We are in a global down turn with doom and gloom everywhere we look. What effect is this having on the legal profession?
Walker: It's interesting that you say there's doom and gloom everywhere because in London at least, that is not what is reflected by the amount of work we have got on. From the end of March we have been outstandingly busy. Some of our European offices have been less busy. There are still good deals around and some of them are being brought to fruition. There is a lot of caution around and the talk of war and the ghastly things that happened in Bali do create uncertainty and undermine confidence. And that is just the thing that financial markets do not like. But I am not prepared right at the moment to be as gloomy as your question presupposes.
So your business is coming in from financial markets work, not just the counter cyclical rise in litigation, arbitration and insolvency?
It's not just caused by those areas being resurgent while the market is down. Another counter cyclical area is re-insurance and we have a practice based in London, Chicago and New York that is absolutely blasting away at the moment. But generally most of our practices areas are busy.
How about Asia? What is the view of this region from headquarters in London?
The view is that this region has continued to have quite a difficult time. The Japanese economy obviously has a huge role to play in Asia and it has been very depressed for some time and that has its effect on places such as Hong Kong and Singapore. But having said that, there are deals being done in both places. In terms of the economic climate here, my sense is that Asia has had it as tough as anywhere over the last five years.
Having said that Asia is a huge development area and we cannot ignore it, especially China. When we talk to the big manufacturing companies in Europe, they say that they are not interested in Western Europe, only Eastern Europe and Asia, because those are the two areas where anything is happening. This region is still regarded as the place that big companies are going to invest in the medium to longer term, if not in the immediate future.
Do you have plans to increase your presence in China from the single office you have in Beijing?
We have submitted an application for an office in Shanghai. We have a partner seconded up there at the moment. We were in the first round of office openings in Beijing, and more recently have expanded our team based in Beijing.
So what is your client strategy in China and the region? Is it to follow existing clients into the markets or are you going for a more local client base?
We really want to do both. We generally respond to the market, so if the work is there we will do it, whomever it comes from. We will not confine ourselves to serving large multinational clients making inward investments. That kind of work is quite common and it is becoming lower value. We will look at whatever the market is generating.
How is the competitive environment for lawyers in Asia?
It's very competitive. All the large international firms are here and then there are very good local firms in places like Hong Kong and in Singapore. But there is quite a lot of work and if we cannot compete then we have no right to be here.
Is Asia over-lawyered?
I have a mind to say yes, but in truth I don't really knowàthere are lots of lawyers.
Put it another way, is there enough work around to keep all the firms here in profitable business?
I suspect that it is over lawyered and some firms will struggle. But I don't think it is so over lawyered that there is no point us being here. It certainly is not easy here.
Given that you opened Lovell's office here in Hong Kong back in 1982, how has the legal market changed over the past 20 years in Hong Kong?
It has changed enormously. When we came in 1982, one of our worries was that we were too late. But then a whole lot of our competitors actually came in after us. I get the impression that all the firms have ratcheted up their act and now there is a lot more competition here. A lot of the Chinese firms have done very well in China and their Hong Kong practices have flourished as a result. The legal market is now much bigger, there is more going on and so more work to be had. It is a much larger commercial community now than in 1982, although perhaps I am saying that because we see a lot more of it than we did then.
Quite a few international lawyers in Hong Kong complain about the Law Society of Hong Kong's rules that state they have to qualify as Hong Kong lawyers to practice here. They feel it penalises international firms and gives an unfair advantage to the local firms. What is your stand on this issue?
That is something we have to confront and it does give us a problem. If we are sending over senior people and then being told that they have to take examinations on conveyancing and so on, many of them find it very unattractive. I have some understanding of why the local Law Society regulates itself this way. But I must say it's a pity if it has the effect of penalising the international firms. Far from the international firms being a threat to the local firms, I feel it is good for the local players. Having a strong international presence here helps the local profession.
What would you recommend as the best way to regulate this area? Grand fathering rights for instance?
Grand fathering rights are always very difficult things to justify. I think there ought to be a greater mutual recognition of each other's qualifications, especially when you look at the common law history of the legal system here. Given that history, I would not have thought that it was such a difficult step for the local profession to recognize that.
You mentioned Singapore before, which has, as ever, taken a rather idiosyncratic approach to regulating foreign law firms, with its joint law venture (JLV) system. How has your experience of your JLV been so far?
It's early days, but we're very lucky as our JLV has worked well. It's more than you can say for some of the others, which have fallen apart. That is one of the difficulties of joint ventures. I think experience shows that, by and large, it is very difficult to make JVs work. They have built in conflicts and tensions, which need to be worked at and need lots of goodwill on both sides.
However, at the time I thought it was an enlightened step by the Singapore government to say that these JLVs would be possible. I believe it works to the benefit of the local profession and to the benefit of the financial and industrial community there. It brings more legal work to Singapore. It introduces more expertise into the legal community there and works greatly to their advantage. It has been the right thing to do.
