The Asia 50
The Asian Lawyer presents our second annual survey of the Asia Pacific region's largest law firms, both international and domestic.
Big mergers have shaken up the Asian legal scene, though their effect on the Asia 50—The Asian Lawyer's survey of the 50 largest firms based in the region, as calculated by head count—has been more muted.
The Asia 50 actually didn't lose any firms because of international mergers [see "On Their Home Turf"]. That's because our methodology attributes a firm's nationality to the jurisdiction where it has the most lawyers, rather than where its management is or where it generates the largest part of its revenue. Thus, though many will likely disagree, we label Herbert Smith Freehills as Australian, since Australia contributes the single largest number of the combined firm's lawyers, 901 out of 2,058. Likewise, Ashurst, which combined with Blake Dawson in 2012 and now has 634 out of its 1,561 lawyers in Australia; the firm has 428 lawyers in the U.K., now its second-largest jurisdiction. Mallesons Stephen Jaques remains in the Asia 50 but has changed names and nationalities through its merger with China's King & Wood. At the number four spot, King & Wood Mallesons is now considered to be a Chinese firm, as it has 1,217 lawyers in China and 762 in Australia.
However such moves are reflected in our results, many in the affected markets feel that the wave of mergers has effectively reshaped Asia's legal map.
To calculate our Asia 50 rankings, The Asian Lawyer compiled three different sets of data. First, we reached out to Asia-based firms to get their total head count of qualified lawyers, excluding trainees and contract attorneys. Then we pulled the figures collected by our sibling publication The National Law Journal for its NLJ 350 rankings so that we could also include the U.S. firms with the largest head counts in the Asia Pacific region. Lastly, the same survey information was collected from non-U.S. firms with substantial Asia Pacific offices as well [see "Biggest Footprints"]. For consistency, we requested that all numbers represent 2012 full-time-equivalent head counts in order to match the NLJ 350 data. That means large mergers that closed in 2013 aren’t reflected in our rankings, including K&L Gates’ merger with Australian firm Middletons, which became effective at the beginning of last year. The deal, which gave K&L Gates an Asia headcount of over 400, means it will likely rank in the top five in our next survey.
Many of the big combinations of recent years have been driven by the seemingly ever-increasing volume of trade between Australia and China, especially in the energy and resources sectors. Those firms are now facing tougher times ahead, though, as the Chinese economy began to brake by the end of 2012, slowing the mining boom and dampening a major revenue stream for these newly combined firms.
All eyes are on Australia's newly elected Prime Minister Tony Abbott to help turn things around, but the effect on law firms operating there has already been felt: "The legal market in Australia is subdued, [mergers and acquisitions] and equity markets are subdued, and foreign direct investment has slowed significantly," Clayton Utz chief executive partner Darryl McDonough told The Asian Lawyer last August. "It's not as strong as it was."
Though cross-border activity may have slowed, Australia remains one of the region's most highly developed legal markets. The breadth and sophistication of that market was the main reason a country of just 22 million could support so many sizable firms in the first place. Two of the largest Aussie firms remain independent—Clayton Utz and Minter Ellison. Clayton Utz is now the biggest Australia-based firm, with 842 lawyers, while Minter Ellison clocks in at 722. Another firm, Allens, is in between at 790. It's also in between in terms of its participation in the merger wave. Though it hasn't embraced a full combination, Allens has an exclusive alliance with British Magic Circle firm Linklaters.
Similarly near to each other in the rankings, and virtually tied for third place in this group, are Gadens at 554 lawyers and Corrs Chambers Westgarth with 544. Further behind, but still sizable, is HWL Ebsworth, with a head count of 443. Not that Australia should get all the attention. China accounts for more than half of the top 20 firms on our list. Dacheng Law Offices and Yingke Law Firm are the largest firms in the Asia 50. Dacheng this year reported that it had 3,070 lawyers. Yingke said it had 2,224. These very large firms are generally regarded as loose agglomerations of smaller firms and solo practitioners that operate under common, increasingly visible brands.Other well-known Chinese firms are well represented on our list. Zhong Lun Law Firm reported an even 700 lawyers this year, while Jun He Law Offices counts 482.
