback, funds are assessing the exercise of such provisions.”

The Indian real estate sector has seen an unprecedented slow-down over the last six months, with some valuations dropping by almost 50% from when the deal was struck. This gives rise, of course, to arbitration and litigation. The key question, however, according to lawyers interviewed by ALB, is whether an economic recession can, in fact, be classified as a material adverse change. Hirani says that this issue is set to keep judges and lawyers in India busy over the next year. “Such cases are new for Indian courts and this may be a case of first instance for them.”

Where such disputes are routed offshore for arbitration, Hirani says that Indian courts must act swiftly to enforce arbitral awards, implying that this is intimately linked to giving prospective investors confidence that

their investments in India are safe. “Considering that most PE contracts provide for offshore arbitration, these issues will first end up being arbitrated outside India [in places like Singapore] and will come to Indian courts in the form of proceedings to enforce arbitral awards,” he says.

Even so, it is unlikely that all PE investors will seek to withdraw from deals. The more likely scenario may be a reconsideration of the terms of the deal – especially in situations where preserving relationships is important, and not least because real estate, ironically, remains India’s highest invested sector for PE. “Original plans might not be completely viable in the current environment. When PE commitments have happened or deal closures are in the last leg, investors and investees are not averse to taking a re-look at the project plans to assess whether project size or mix needs to be pruned or phased out to protect their internal rates of return,” explains Rajiv Sahni, a partner in Ernst & Young’s real estate practice:

Indeed, the apparent ability of PE to guarantee long-term revenue is part of why, despite the global recession, PE retains its appeal not only in China but across the region.

Korea: ‘Big bang’ to kick-start 2009 pE activity?A vastly depreciated Korean won and a host of relatively strong conglomerates with impressive balance sheets should prove the perfect mix for increased buyout activity, but that is not necessarily the case, according to Yong Jae Chang, a partner at Lee & Ko.

“Buyouts were down in Korea throughout 2008, as was most other PE activity,” notes Chang. “There were several deals going through, most of them trying to establish funds and others seeking to establish target funds, but a great number of PE funds here are now in dispute.”

In the fourth quarter of 2008, MBK Partners’ US$310.7m buyout of Doosan

india

Japan

China

new Zealand

Australia

Amount (US$bn)

Amount (US$bn)

Source: AVJC–KMPG Asian Private Equity quarterly investment report (Q4 2008)


AnnoUncEd PE InVEsTMEnTs (AsIA-PAcIFIc) q4 2008 By jUrIsdIcTIon ►

US$1.68bn

US$1.2bnUS$1.13bn

US$0.99bn

US$0.799bn

Financial services

Technology, media & telecommunications

Mining

Utilities

US$1.67bn

US$0.863bn

US$1.0bn

US$1.2bn

AnnoUncEd PE InVEsTMEnTs (AsIA-PAcIFIc) q4 2008 By sEcTor ►



Techpack accounted for almost the entire buyout deal flow in the country.

Just as the relaxation of company and foreign investment regulations in places like Taiwan, China and India is expected to spur on PE activity, so too is Korea’s capital market overhaul expected to help PE activity along. The streamlining of financial services regulation is expected to open new doors for PE players. “Under the new law [the Capital Market Consolidation Act], PE players will be allowed to use alternative vehicles – much different to before, when their options were somewhat limited,” says Chang. He is quick to point out, however, that while the proposed changes may aid PE players in theory, the reality of the situation is that the new vehicles created by the regulatory consolidation may not be as appealing as first thought.

“The new law will bring new opportunities but we must remember they are mostly just a consolidation of existing provisions,” says JW Lee, also a partner at Lee & Ko. “Conflicts [between the existing and consolidated regulations] need to be addressed first. Fundamentally, any increase in PE activity depends on the market.”

The silver lining: pE ‘value-add’No one should mistake PE players’ willingness to withdraw, or sponsors’ readiness to hold out for market conditions more conducive to higher multiples or their heightened focus on long-term gains as the only types of activity occurring in the PE sphere at the moment.

For while there are plenty of opportunities should the price be right, this is not necessarily the game anymore or, perhaps, this is not the game at the moment, according to lawyers interviewed by ALB. For many of their PE clients, it is not about looking at how PE can be deployed as a stop-gap solution to the dearth of bank financing, nor is it a question of accepting low multiples or a question of price. Now, more than at any stage in the past, the focus of fund clients is about looking to how they can improve the profitability of what they already have by harnessing the PE ‘value-add’. “ ‘The price’ used to be the mantra,” says Chang. “But for a lot of PE clients it is now not so much about looking for new opportunities as it is about making sure that what they have is performing well and implementing strategies to ensure this is maintained no matter how dire the economic situation may become.”

“Pricings are not everything,” agrees Paul, Weiss’ Chan. “Our clients are looking at assets already under their management, restructuring their investments, using rights conversions and the like to make sure what they have is sound and, if it is not performing, making sure it can be turned around.”

It is this ‘value-add’ of PE that makes it so appealing in the current environment. PE funds, unlike traditional bank financing, can increase the value of portfolio companies by arranging ‘add-on’ acquisitions that complement existing portfolio companies, permitting them to grow in size, strength and profitability before sale or exit. Add-on acquisitions capitalise on a fund’s existing knowledge and experience in a business or industry and therefore involve less risk in dicey economic conditions than the acquisition of a completely new business.

“PE differs substantially from normal bank financing,” says Chan. “Banks generally don’t have a direct hand to play in increasing returns. PE investment is all about backing people and management [in target companies]. It’s attractive because it offers value-add services that banks can’t and guarantees a steady stream of income and offers capital to help businesses extend themselves.”

If, on the one hand, fund clients are searching for the PE value-add, then the same must undoubtedly be said of PE (and other commercial) lawyers, who themselves are facing questions of relevance and being encouraged to change the nature of their counsel.

But just what exactly does this entail? Chan contends that lawyers may start by identifying their very own value-add – something more easily said than done. Not only will PE lawyers face vastly decreased billable hours and the pressure to reduce fees, they will be expected to complete transactions in shorter timeframes and undertake more detailed due diligence than was previously the case as well as ensuring that deal documents are watertight and investments are bankruptcy proof. “Legal advisors to PE firms will have far fewer billable hours in the first half of 2009,” says Zhou. “However, firms with strong restructuring, corporate governance, disputes and distressed asset acquisition will have more opportunities, since clients are expecting more sophisticated advice and the deal structure may no longer be plain vanilla growth capital deals as once was the case.”

And this, it seems, is the key to maintaining relevancy in a deflated market – the recognition, as one lawyer put it, that “no PE attorney is an island”. For just as clients are reaching out to their lawyers, lawyers should reciprocate, perhaps by exploring alternative fee structures.

Reaching out to clients who are in need is as sound a long-term investment as you will find in the current environment. ALB

AnnoUncEd PE InVEsTMEnTs (AsIA- ►PAcIFIc): ThE 2008 downwArds sPIrAL

Period–2008 Amount

January–March US$19.6bn

April–June US$15.5bn

July–September US$11.9bn

October–December US$8.4bn


Jeanette Chan, paul, Weiss

“Buyouts were down in Korea throughout 2008, as was most other PE activity … but a great number of PE funds here are now in dispute”

yoNg Jae chaNg, Lee & ko

58

FEaTuRE | tax & trusts >>


The Cayman Islands introduced its own unique form of non-

charitable purpose trust legislation in late 1997. The statute, called the Special Trusts (Alternative Regime) Law, 1997 (or STAR Law), is a significant departure from the original Bermuda model, which has been substantially copied by the British Virgin Islands and many other offshore jurisdictions. Cayman decided to go its own way partly due to concerns that the original Bermuda model (which was introduced in 1989) raises some significant and as yet unanswered questions relating to certainty, controllability by the courts, and the requirement that trusts for persons and trusts for purposes should be mutually exclusive. The STAR Law has now been consolidated with and is contained in Part VIII of the Trust Law (as amended).

