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'Staying competitive in a time of transition' by Lee Suet-Fern
In the Who's Who in Law 2012 supplement of the Business Times (16 May 2012), Stamford Law senior partner, Lee Suet-Fern authored an article titled: ‘Staying competitive in a time of transition'
An extract of the article appears below -
Staying competitive in a time of transition
THE last five years have seen rapid change for Singapore law firms. The next five promise acceleration of change.
The year 2008 saw the opening of Singapore's domestic legal markets with the granting of six Qualifying Foreign Law Practices or QFLPs to practise Singapore law with certain restrictions. The Singapore government has since intimated that it will grant a second round of licences next year.
These QFLPs licences have been granted to players with global reach and branding: Goliaths whose size and reach make even Singapore's old and established players look like Tom Thumbs. These QFLP behemoths are effectively large corporations which have already transformed the practice of law into businesses, with machineries for the production process and monitoring efficiency, and with most lawyers, save for a rare few with star billing, just digits in a well oiled factory. These giants also have established and embedded relationships with major banks and financial institutions and multinational corporations.
This altered the landscape for Singapore law firms and raised challenges on many fronts.
One of the first was costs. In the legal service sector, legal salaries are the overwhelming cost, with office rentals trailing as a distant, albeit not unimportant, second. Almost overnight, in order to attract and retain young Singapore lawyers, Singapore law firms had to raise pay. Not only did annual associates' packages rise, it also became essential to pay much more in the fixed monthly component.
Sadly, this movement of remuneration upwards, and away from the variable bonus component, created less alignment of interests between the young lawyer and his firm. In turn, this resulted in greater churn amongst young lawyers, including some who, notwithstanding the time and money invested in a legal education, have moved to opening restaurants and wine bars!
The war for talent has thus become hand-to-hand combat on home turf. QFLPs offer the seduction of a global brand-name, their in-house training and the possibility of slaving in an overseas office. Singapore law firms hold out more tangible prospects of career advancement, broader, less pigeon-holed work experiences and client-facing work exposure.
Further, with more players chasing an already crowded market for Singapore legal work, there has been continued pressure on fees which (with rising costs) have squeezed margins for all players in the Singapore legal market, QFLPs and Singapore firms alike.
Singapore firms have not taken the invasion into Singapore legal practice lying down. Many have continued to grow and build on their cross-border practices, continuing to compete with QFLPs based in Singapore for work in Indonesia, China, Vietnam, India, Thailand, Philippines, Cambodia, Myanmar and so forth, with our lawyers working as far afield as Africa and Russia.
Before the granting of the QFLP licences in 2008, foreign firms had used Singapore as a base for their practices in the region. Increasingly, they are seeing a Singapore firm across the table outside Singapore.
Singapore law firms have another asset. Singapore lawyers have always been well regarded for their high standards, knowledge and professionalism. More importantly, unlike many emerging economies, Singapore has a body of experienced, sophisticated and highly regarded practitioners. This has allowed many Singapore law firms to differentiate themselves from QFLPs by their intimate knowledge of the business environment and players in Singapore and the region. This, plus the ability to contextualise any interpretations of laws and regulations, to provide guidance and advice with a read of local markets, is something that a growing body of increasingly sophisticated clients have found invaluable.
Beyond all this, as a result of a coming together of many autogenous Singapore initiatives and exogenous factors in the region, Singapore has, in the last few years, become the hub for legal services in the region, in particular, arbitration and disputes resolution from Indonesia, India, China plus various Asean nations. Also, a growing number of offshore or cross-border transactions in the corporate, banking, finance and projects spheres are hubbed out of Singapore, often with Singapore law as the choice of governing law.
This trend has far wider implications than growing the work pie for Singapore lawyers. The use of Singapore law or Singapore lawyers or the use of Singapore as a forum for dispute resolution means, in some instances, that the laws enacted by the Singapore parliament could have an extra-territorial effect in the region. It means that the Singapore law approach influences cross-border transactions, enhancing Singapore's de facto position of leadership and influence beyond its shores.
This regionalisation has also meant that we see more and more lawyers of different nationalities working in Singapore law firms - Malaysians, Indonesians, Vietnamese, Cambodians, Japanese, Australians, Brits and Americans are now working side by side with Singaporean lawyers in Singapore law firms.
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