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Overview
The past year has seen a dramatic change in the fortunes of the Hong Kong legal market. The collapse of Lehman Brothers in September 2008 triggered a sea change in the global financial climate, and within just a few weeks, capital markets activity dropped off a cliff, fundraising ground to a halt, and the size and volume of existing deals was much reduced.
Even as the situation began to show signs of improvement in the spring of 2009, there was still an air of uncertainty, with investors taking a much more conservative approach and focusing on risk management, moving away from highly complex structured products to more straightforward lending.
For the firms themselves, there have been few major changes, though the move of Allen & Overy’s equity capital markets team to Latham & Watkins LLP certainly turned a few heads. Laracy Gall split up into Gall & Lane and boutique shipping practice Laracy & Co, while King & Wood completed its merger with Arculli Fong & Ng. Norton Rose Hong Kong announced its intention to merge with Deacons Australia, leaving Deacons’ Hong Kong office as a separate independent entity.
The long-awaited Civil Justice Reforms finally came into effect in April 2009, after nearly a decade of debate. The principal aims of the reforms are to reduce delays, improve the cost-effectiveness and fair allocation of precious court resources, and to facilitate the settlement of disputes at an earlier stage.
Despite the dearth of activity in some areas, other practices have had a busy year, with regulatory lawyers endeavouring to ensure compliance with the regulations to avoid the wrath of a more vigilant Securities and Futures Commission (SFC) and Hong Kong Monetary Authority (HKMA). Many firms have also been channelling more resources into their restructuring teams, which have engaged primarily in corporate reorganisations and debt restructurings. The expected wave of defaults and insolvency has not quite materialised, though this may yet occur.
The real success story, however, is the continued trend towards outbound investment from China, particularly in natural resources from Australia and South America. This is certainly nothing new, though the backing of the Chinese government over the past year has moved the process along somewhat, but the relative lack of activity elsewhere has thrown the trend into relief and encouraged a number of firms to beef up their presence in the PRC.