Alternative regimeThe idea of the STAR Law is to create an alternative regime under which a

An innovative form of trust in the Cayman Islands offers a flexible alternative to traditional common law trusts, writes Walkers partner Andrew Miller

New STAr to guide trust formation

Andrew miller, Walkers

new trust can be created. The STAR Law will not affect existing ordinary trusts or powers and a special trust (a STAR trust) must state that the STAR Law is applicable. It would not have been desirable to exclude the vast body of English and Commonwealth case law relating to personal trusts. To that end, the STAR Law expressly provides that the law relating to STAR trusts and powers is the same in every respect as the law relating to ordinary trusts and powers save as provided in the STAR Law.

The objects of a STAR trust or power may be persons or purposes or both. The persons may be of any number and the purposes may be of any number or kind, charitable or non charitable, as long as they are lawful and not contrary to public policy. It is a requirement that at least one trustee of a special trust is a trust corporation licensed in the Cayman Islands or a private trust company registered as such in the Cayman Islands.

Enforcement and enforcersWith a trust for persons, the beneficiaries normally have a right



to enforce the trusts against the trustees. For charitable trusts in Cayman, the attorney-general has the right to enforce the trust for charity or the public interest. Clearly, in the case of a non-charitable purpose trust, enforcement is a potential problem. The STAR Law permits the settlor to specify in the trust instrument who will have standing to enforce the STAR trust.

The deed should provide for successor enforcers. An enforcer need not be a beneficiary. Under certain circumstances, the court also has jurisdiction to appoint enforcers and if there is no enforcer who is of full capacity, the trustee must within 30 days apply to the court for the appointment of an enforcer.

The STAR Law also allows the trust deed to specify whether the enforcer is to be subject to a duty to enforce the trust or whether the enforcer is to be free from any such duty. However, in the absence of express provisions in the deed there is a presumption that an enforcer has a fiduciary duty to act responsibly with a view to the proper execution of the trust.

Uses of a STAr trustSTAR trusts will prove to be very useful planning tools. A few examples of possible uses of STAR trusts are set out below.

Pure purpose trust with no individual beneficiariesA STAR trust can be a pure non-charitable purpose trust where there are no individual beneficiaries. The purpose of the trust could be, for example, investing in and promoting the growth and development of a particular company or business group. This will be particularly useful in cases where the patriarch of a family is concerned about who will succeed him in the ownership and control of the family businesses.

One of the anticipated uses is that of ownership of a private trust company which will act as trustee of various family trusts thereby giving consistency and control over the administration of the family trusts.

The trust can be perpetual and the trustees will be relieved of much of the burden of diversification of the trust assets and other risk-related problems. However, care should be taken not simply to state the purpose of the trust to be to hold the shares of a particular company (which is sometimes referred to as a “self-serving purpose”), because

Uncertainty no issueAnother traditional conceptual problem relating to non-charitable purpose trusts concerns the uncertainty as to their objects or their mode of execution. The STAR Law provides that a STAR trust is not rendered void by any such uncertainty and that the deed may give the trustee or any other person power to resolve any uncertainty as to the objects of the trust or its mode of execution. There are further powers for the court to resolve any uncertainty by reforming the trust, settling a plan for its administration or in any other way it deems appropriate.

perpetuities restrictions and reformSTAR trusts are not subject to the rule against perpetuities, which makes it possible to have a STAR trust which has an unlimited life. If a STAR trust becomes impossible or impracticable, unlawful or contrary to public policy, or unsuitable by reason of changed circumstances to achieve the general intent of the trust, and the trust cannot be reformed pursuant to the deed’s terms, the trustee must apply to the court to reform the trust cy près.

The unique advantage of a STAR … is that [it] can be structured as a pure purpose trust with no beneficiaries or [it] can be created for non-charitable purposes and for the benefit of individual beneficiaries

60



this language is directed towards the form in which the assets should be held rather than the way in which they should be applied.

A trust structured along these lines runs the risk of being treated as a failed disposition of the beneficial interest because of the lack of any beneficiary or proper purpose within the structure.

Pure purpose trust with beneficiariesThe unique advantage of a STAR trust over non-charitable trusts of some other jurisdictions is that a STAR trust can be structured as a pure purpose trust with no beneficiaries or can be created for non-charitable purposes and for the benefit of individual beneficiaries. This significantly increases planning flexibility as it means that in the scenario of the succession to the family businesses described above, income and principal can be paid to members of the family, if appropriate.

Substitute for traditional trust for personsIt should be remembered that a STAR trust can be used as a substitute for a traditional trust for persons when it is not necessary to have a trust for non-charitable purposes and that the advantages of perpetuity and the exclusion of certain traditional beneficiary rights (see below) would still apply.

Restricting the enforcement and information rights of beneficiariesIn the case of a STAR trust for purposes with beneficiaries or where

a STAR trust is used as a traditional trust for persons, the rights of beneficiaries to enforce the trust and/or to obtain information relating to the trust can be restricted. For example, where a settlor wishes to provide for his children and grandchildren but is aware that, after his death, one of his children (with whom, perhaps, his relationship has been stormy) will challenge the trust arrangements, the right of that child to obtain any information or enforce the trust (ie, take the trustees to court) can be excluded and vested in a different person as enforcer. This feature should be of considerable comfort to settlors and trustees alike!

International structured finance transactionsIn a commercial context, STAR trusts can be used in place of charitable trusts as the owners of Special Purpose Vehicles (SPVs) in international structured finance transactions.

Substitute for a charitable trustSTAR trusts can be used as substitutes for charitable trusts where, for example, the settlor wishes to control who has the right to enforce the trusts. They are also useful in circumstances where it is not entirely certain that the proposed charitable objects would be regarded as wholly charitable under Cayman law. ALB

Andrew Miller is a Cayman Islands-based partner and heads Walkers’ Private Trusts Group

The trust can be perpetual and the trustees will be relieved of much of the burden of diversification of the trust assets and other risk-related problems


Firm Profile KhattarWong

Over three and a half decades, KhattarWong’s tax practice has steadily earned itself a strong and solid reputation. The firm which

started out as a small tax practice now offers a full spectrum of services and boasts one of the few full-fledged tax practices in Singapore, with a team of eight tax practitioners.

The practice sets itself apart from others with the specialised nature of the work it undertakes. It advises and acts for clients in a variety of complex tax matters, including both contentious and non-contentious legal issues with the Inland Revenue Authority of Singapore. Further, the firm provides comprehensive advice on all tax and tax-related matters relating to corporate structuring, corporate tax, income tax, withholding taxes, double taxation agreements, transfer pricing, asset securitisations, stamp duties, property tax and goods and services tax. It also deals with matters relating to mergers & acquisitions, cross-border transactions and employment & remuneration.

Notably, as a member of Taxand, a global network of independent tax advisors, the firm is able to provide international tax advice of the highest calibre to clients. Taxand was formed in 2005 and has over 300 tax partners in more than 40 countries. The global network offers sophisticated tax advisory services to companies around the world and 78 per cent of Taxand firms are ranked in the top tiers of World Tax 2009.

Significantly, KhattarWong’s tax team frequently represents clients in matters with the Inland Revenue Authority of Singapore and before the Income Tax Board of Review, High Court and Court of Appeal. The firm has amassed vast experience in advising, planning and compliance as well as conducting objections and appeals, and reducing clients’ assessments when these are excessive.

“While we provide advice on all kinds of matters related to taxation, we are particularly well-versed in representing clients to good effect in issues of legitimate contention,” says Mr Leon Kwong Wing, head of KhattarWong’s Tax and Trusts Group.

“Our wide breadth of experience in resolving disputes coupled with our presence on the ground allows us to expediently and efficiently meet clients’ needs as and when they arise.”

The tax department’s experience in a wide range of tax and tax-related matters include

having acted for a shipping line in a successful objection against an additional assessment of $165 million; a taxpayer in a successful objection against an assessment amounting to $13 million on a lease premium; and a US media group in recovering $14 million in withholding tax due to payments erroneously characterised as royalties.

Of particular significance is the area of tax investigation and audit - one of the tax practice’s specialist skills. The firm is known to handle a large proportion of the market for such work and regularly assists clients in resolving audits and investigations. The team’s strength in this area is bolstered by the inclusion of Alan Ow, formerly senior deputy commissioner in the Inland Revenue, who brings to the table his vast experience in tax investigation from the tax authority’s point of view.

