Singapore’s central location in the high-growth ASEAN region, it’s status as a safe financial hub and the increasing ease by which foreign firms can access the country, has led to a recent increase in the influx of foreign law firms.
A super high-growth legal market
According to recent reports in both Legal Week and Lawyers Weekly, Singapore has become a hub for regional arbitration, advisement of high-net worth individuals, and a gateway not only to the ASEAN region, but China and India as well. Projects, infrastructure, energy, arbitration and finance are the core areas of opportunity for legal work in Singapore. As Legal Week reports: “According to the Singapore Ministry of Law (MinLaw), the legal services industry has grown 23% in the past five years, jumping from S$1.5bn (£787m) in 2008 to around S$1.85bn (£971m) in 2012.”
Since liberalization began in 2008, foreign firms from Europe, the US and Japan have entered the market in increasing numbers. Foreign lawyers now account for 25% of all lawyers practicing in Singapore. And as Lawyers Weekly reports: “the Singapore attorney-general has said the country will relax its entry conditions and will be encouraging foreign law firms to use Singapore as a base for both corporate work and international arbitration work across Asia.” The Ministry recently granted more Qualifying Foreign Law Practice status (QFLP) licenses to foreign firms. “At one stage last year the attorney-general apparently had more than 70 Foreign Law Licence applications in process for Singapore”. “There are currently only three large local firms in Singapore, but more than 1000 smaller law firms; an environment ripe for consolidation and restructure” reported Stephen Moss in Lawyers Weekly.
What firms are focusing on
International firms have focused on cross-border work and local firms on domestic work – hence there has not been a heated competitive climate – yet. Local lawyers, however, are concerned about the possibility of heightened competitive pressure should foreign firms with the new licenses to practice domestic law – begin to recruit whole practice groups from other firms – not simply the star players. Those firms without licenses to practice domestic law are active in the market via alliances with local firms.
What firms should be thinking about
Domestic Singaporean firms should now be seeking to make themselves as competitive as possible in anticipation of remaining independent, forging an alliance, or merger.
Foreign firms planning some presence in the region should ensure they are capable of generating sufficient outbound work to justify their presence.
Both the above require firms to established comprehensive, focused, proactive business development postures. The needs of each firm will be unique to the practice niche they choose to focus on in Singapore – as well as their practice focuses in the US, Japan and the EU. A business development initiative should then be wrapped around these practices in order to maximum both local and cross-border revenue generated out of a Singapore presence.
The future of the Singapore market is certainly going to be a very interesting and exciting one to watch.