The period we surveyed saw the Korean legal market opened to foreign law firms for the first time. This liberalization, which coincided with free trade agreements that the country signed with the United States and the European Union, is taking place in phases. Currently, international firms can open offices and practice the law of their home jurisdictions. Later this year, they will be able to form alliances with their Korean counterparts. In 2017 they will be able to directly hire Korean lawyers and practice local law through joint ventures.
In the years leading up to the FTAs, there was trepidation among Korean law firms at the prospect of opening the doors to foreign competition. But those firms are both big and entrenched, boasting especially strong relationships with the major conglomerates that drive the country's economy. So a firm such as Kim & Chang—Korea's largest, with 600 lawyers—may find it can hold its own as barriers to entry for foreign firms come down. The same goes for Lee & Ko (385), Bae, Kim & Lee (318), Shin & Kim (306) and Yoon & Yang (301). Almost all of the 20 or so foreign firms that have opened in Seoul remain tiny by comparison, with just one or two partners.
The rankings for firms in both India and Japan have remained largely unchanged. Amarchand & Mangaldas & Suresh A. Shroff & Co., with 546 lawyers, is still the biggest Indian firm on our list and ranks 14th overall. The nearest Indian contender, Khaitan & Co, is a distant second with 300. In Japan, the Big Four firms also hold on to their top spots, with Nishimura & Asahi in the lead at 473 lawyers. The other three— Nagashima Ohno & Tsunematsu, Anderson Mori & Tomotsune and Mori Hamada & Matsumoto—follow one after the other in a cluster with 340, 325 and 321, respectively. Another Japanese firm, TMI Associates, is close behind with 316 lawyers.
Singapore firms continue to be a substantial part of the Asia 50. Rajah & Tann is now the largest firm in the city-state and number 20 on our list with 480 lawyers. Allen & Gledhill, long Singapore's largest law firm, is now second with 309 lawyers. WongPartnership, the other big Singapore firm on our chart, clocks in at 285.
Singapore is the financial hub for Southeast Asia and has benefited from increased investment in the region. A considerable part of Rajah & Tann's growth has come from overseas expansion; the firm now has a presence in most Southeast Asian countries, including frontier markets like Cambodia and Myanmar.
"It's going to be a positive picture for the next few years," says managing partner Lee Eng Beng.
Other Asia 50 firms see opportunity in Southeast Asia too, with even conservative Japanese firms like Nishimura and Nagashima Ohno expanding in Singapore and elsewhere in the region in order to follow their nation's banks and corporations in search of growth abroad.
Among non-Asian firms operating in the region, U.S. and U.K. firms make up the entire top 50 [see "The Global Players"]. Baker & McKenzie is the largest international firm in Asia with 1,050 lawyers. On the U.K. side, Norton Rose has the top spot with 667 lawyers in the region. Some of the Magic Circle fill out the rest of the leading non-U.S. international firms in Asia, including Clifford Chance (393), Linklaters (352), Allen & Overy (378) and Freshfields (212).
Among U.S. firms, one saw meteoric growth for the year—Squire Sanders. In addition to launching in Perth with an 80-lawyer team poached from a raid on Minter Ellison's office in late 2011, the firm also opened an office in Sydney. At the same time, Squire Sanders launched in both Singapore and Seoul. These moves allowed the firm to grow to 116 lawyers in Asia from just 48, catapulting it past 11 of its American peers to rank ninth of all U.S. firms based in the region.
"We were really quite aggressive about taking advantage of opportunities that came our way in 2011 and 2012," says firm chair James Maiwurm.
Though he realizes China's slowing down, Maiwurm notes that the country's current growth rate of 7.5 percent, though down from over 10 percent just a few years ago, is still pretty high compared to the the numbers out of the more developed economies of North America and Europe. That, combined with a healthier Japan and a stable Korean economy, keeps him fairly positive about Squire Sanders' prospects going forward.
"We're actually pretty upbeat," he says.