Behind the firm’s wide experience is a top-notch team that comprises recognised and respected figures in the industry. Senior Partner Gurbachan Singh has been actively involved in tax work for more than 30 years and is regarded as one of Singapore’s leading tax lawyers. Mr Singh is also consistently ranked highly in legal publications such as Asia Pacific Legal 500, Asian Legal Business and PLC Which Lawyer.

Leon Kwong Wing, the head of the department, has garnered more than 10 years experience advising on income tax, property tax, goods and services tax, estate duty and stamp duty in Singapore. Notably, Kwong Wing has a record of achieving substantial reductions in clients’ tax liabilities through successful legal argument and critical examination of fact situations.

The other partners in the Tax Practice include Ban Su-Mei, who has 10 years experience under her belt with the firm, and Moira Khaw, who has extensive experience in Singapore and international taxation from her years spent in international accounting firms and legal tax practice. Moira also taught Taxation and Advanced Taxation in the Nanyang Business School, Nanyang Technological University.

Supporting the team with their extensive expertise and experience are tax adviser Alan Ow and technical finance adviser Aloysius Tan.

Alan Ow has served more than 30 years at the Inland Revenue and was also the CEO of the Tax Academy of Singapore. He has received three Public Administration Medals, awards presented to outstanding individuals for their contribution to the nation’s growth, in his illustrious career.

Aloysius Tan was the former head of tax at Shell in Singapore and has over 40 years experience in tax, finance and structuring in governmental bodies, multinational industries and on revenue law committees.

“We are very proud of our tax team here at KhattarWong. The different strengths of the members of our team in the legal, regulatory and academic fields, complement one another and help us better meet our clients’ varied needs,” says Mr Singh.

KhattarWong 80 Raffles Place, UOB Plaza 1 #25-01, Singapore 048624 Tel: (65) 6535 6844 Fax: (65) 6534 4892

KhattarWong’s Tax Department Stands Out Amongst Others

Seated (from left to right): head of Department, leon Kwong Wing; Senior partner Gurbachan SinghStanding (from left to right): Associate Chua yee hoong; Tax Adviser Alan ow; partners moira Khaw and Ban Su-mei; Technical finance Adviser Aloysius Tan and Associate harleen Kaur

The fifth annual ALB In-House Legal Summit Japan is brought to you by Asia’s most respected monthly legal magazine, ALB, and assembles senior in-house legal counsel to network and hear updates from Japan’s top law firms in an intensive one-day event. A series of informative 90-minute workshops, interactive panel discussions by senior in-house legal counsel and the inaugural “Managing Partners Forum” panel will address issues such as “Global Financial Crisis: Risk Minimisation and Damage Limitation”. Join this important day in Tokyo and:• ensure you are up-to-date on contractual indemnities and liabilities• avoid redundancy litigation and employment law difficulties• resolve debt default issues to your advantage• understand key regulatory and merger control issues arising in cross-border M&A transactions• find out the best M&A strategies for J-REITs to survive the financial crisis• study the impact of the credit crisis on Real Estate Securitisations in Japan• network with leading internal and external legal counsel and business leadersPLUS: Lively debate on how law firms and in-house counsel can best help corporations adapt to, cater for and limit the effects of the global financial crisis

Distinguished speakers and panelists include:

fifth annual ALB In-House Legal Summit Japan – 2009- Legal Solutions During Turbulent Times -

28 May 2009, Ritz Carlton TokyoJP

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For further information and registration (complimentary for in-house legal counsel from Japan and other countries), please contact Dara Yam: [email protected] +852 2815 5988 2 +852 2815 5225

For sponsorship opportunities please contact Joel Ulbricht: [email protected] +852 2815 5988 2 +852 6120 4130

In-house counsel

FREE REGISTRATION*

Workshop Sponsors

Associate Sponsor Official MediaSupporting Organisation

Japan In-house Counsel Network* Terms and conditions applyOnly private practice lawyers from sponsoring firms are able to attend

ABN AMRO Securities (Japan) LtdAccenture Japan Ltd.Aozora BankBank of America Securities-Japan,IncBloomberg L.P.Cadence Design Systems, JapanCitibank N.A. JapanCredit Suisse Securities (Japan) Limited Deutsche Securities Inc.DHL Japan, Inc.Dow Corning Toray Co., LtdFederal ExpressGE Consumer FinanceGoogle Japan IncHitachi, Ltd., Automotive Systems

HSBC ING Life Insurance Co., Ltd.Intel CorpItochu CorporationJohnson and Johnson K.K.JPMorgan Securities Japan Co., LtdMarubeni CorporationMerrill Lynch Japan Securities Co., Ltd.Mitsubishi UFJ Merrill Lynch PB Securities Co., Ltd.Mizuho Securities Co., LtdMorgan Stanley Japan Securities Co., Ltd. NEC CorporationNikko Citigroup LimitedNippon Boehringer Ingelheim, Co., Ltd.Nippon Oil Corporation

Nokia Japan, Co., Ltd.Nomura Asset Management Co., Ltd.Novartis Holding Japan K.K. Olympus CorporationPanasonic Co.,LtdPhilip Morris Japan K.K.Societe Generale SecuritiesSony Computer Entertainment Inc.Sumitomo Mitsui Banking CorporationThomson ReutersToyota Motor CorporationUnilever Japan K.K.Walt Disney Internet Group (Asia Pacific)Wyeth K.K.and many more...

The annual ALB in-house legal summit Japan has been actively attended by in-house counsel from MNC’s such as:

Atsutoshi MaedaPartnerAnderson Mori & Tomotsune

Dr. Vassili Moussis Solicitor of the Supreme Court of England & Wales; Senior Foreign Counsel Anderson Mori & Tomotsune

Takayuki Kihira Attorney-at-law Mori Hamada & Matsumoto

Taro Omoto Attorney-at-law Mori Hamada & Matsumoto

Hiroto Inoue Partner, Attorney at Law Nagashima Ohno & Tsunematsu

Motohiro Yanagawa Partner, Attorney at Law Nagashima Ohno & Tsunematsu

Dr. Sebastian Gruson Legal Department Boehringer Ingelheim Japan

Michael D. Gertler Senior Counsel IBM Japan Ltd

Masako Takahata Attorney at Law Director & Senior Counsel Legal Department Deutsche Bank Group, Tokyo

Geraldine Donovan Chief Counsel - Japan Wyeth K.K.

http://tokyo.theinhousesummit.com/

http://www.ipba2009.com.ph

64

spECIal REpORT | Philippines >>


philippines 09striking the perfect balanceIn the midst of undeniably gloomy economic indicators, the legal fraternity in the Philippines has just cause for optimism. Having struck a balance between upturn and downturn work better than most players in the region, firms in downtown Makati are set to thrive in 2009

The dynamism that typified the Philippines economy for much of 2007 and the greater part of 2008 may have been replaced by

tales of falling stock prices, stagflation and rapid currency devaluation that one expects in a global depression. But whereas this may prove to be a recipe for legal sector malaise in other jurisdictions across the region, the Philippines legal market is thriving.

Firms there continue to register impressive growth, and continue to post revenue and profit stats that belie both the relatively small size of the market and the firms in it. Welcome to the Philippines in 2009, where law firms are leveraging off the country’s reputation as southeast Asia’s pre-eminent ‘low cost jurisdiction’, seeking that balance between upturn and downturn work and looking beyond the

confines of their own market for growth – something which will see them not only weather the quick-approaching economic storm but prosper from it.

in search of balanceThe Philippines may well be one of the most balanced legal markets in southeast Asia. Comparatively well developed (most of the larger players in the market have been around for at least 40 years, in stark contrast to neighbouring Thailand, Vietnam and Indonesia), the Philippines market is well rounded, boasting not only a well-developed top- and mid-tier but a sizeable corpus of some 200-plus smaller specialist firms and sole practitioners.

In addition to having a well-developed hierarchy, the market is also one of the most sophisticated and

diversified in the region: all firms possess a full-service capability and are able to advise clients on matters ranging from complex cross-border M&As to litigation, arbitration, dispute resolution and intellectual property (IP) enforcement. It’s a diversification that means it will be able to weather the tribulations presented by the global financial crisis better than most.

“The Philippines’ legal sector is extremely well diversified. Most, if not all, law firms have the capacity to cover the whole legal spectrum – cross-border, capital market to litigation” says Rafael Morales, a partner at SyCip (full name: SyCip Salazar Hernandez & Gatmaitan). “If you consider diversification a function of sophistication and development, then the Philippines is further ahead of




snAPshoT: PhILIPPInEs LArgEsT dEALs: 2007–08 ►Firms Deal name Value

Allen & Overy, Cleary Gottlieb, Romulo Mabanta Buenaventura Sayoc & de Los Angeles

Republic of the Philippines global bonds issuance

US$1,500m

Clifford Chance, Hunton & Williams

Quezon Power Project financing US$130m

Paul Hastings Energy Development Corporation capital facility US$80m

Paul Hastings, Shearman & Sterling Santa Rita power project refinancing US$544m

Allen & Overy, Cleary Gottlieb, Picazo Buyco Tan Fider & Santos, SyCip Salazar Hernandez & Gatmaitan

San Miguel Share Offering US$111m

Castillo Laman, Clifford Chance, Mallesons Stephen Jaques, SyCip Salazar Hernandez & Gatmaitan

International Finance Corporation & Asian Development Bank financing

US$1,100m

Freehills, Mallesons Lion Nathan – Boags acquisition US$325m

perry pe, romulo mabanta

rafael morales, SyCip

legal markets in Indonesia or Vietnam. It’s probably fair to say that it’s our competitive strength.”

And this strategy will only leave the market in a better position to limit its exposure to the global financial crisis. Perry Pe, the chairman of the energy, infrastructure & special projects department of Romulo Mabanta (full name: Romulo Mabanta Buenaventura Sayoc & De Los Angeles), explains. “Look at the US and the UK at the moment and you will find that the law firms that are laying off people and scaling back their operations are those

who have had the heaviest reliance on capital markets and banking & finance work whereas the firms who have had an equal concentration of lawyers in high end corporate work like M&A, and litigation, arbitration, insolvency and the like have not been hit as hard. You can draw similarities with the Philippines legal market I think – firms, theoretically, should do as well in the downturn as in the boom times.

“The environment has changed dramatically,” adds Pe. “Newer firms in the litigation and dispute resolution

space are competing more and more aggressively. They are hiring new staff and reducing their rates, and they’re not afraid to take cases on contingencies – only charging legal fees for successful outcomes.”

The early signs seem to confirm Pe’s prediction. According to the lawyers ALB spoke to, the flow of litigation and dispute resolution instructions being received over the last four months alone has increased, on average, by around 30% – with further growth predicted throughout 2009. “Litigation increases in an economic downturn – that’s no big secret,” says Editha Hechanova, the managing partner at boutique litigation firm Hechanova Bugay & Vilchez. “Clients the world over are more willing to settle disputes in court in a downturn and that’s no different in relation to Philippines clients or international clients doing business here.”

But as to whether the revenues brought in by such work are equivalent to that derived from big-ticket M&A, cross-border or capital market work is

66



MAndATory LEgAL AId IMPosEd on PhILIPPInE LAwyErs ►Effective July 1 2009, every practising lawyer in the Philippines will be required to render a minimum of 60 hours of free legal aid services to indigent litigants per year.

Passed by the Supreme Court in February 2009, the new rule is aimed at enhancing the duty of lawyers to society as agents of social change by helping improve access to justice for the less privileged members of society and expedite the resolution of cases involving them.

At the end of every calendar year, any practising lawyer who has failed to meet the minimum prescribed 60 hours of legal aid service each year shall be required by the IBP, through the National Committee on Legal Aid (NCLA), to explain why the lawyer was unable to render the minimum prescribed hours. The NCLA shall make a report and recommendation to declare a lawyer “not in good standing” if a lawyer fails to give an explanation for said failure or the NCLA finds the explanation unsatisfactory.

The “not in good standing” declaration will be effective for a three-month period from the receipt by the erring lawyer of the notice from the IBP Board of Governors. During the said period, the lawyer cannot appear in court or any quasi-judicial body as counsel.

While lawyers ALB spoke to believed the idea to be admirable, they have serious doubts as to just how it will play out in reality. “The purpose and the rationale behind the Supreme Court’s resolution is certainly laudable,” says Rafael Morales of SyCip. “But in its implementation it may actually have the opposite effect. Corporate lawyers, with little or no courtroom training will need to act for pauper litigants – this could have disastrous results.”

Disastrous results not only for the indigent litigant. “There will come a stage where this

starts to affect firms’ profitability,” says Editha Hechanova of Hechanova Bugay. “The rule states that lawyers must perform at least five hours of mandatory service each month – which is all well and good for time in court, but preparing for each case, the preparation of briefs, and the like could take anywhere from 40 to 50 hours. In the event that this does happen lawyers will still only be given a one-hour credit for their work. I fail to see how the system, as it is currently proposed, can work.”

Watch out for some collective action on this front in the months ahead.

another question. Ricardo Castro, the managing

partner at Quisumbing Torres (part of the Baker & McKenzie network) has seen the revenue brought in his firm’s litigation, dispute resolution and insolvency & restructuring practices increase exponentially over the last few months. “For our office, litigation accounted for about 25% of our revenue last year, but as at the end of January [2009] this has increased to more like 29% and the number of billable hours being registered has also increased.”

Morales cites a similar trend, suggesting that litigation and dispute resolution work in particularly could account for “upwards of 35%

of SyCip’s revenue in 2009”, but refused to comment on whether the increase would be proportionate to the decreased revenue in the firm’s staple areas such as investments and M&A.

But as much as this area presents law firms in the Philippines with a viable way to maintain revenue growth throughout the global recession, it is also the area where competition between firms is at its most ferocious and downward pressure on legal fees most evident. “The environment has changed dramatically,” notes Pe. “Newer firms in the litigation and dispute resolution space are competing more and more aggressively. They are hiring new staff and downsizing their rates, they

are taking matters on a ‘speculative basis’ – only charging legal fees for successful outcomes – and reducing hourly rates, in some cases by as much as 50%.”

All of this is underscored by a profound shift in client behaviour and an ‘auction-type’ process for the award of legal work. “Clients look at charges now and don’t necessarily look at quality of the work delivered. It’s now really a case of whoever can charge the lowest rates wins the work,” Morales explains.

He also notes that, while international and domestic clients are preferring to auction their work to the lowest bidder at the moment, bigger ‘blue-chip’ clients are still more discerning when it comes to quality.

Hechanova concurs that smaller firms like her own are now competing for work more fiercely with the larger firms in the market, but she does not agree with Morales’ assertion that the quality of work offered by smaller firms is of lesser quality or that they cannot attract blue-chip clients.

“The commercial litigation work we do is of a very high quality and assertions to the contrary are wrong. Our client base – just like that of the bigger players – is about 70% international and 30% domestic,” she says, highlighting that her firm has received regular instructions from US and European majors such as Daimler AG and Rubbermaid, to name only two.

And while Morales offers the rejoinder that “larger firms must encourage clients to make the flight to quality”, it is clear that this no longer means what it used to. Value for money, it seems, is an integral part of the quality legal service.

A different type of outsourcingThat the Philippines has been one of the region’s most favoured destinations for business process outsourcing is no secret. In 2007 alone, this sector contributed more than US$2.1bn to the nation’s economy, leaving it outranked only by BPO heavyweights India and China. Projections by McKinsey & Co state that by 2010 the BPO sector will contribute in excess of



US$11bn to the economy and employ more than 900,000 people, thanks largely to the government’s efforts in offering significant fiscal and non-fiscal incentives to attract FDI in these industries as part of the 2006 Investment Priorities Plan (IPP).

The country has not only been engaged in so-called ‘low value-add’ services like call centres; it provides higher end outsourcing as well, including services such as web design, medical transcription, software development, animation, shared services and, importantly, legal services. And it is the latter that is being watched very closely by a number of the country’s top law firms.

Lawyers that ALB interviewed for this report remain hopeful that Legal Process Outsourcing (LPO) will catch on in the Philippines to the same extent it has in India, noting that it may no longer be a question of ‘if ’ but rather ‘when’ it happens.

“The infrastructure to support such things is already present in the Philippines,” says Morales. “We quite clearly know how to handle outsourced work; we are a common law jurisdiction; we have an English-speaking population and lawyers trained in reputable schools who are capable of handling such work. I would think it will only be a matter of time.”

And with the country’s BPO sector stalling at the moment due to the financial crisis, Pe believes that LPO could quickly gain in popularity, provided, of course, the Philippines is able to catch up with the LPO leader – India. “To some extent I think we may have missed out on a huge opportunity here,” he says.

“India is certainly miles ahead of us at the moment but there is still room for us to get involved,” he continues, noting that “ethical and professional questions” that have been raised about India’s LPOs recently may provide such an opportunity.

However, it is these precise questions that have other lawyers in the Philippines questioning the utility of entering the sector. “LPO could potentially be quite big, yes, but I don’t see a rush to it in Manila,” says Castro. “It’s a definite trend and, frankly, we have looked at it, but there is a

larger issue involved and that is the commoditisation of the value of legal work which may not appeal to many international law firms.”

But, as is the case in India, it’s not international law firms, but MNCs that are the biggest exponents of LPO. “I have heard rumours that some in-house teams at MNCs are starting to send some of their legal work to the Philippines. I hear they are using avenues they use for their BPO operations – I’d say this will be the route used when, and if, LPO starts on a larger scale in the Philippines,” says Morales.

The macro and microThe size of the Philippines’ legal market has lawyers there worried. And rightly so. In 2008, estimates suggested that the legal sector contributed around US$500–600m to the Philippines’ economy. The more observant may note that this is less than what white-shoe law firm Skadden grossed in the same period. And while this is in itself not a cause for alarm (Korea, arguably a far more developed legal sector and at least four times larger than the Philippines grossed only KRW2trn (US$2bn) in 2008), the fact that the Philippines’ legal sector has grown only marginally in the last five years make the situation a little more serious. And most firms in the Philippines are cognisant of the need to look beyond their home market for growth.

“I have heard that lawyers in some other jurisdictions feel that the legal market here in the Philippines is too insular, too inward focused. And to some extent this is probably true – there has been a tendency for firms here to focus on the home market,” says Morales. He also notes that almost 90% of transactional work that has occurred in the last 10 years has occurred into the country (see box on p64). “It’s created a situation where firms haven’t really needed to look outside of the Philippines.”

The global financial crisis has changed things, however. Cross-border transactions on the scale the Philippines has seen over the past five or 10 years have slowed to a trickle and Pe believes this could bring a change

of mindset. “The market will need to be more regional and perhaps global in 2009. It can no longer afford to be parochial; the world is getting smaller and smaller every day,” Pe says.

But while the world is getting smaller and smaller for Philippines law firms, issues pertaining to firm management, maintaining financial profitability, and the recruitment and retention of staff are becoming bigger and bigger.

Not only will Philippines lawyers be hit with, by all accounts, ethically admirable but nonetheless onerous mandated minimum pro bono hours each month (see box on p66) which offer the real possibility of eating into a firm’s bottom line, but they also have recruitment and retention problems to deal with at the moment.

But these are not the recruitment problems that firms in other jurisdictions are having. Whereas 2006 and 2007 employment markets were

68



typified by the departure of mid-career lawyers to jurisdictions like Hong Kong and Singapore, in 2008 and 2009 the top firms in the Philippines are struggling to stop their lawyers being poached by companies to staff their in-house teams.

“Over the last three years we’ve seen a steady of stream of lawyers leave the Philippines. These lawyers, who were generally below partner level, mostly senior associates, would go to places like Singapore and Hong Kong because remuneration is higher,” explains Pe,

quickly pointing out that his firm has had no turnover in 15 years. But this does not mean that Pe has lost no lawyers to in-house roles. “But now, many of them have returned home. The trend now is for many of these lawyers to go in-house because of the perception that there is a better work–life balance and the like,” he says.

And while lateral moves are few and far between in the rather collegial atmosphere in the Philippine legal market, there is always a fierce tussle for fresh graduates, with many of the

top firms fighting it out for the nation’s brightest pupils.

This, of course, has ramifications for smaller players in the market. “It is certainly difficult to get the best graduates from the best schools in the Philippines,” says Hechanova. “To do so, to lure them away from the big firms here, we have to competitive when it comes to compensation, we have to pay above market rate and that is difficult. But we are finding we have a strong lure in the quality of work we can offer.” ALB

“The environment has changed dramatically. Newer firms in the litigation and dispute resolution space are competing more and more aggressively. They are hiring new staff and reducing their rates…”

Perry re, roMuLo MaBaNta

68 ISSUE 6.2

Firm Profile Angara Abello Concepcion Regala & Cruz

68 Asian Legal Business ISSUE 9.3

Angara Abello Concepcion Regala & Cruz Law Offices (“ACCRALAW”) is a full service top-tier institutional law firm in the Philippines with

head offices in Makati City, Metro Manila, and branches in the thriving business commercial centers of Cebu City and Davao City to the south of Metro Manila. The Firm now has over 130 lawyers. ACCRALAW and its lawyers are active members of global networks and organizations of law firms and lawyers, including Terralex, Meritas, the Asean Law Association, Inter Pacific Bar Association and International Bar Association, among others.

ACCRALAW has been ranked as a leading Philippine firm by several publications (such as Chambers, Asia Pacific Legal 500, PLC Which Lawyer and IFLR) in corporate and commercial practice (“leading firm”), litigation (the top litigation firm with a “fearsome reputation”),

labor and employment (Pacific Business Press’ Asian Labor Counsel of the Year in 2008), and intellectual property (Asia Law’s IP Firm of the Year in 2007).

Many of the ACCRA lawyers have been cited by international publications as among the leading lawyers in their fields, including Teodoro D. regala (the top corporate lawyer in the Philippines); Avelino V. Cruz (senior statesman); rogelio A. Vinluan, Victor p. lazatin and Teresita J. herbosa (leading lawyers in litigation and arbitration); Eusebio V. Tan and Tadeo f. hilado (leading lawyers in corporate and commercial transactions); marcial G. de la fuente, Emiterio C. manibog, Jr. and Emerico o. de Guzman (senior statesmen and leading individuals in labor and employment practice); Aleli Angela G. quirino and Alex ferdinand S. fider (frontrunners in IP practice); and ruby rose J. yusi (leading tax lawyer).

HEAD OFFICE ACCRA Building, 122 Gamboa Street Legaspi Village, 0770 Makati City, PHILIPPINES Tel. No.: (632) 830-8000 Fax Nos.: (632) 816-0119; 812-4897 Email: [email protected] | Website: www.accralaw.com CEBU CITY BRANCH OFFICE 6/F Cebu Holdings Center Building Cebu Business Park (Ayala), 6000 Cebu City, PHILIPPINES Tel. Nos.: (6332) 231-1449; 231-4223 Fax Nos.: (6332) 231-3614 Email: [email protected] DAVAO CITY BRANCH OFFICE 11/F Pryce Tower, Pryce Business Park, J.P. Laurel Avenue, 8000 Davao City, PHILIPPINES Tel. Nos.:(6382) 224-0996; 224-0997 Fax No.: (6382) 224-0983 Email: [email protected]

ANGARA ABELLO CONCEPCION REGALA & CRUZ LAW OFFICES (“ACCRALAW”)

37 Years of Setting the Pace In Excellence In the Practice of Law



Firm Profile Sycip Salazar Hernandez & Gatmaitan

Founded in 1945, SyCip Salazar Hernandez & Gatmaitan is one of the most established law firms, and the largest, in the country.

Principally based in the country’s financial and business center of Makati City, with offices in Cebu, Davao and the Subic Bay Freeport, the firm provides its clients (which currently include top local and foreign corporations, international organizations and governments) with a selection of experienced practitioners – also leaders in their respective fields - across the region.

Their practice covers all fields of law including: Advertising, Media & Entertainment, Aviation & Maritime Law, Banking, Finance & Securities, Construction & Infrastructure, Corporate Services, E-commerce & Technology, Employment, Labor Relations & Immigration, Energy, Environmental Law, Food & Drug, Insurance, Intellectual Property, Investments, Mergers & Acquisitions, Litigation & Arbitration, Mining & Natural Resources, Privatization, Real Estate , Tax, Telecommunications, Trade Law & Customs Regulation.

The firm’s professional history has always tracked emergent legal issues engendered by developments and shifts in Philippine business and society, and by global changes and trends. The firm has assisted in a range of key legal issues, including those that arose during the formative years of our Republic, to the restructuring of the Philippine external debt, as well as facilitating a range of major deals.

Some of the most recent deals that SyCip Salazar Hernandez & Gatmaitan have been involved in are listed below:

Republic of the Philippines’ Paired Warrants •Program: The Republic of the Philippines adopted and implemented a Paired Warrants Program aimed, among others, at addressing certain new Basel 2 capital standards and to make Philippine sovereign international bonds more attractive to investors, especially banks, as these bonds paired with warrants carry zero (instead of 20%) risk weighting for capital adequacy purposes, the same as peso-denominated T-bonds.

The firm represented the sole financial arranger for the Paired Warrants Program, Credit Suisse (Hong Kong) Limited.

Sale of 40% of Aramco Overseas Company •B.V. in Petron CorporationThe firm acted for Aramco in the sale of its 40% shares in Petron Corporation, the country’s largest oil refinery and marketing company. As Petron is a listed firm in the Philippines, the deal also involved a tender offer for the shares of its public shareholders, requiring the resolution of certain novel securities laws issues.

Financing for the Purchase of the 600MW •Masinloc Coal-Fired Power PlantThe firm continues to dominate energy practice in the country. It recently represented AES Corporation in connection with the financing for the acquisition by Masinloc Power Partners Co. Ltd of the 600MW Coal-Fired Power Plant in the Province of Zambales, Philippines from the Philippine Government as part of its privatization program under the Electric Power Industry Reform Act (EPIRA). The secured financing amounting to more than US$600M was provided by International Finance Corporation, Asian Development Bank and a consortium of foreign and local banks.

Acquisition of Shares of eTelecare Global •Solutions, Inc.This transaction involved the purchase of all outstanding common shares and American Depositary Shares of eTelecare. The common shares are listed on the Philippine Stock Exchange, Inc. and the ADSs, each representing one common share, are quoted on the Nasdaq Global Market. It involves the first tender offer in the Philippines that is implemented as a single offer in two jurisdictions (Philippines and United States), as opposed to a dual offer, i.e., a separate offer in the Philippines and in the United States. The firm acted for the purchaser.

These and other deals come in the wake of other significant deals in the past few years. Recently, the firm captured the ALB Southeast Asia Law Award for National Deals Firm for 2008, with the publication noting that “[the firm] had a great 2007, with a major highlight being its work advising Mirant in its sale to the Tokyo Electric Power

Corporation…” It has already won the IFLR National Law Firm Award for 2008, a distinction it has held for several years.

The firm’s extensive experience and comprehensive corporate expertise, combined with its “grasp of the local market and global perspective” has consistently impressed clients and led to the firm and its lawyers being always included in “go-to” and leading lawyers lists and surveys. It is a constant “Band 1” (top tier) firm in the annual Chambers Global Law Firm Survey, described as “a leader across the board”, noting that “clients cite the firm’s diligent, responsive lawyers and their ability to interpret and simplify the complexities of the local legal code” as key drawcards.

While senior of-counsel such as Angelito C. Imperio (credited with pioneering the firm’s ground-breaking banking practice) and Andres G. Gatmaitan continue to be highly regarded, the firm’s deep bench of practitioners such as Andres B. Sta. Maria and Rocky Reyes in the field of energy and infrastructure, Rafael Morales and Jose Maria Hofileña in the area of finance and securities, Marilyn Victorio-Aquino and Hector de Leon, Jr. in mining and natural resources, has impressed clients and made its “client list and track record… the envy of many firms.”

With more than half a century of collective experience and resources, and a continuing drive to innovate, the firm remains at the cutting edge of legal practice, combining traditions of professional integrity and excellence with a time-tested ability to break new ground.

For more information please contact: Manila Office SSHG Law Centre, 105 Paseo de Roxas Makati City 1226 Metro Manila, Philippines Telephone: (63 2) 817.9811 to 20 (63 2) 817.2001 to 09 Fax: (63 2) 817.3896; (63 2) 818.7562 Email: [email protected], [email protected]

SyCip Salazar Hernandez & Gatmaitan: Leading the way

70

pROFIlE | managing partner >>


Alastair Da Costa: DLA Piper

Organisational principles

ALb 2009 MAnAging pARTnERS SERiES

Being swamped with work is not normally something to be happy about, even for the most assiduous of lawyers. But these

are far from normal times. “Well, we’re quite busy at the moment, as you can imagine. It’s not every day that the world economy collapses,” says Alastair Da Costa, the Asia managing director of DLA Piper. “And, don’t get me wrong – it’s great that we are.”

His apparent pleasure may well be warranted. DLA Piper has fared better than many of its international rivals during the global financial crisis.

This isn’t to say that it has remained completely immune; it, too, has had to layoff staff across the US and Europe (and, more recently, in Asia) but where other mega firms – the likes of Skadden, Sidley Austin, Latham & Watkins and White & Case – have all seen either their 2008 or profits-per-equity partner stats plummet, DLA Piper remains in the black on both counts. “We are wary of being complacent – we’ve done a lot of great work in 2008, but that is only a fraction of what we want to achieve,” he says.

This in many ways typifies Da Costa’s approach to building DLA Pipers’ credentials in the Asia-Pacific region – and he readily admits that its grand strategic vision – to become the leading business law firm – is still very much a work in progress.

Whereas in the past a firm’s Asian operations may have been considered nothing more than a feeder office for its US or UK headquarters, the region’s strategic and financial importance has been growing steadily over the last five years. “Asia is vitally important for the firm’s global strategic vision and our Asia-Pacific strategy – working with our group firm DLA Phillips Fox (DLA’s group firm in Australia and New Zealand) in closer integration – is a key part of that strategy; our aim is to offer global coverage and enable a broad approach,”

says Da Costa. “The percentage of work coming from Asia is increasing, and our revenue is becoming more and more global each year.”

Just how important Asia is for DLA Piper is amply demonstrated by financial figures for 2008.

Revenue for DLA Piper’s EMEA & Asia operations increased by 16% in 2008 from more than US$718m to just over US$836m, outshining even the firm’s US practice which reported growth of only 3.8% in a revenue increase of US$1.13bn to US$1.17bn.

Growing painsBut while Asian growth has its obvious financial benefits, it also brings difficulties, most notably in relation to cohesion and integration – to which international firms that do not have a centralised management structure

Alastair Da Costa knows a thing or two about marketing. Having sold the city of Leeds to the world, he is now doing the same for DLA Piper in Asia

dLA PIPEr: FInAncIAL PErForMAncE (EMEA + AsIA V Us) 2008 ►Year Revenue EMEA

+ Asia Revenue – US PEP EMEA + Asia PEP–US

2007 US$718m US$1.13bn US$897,000 US$1.21m

2008 US$836m US$1.17bn US$905,000 US$1.29m



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like DLA Piper are especially prone. “There’s a tendency for an office-based mentality in Asia and it’s something that has the potential to get in the way of development of information and knowledge sharing. We are in the process of implementing a ‘bigger picture’ organisational structure, based on groups and structuring the firm’s global operations in terms of work performed rather than geographic location,” Da Costa says.

This is a process that Da Costa believes transcends matters such as lawyer training, efficiency and the like, and gets right to the heart of branding, marketing and financial performance. “Underlying this whole process will be the development of our profile in Asia, increasing our brand recognition in places like mainland China. This is the first step to ensuring financial profitability,” he explains.

Marketing and branding are areas that Da Costa knows better than most. Not only is he is a director of Marketing Leeds Ltd, a company responsible for promoting the brand and image of the English city, but he also sits on the International Committee of Leeds Financial Services Initiative Ltd, a body that represents and lobbies for the financial sector in Leeds.

And while Da Costa admits that many firms have generally been slower to recognise the role that marketing and branding play in driving the development of a law firm, he feels this is changing. “UK law firms have probably been more proactive in the

past, but many international firms are catching up. They’ve realised that it’s an important part of business development and can help boost financial performance,” he says.

layoffs, redundancies and equity contributionsWith nearly 1,200 (almost 100 of them at DLA Piper) lawyers in the US and UK having lost their jobs in the last three months alone, it was inevitable that similar activity would soon reach Asia’s shores.

Early last month, DLA announced that 54 staff would be laid off across its Asia operations, including 20 fee-earners and 34 support staff – a decision which, although pragmatic, was nonetheless a difficult one for the firm to make. “The staffing adjustments we are making are necessary and appropriate given the deteriorating economic climate. We are reshaping our resource structure and cost base to better align with current business activity levels as a result of the recent market downturn,” he says. “We genuinely regret the impact this will have on our people who will be affected and are providing outplacement consultation and support through the transition period.”

And while this decision may have been all about positioning the firm to emerge from the downturn in a stronger position, layoffs, redundancies and downsizings are not the only solution.

DLA Piper announced late last year that it would ask salaried partners across the globe to contribute up to US$150,000

capital to the firm. A decision considered, in some circles, to be a sign that the firm was in financial strife. “Some firms don’t do this, but it’s part of being a partner at DLA,” he says. “We didn’t feel like it was a particularly odd move – if anything, it’s financially prudent in the current climate and aligns practices in Asia with those across the globe.”

Da Costa adds that the move is also a positive for partner culture. “Apart from being financially beneficial, it’s also helped encourage an ownership culture rather than an ‘employee’ culture for salaried partners,” he says.

retooling, retraining, redeployingDLA Piper is one of the many law firms exploring the possibility of retraining lawyers in practice areas hardest hit by the global financial crisis.

Da Costa does not subscribe to views which say you can’t teach an old dog new tricks (or, for that matter, young pups can’t be trained) and, instead, notes that retraining of lawyers in such a way is not only a sound business move but also beneficial for their professional development. “The retraining of lawyers is do-able with a high degree of success. All you need is people who understand the market – a lot of issues surrounding insolvency, restructuring and refinancing should be well known to good lawyers,” he says. “If anything, older lawyers should be in a better position than younger lawyers to do this. But for younger lawyers, it’s a good move for their professional development to change tack if need be.” ALB

“There’s a tendency for an office-based mentality in Asia and it’s something that has the potential to get in the way of development of information and knowledge sharing”


Company Profile Fraser Place

expansion plan as Japan is a key gateway city with foreign investments. Tokyo is a major financial centre like Paris, London, Sydney and Seoul where we already have a strong Frasers presence. Having a Gold-Standard serviced residence here puts into action our aspiration to be a major player in North Asia. Shinjuku is undisputedly one of Tokyo’s leading business, administrative and entertainment districts, ideally suited to the Fraser Place brand profile of a fun, trendy and modern lifestyle for business travelers from the likes of Fortune 500 and Forbes corporation guests." said Mr Choe Peng Sum, Chief Executive Officer, Frasers Hospitality.

"There is a great need by corporations, both local and foreign, for mid to long-term stay needs, and we will be meeting the exacting needs of these business travelers who want the comforts of home with selected facilities available at five-star hotels," added Mr Choe.

Fraser Place howff Shinjuku, Tokyo 2-27-7 Hyakunin-cho Shinjuku-ku Tokyo 169-0073 Japan http://shinjuku.frasershospitality.com For further information, please contact : The Director of Sales Tel : 03 5925 3111 Fax 03 5925 3555 Email : [email protected] http://www.frasershospitality.com

Fraser Place howff Shinjuku, TokyoGold-standard serviced apartments in Tokyo’s trendiest district

Get comfortable as the deal gets more attractive with Super Savers and Bonus Offers for a limited period

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Fraser Place howff Shinjuku is the growing choice of gold standard serviced apartments for corporate travelers on extended-stay or relocation

including business or leisure travelers on short or daily stays in Tokyo. The extensive range of fully serviced apartments include designer-styled units with spectacular views – limited units only for the discerning few with a desire for stylish living with a difference.

For a limited period only, take advantage of Super Saver Rates for daily stays – the deal gets more attractive as you get more comfortable!! For those on relocation or intending to spend a longer time in this ultra-modern city, the exclusive Bonus Deal offers a guaranteed upgrade to a 1-Bedroom apartment at the price of a Studio Super Deluxe, including many more benefits. For more offers and details, visit our website www.frasershospitality.com or email [email protected]

The fully-serviced residences, ranging from Studios, 1, 2 and 3-bedroom type with views above the rest to envy, are complete with the conveniences of home appliances including a washer/dryer and home entertainment system to provide as the ideal choice of “home-away-from-home” while in Tokyo. Internet connection options are available in all apartments including wireless connection in selected guest common areas. For the exclusive benefit of Fraser residents facilities include the gymnasium, open daily for a healthy workout, and the Residents Café which offers daily continental breakfast and use of the internet stations on complimentary

basis. Services include 24-hour concierge and guest services, housekeeping, laundry and dry-cleaning, round-the-clock security and electronic key-card system.

Located within easy walking distance of Shinjuku’s business area, guests and residents can appreciate the convenient location as they enjoy the calmness of being away from the main hustle and bustle of Shinjuku’s business district. The location, an ideal balance between work and life’s little pleasures for discerning people, includes the conveniences of a 24-hour supermarket within the premise and an almost never-ending selection of eateries in its surroundings. A 3-minute walk to Okubo station and 15 minutes to Shinjuku station, one of Tokyo’s main transportation hubs, enables quick and easy access.

On the global front, serviced apartments are a recognized choice of accommodation amongst business executives. This lifestyle trend is fast gaining interest and awareness in Japan for extended stays and long-term accommodation including a growing demand among local Japanese with a desire for a more convenient lifestyle.

Frasers Hospitality’s business philosophy of providing outstanding service to their residents is encapsulated in their mantra: ‘Where you’re more than just a guest’. They are world-renowned for their distinctively warm and intuitive ‘Gold-Standard’ service and have garnered numerous global awards and accolades. The ‘Fraser Place’ brand philosophy is described as ‘true cosmopolitan living’ for its contemporary and chic interior designs as well as excellent services.

"This is a milestone in our North Asian

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Responsibilites:You will join our team of in-house legal counsels in assisting the General Counsel and Deputy Legal Counsel in a diverse portfolio of legal and insurance matters; by providing corporate advisory work and supporting various departments on legal aspects in the conduct of the business to ensure compliance with the laws and corporate governance.

You will need to ensure that proper legal documents are in place to protect the Group’s interests, limit its exposure to liability and properly address the allocation of risks. Other duties include marine insurance and general corporate work such as preparing, reviewing and negotiating management agreements, sale contracts, joint venture agreements, shareholders’ agreements and other contracts.

Requirements:Lawyer with 1 - 3 years PQE, preferably having been in practice with a law •firm in a Commonwealth jurisdiction Knowledge of maritime and shipping law, ship finance, insurance law and/•or corporate law will be an advantageMeticulous with an eye for detail•Able to work under pressure in a fast paced environment•

Applicants are invited to register their interest by forwarding their CVs to [email protected]

We regret that only shortlisted candidates will be notified. Visit our website www.ezraholdings.com for more information on the company.

Assistant Legal Counsel

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hmaBlaze117205

Talent2 International Limited, an Australian-Listed entity, is Asia-Pacific's first end-to-end Human Resources Outsourcing (HRO) solutions business and one of the leading recruiters of choice for a growing number of businesses across the region. Led by the hugely successful and visionary Geoff Morgan and Andrew Banks (formerly of Morgan & Banks), Talent2 combines a contemporary and ethical approach to recruitment with a lineage stretching back more than 20 years.

Singapore – LegalHead of Legal, (Healthcare) > 5 PQE

Our client, a U.S listed healthcare services entity is seeking an »experienced corporate lawyer to head their regional legal function. Ideally, you would have substantial corporate and commercial legal »experience either in-house or within practice. This position will be responsible for building a legal function within their Asia business which is newly-acquired. You will have very strong communication skills conjoined with »a consensus-building approach to negotiations Candidates with experience in JV/M&A and business integration experience are encouraged to apply.

Ref: ALB 22799/PJ

Legal Counsel, Banking > 3 PQE Our client, one of Asia’s top investment banks is presently seeking a legal »counsel to join a growing regional legal function based in Singapore. The role involves supporting a corporate legal function focusing on »merchant banking, commercial issues and general corporate legal matters. Candidates with prior banking experience are advantaged for this role, »however, Candidates with excellent academic credentials and general corporate experience would also be strongly considered.

Ref: ALB 22525/PJ

Legal Counsel (Private Banking/Derivatives) > 3 PQE Our client, a renowned private and investment bank is currently »seeking a qualified lawyer to join their regional legal function supporting the private bank.The coverage of the role will include structured products, funds and f/x. In »this role you’ll be responsible for drafting and reviewing legal forms and agreements, dealing with complex cross-border legal questions on the execution and settlement of structured products and investment funds. You will ideally have private banking expertise, but barring that, »candidates with knowledge of derivatives (OTC or otherwise), exotic Options and Forward Strategies are encouraged to apply.

Ref: ALB 20009/PJ

Senior Legal Counsel (Insurance) > 5 PQE Our client, a global international insurance giant, is presently seeking »to build up their regional (APAC) legal function. You will ideally have a mix of insurance litigation and corporate/ »commercial experience within an in-house function. You would also leverage experience dealing with regional financial regulatory issues as there is also significant funds (both mutual and alternative) exposure. You will have key business responsibilities for managing the product »development teams from a legal and regulatory perspective in regional markets.

Ref: ALB 20007/PJ

Senior Legal Manager, (Property & Real-Estate) > 5 PQEOur client, one of Asia’s largest property giants is seeking a legal »counsel for their group legal function. Primary responsibilities include transactional advice on diverse »matters such as structured lending, DCM-related work as well as advice on existing REIT structures.This is a great opportunity to move into one of the most highly-regarded »corporate legal teams in Singapore. The ideal candidate will have top-tier law firm exposure as well as excellent academic credentials.

Ref: ALB 23458/PJ

Legal Counsel (Private Banking/Derivatives) > 3 PQE Our client, a renowned private and investment bank is currently seeking a qualified lawyer to join their regional legal function supporting the private bank.

The coverage of the role will include structured products, funds and f/x. »In this role you’ll be responsible for drafting and reviewing legal forms and agreements, dealing with complex cross-border legal questions on the execution and settlement of structured products and investment funds. You will ideally have private banking expertise, but barring that, »candidates with knowledge of derivatives (OTC or otherwise), exotic Options and Forward Strategies are encouraged to apply.

Ref: ALB 22365/PJ

Senior Legal Counsel, US IT MNC > 5 PQEOur client, an international business consulting MNC, is presently »seeking a senior technology lawyer to join their regional in-house function based in Singapore.This role would revolve around the review, drafting and negotiating »medium to complex client transactions. You’ll be tasked with identifying and advising senior management on legal and commercial risks associated with such transactions, assessing their potential impact and to provide proactive and creative solutions.Transaction experience within an IT environment is essential for this »role. Ideally, you would hail from an IT services vendor environment and understand the industry from a holistic view.

Ref: ALB20011/PJ

Senior Legal Counsel, US IT MNC > 5 PQE Our client, an international business consulting MNC, is presently »seeking a senior technology lawyer to join their regional in-house function based in Singapore.This role would revolve around the review, drafting and negotiating »medium to complex client transactions. You’ll be tasked with identifying and advising senior management on legal and commercial risks associated with such transactions, assessing their potential impact and to provide proactive and creative solutions.Transaction experience within an IT environment is essential for this »role. Ideally, you would hail from an IT services vendor environment and understand the industry from a holistic view.

Ref: ALB 22456/PJ

Corporate Attorney, Technology & Internet > 5 PQEThis globally recognised ‘brand-name’ needs a commercial, creative, »detail-oriented attorney to join their regional operations in Singapore.Ideally, you would be well-versed with technology and financial services »with a critical eye towards risk and regulatory issues. You would have a broad range of experience ideally with financial services and/or technology background You will be working closely with the risk, product, marketing, »compliance and business development teams regionally and report to a regional legal director.

Ref: ALB 20014/PJ

Legal Opportunities – Singapore

For a confidential discussion of any of these roles or if you’re considering a move, please contact Prem John at Talent2 on (65) – 6511 8555 or e-mail him [email protected]

Please visit: www.talent2.com

http://www.talent2.com

80

Sign off >>


Barrister couple to take silk together

husband and wife barrister duo Joanna Smith and Mark

Vanhegan may make history this March when they both take silk before the Lord Chancellor.

The pair, who met at bar school in 1989 and have two daughters, aged seven and nine, were both called by Lincoln’s Inn in 1990, and are among 104 new silks in the latest list of QC appointments.

Smith, of Wilberforce Chambers, and Vanhegan, of 11 South Square, join 4 Pump Court construction specialist Sean Brannigan, who will become a silk at just 37, and 39 Essex Street solicitor Stephen Tromans, the speediest silk appointment this year, having made the mark with just 10 years’ call.

DLA gets tough on staff sick daysDLA Piper associates who may have taken the odd ‘sickie’ after a night in

the pub or just for a break from the office are in for a rude awakening. They will soon discover that the firm takes such absences very seriously.

According to a document leaked on legal website RollOnFriday, the firm will be taking ‘attendance’ into account when it comes to selecting candidates for redundancy and – as expected – this has caused some controversy in the firm.

The file outlines that fee earners under consultation will be subject to six criteria – strength of relationship with clients, specialist skills, business development, cross-group work, attendance and disciplinary records – with each category scoring 15–20 points. Those who have taken sick leave in 2008 could have as many as five points deducted for one day.

However, reports suggest that the criteria are still in draft form, and could change during the consultation period.

Support staff will be subject to different criteria.

if we needed any further evidence that law firm redundancies have

got lawyers spooked, look no further than recent statistics from Google which have shown a near fourfold increase in the number of users searching the term “law firm layoffs”. Not surprisingly, the spike started in September with the global economic meltdown. The number of “law firm layoff” queries reached a plateau

during Christmas but resumed a steady climb in January.

The majority of these queries are coming from the US and Canada. There were 431 reported redundancies globally in November, declining to 388 in December and then rising rapidly to 783 in January. In the face of steady official denials to the contrary, there has been steady speculation that Asia will be the next region to feel the heat.

Worried lawyers hit Google to research redundancies

The month so far…

This year has seen many firms fall victim to the economic downturn and – despite efforts to restructure, revamp and cut costs – the tally continues

to grow. Firms continue to turn to redundancy consultations in a bid to lose deadweight and stay afloat.

rEdUndAncIEs As AT MArch 2009 ►Firm Total Attorneys Staff

White & Case 400 200 200

Morgan Lewis & Bockius 216 55 161

KL Gates 121 42 79

King & Spalding 122 37 85

Andrews Kurth 20 20

Pillsbury 155 55 100

Arent Fox 28 13 15

Bingham 39 16 23

Clifford Chance 115 115

Firm Total Attorneys Staff

O’Melveny & Myers 200 90 110

Dewey & Le Boeuf 130 15 115

Shearman & Sterling 78 78

Haynes & Boone 3 2 1

Wiggin & Dana 28 14 14

Freshfields 10 6 4

DLA Piper 54 20 34

Orrick 300 100 200

Schulte Roth & Zabel 20 20

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http://www.emiratesadvocates.com

Documents

Asian Legal Business (SE Asia) Mar 2009