Marcus Leese reflects on his experiences as an offshore lawyer in Asia

During the past four years I have been based in our Hong Kong office assisting clients in Hong Kong, Singapore, Shanghai, Beijing and Tokyo. Having recently returned to our Guernsey office, it is interesting to look back on my time as an offshore lawyer in Asia. 

There is no question that recent years have seen many offshore law firms becoming far more interested than ever before in the North and Southeast Asian markets (in much the same way as many UK, US and western European law firms have done). 

Many such firms have opened one or more offices in the region and many more have undertaken marketing trips to visit clients and prospective clients.

The reasons for this are not difficult to discern. Many of the changes seen in the region in the past three decades have presented significant opportunities for law firms.

The Asian region has become a genuinely huge market and one that is continuing to grow. It is already home to a sizeable proportion of the world's overall population. But in addition, birth rates remain high in many countries within the region (with the recent announcement of the relaxation of the one-child policy in China likely to impact this still further), the growth and increased prosperity has been a catalyst for the return to the region of many born – or with family connections –  in Asia and ex-patriate migration from the West continues. 

Further, Asia has seen and is continuing to see very rapid growth in wealth and living standards. The booming economies throughout the region (assisted by the supportive mix of economic liberalisation in many countries, high levels of domestic investment, increasing levels of domestic demand, strong international demand and considerable inward investment from the West) have resulted in very significant wealth creation for many in Asia. That increase in wealth has lead inexorably to an increase in legal issues. 

In addition, many businesses in the Asian region are actively seeking greater exposure to foreign jurisdictions whether it be through expansion of their businesses, property ownership or joint ventures or other relationships with foreign enterprises in those countries. Those greater foreign connections tend to throw up new and unfamiliar legal, tax and regulatory issues on which advice and guidance is required. 

Moreover, of particular relevance for offshore practitioners is that in many Asian markets there is a generally positive view of offshore jurisdictions and the efficient, effective, tax-neutral structures and solutions which they can provide. This is a notable contrast to the more negative views about offshore jurisdictions found in some quarters in Western economies. 

And all of these matters have been seen against the backdrop of relatively lacklustre economic activity in the traditional markets of the UK, the US and much of Western Europe. These factors have all created a powerful attraction to the Asian region for offshore legal practitioners.

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Opportunities v challenges

However, while these matters certainly create many opportunities, there are challenges as well. 

First, there is a more limited appreciation of the need for legal advice. The clients from the Asian region that we deal with are generally highly astute business people who are successful in their chosen field. Despite this, for many the sorts of complex legal issues that international transactions tend to throw up are often largely or entirely new. Moreover, many of these clients simply do not appreciate (or fully appreciate) the need for advice on such issues, the benefits such advice can bring and the considerable difficulties (and potentially very great costs) that it can help to avoid. Accordingly, there is a very important educational challenge that practitioners face and that we all must take responsibility to address in whatever ways we can.

Linked to the lack of appreciation of need is the common issue of lack of appreciation of value. Simply put, many clients we deal with in Asia do not fully appreciate the value of obtaining thorough and comprehensive legal advice. For many, legal advice is seen as a transaction cost and an impediment, rather than an opportunity to assist and improve the overall commercial transaction. 

This is particularly so in relation to transactions utilising offshore structures. Once again, there is an important and time-consuming education process required so that clients begin to appreciate the true value of robust and appropriate advice and planning. 

Beyond education in relation to cost and value, there is a real need to approach matters in a genuinely commercial way and demonstrate to clients that you appreciate the realities of being in business. In our experience, the Asian market has largely shunned time charges in favour of fixed or (more commonly) capped fees. This is a simple reality of the market, which practitioners have to accept and address as effectively as possible (including with clear communication of the scope of work that will be undertaken for the agreed fee and, above all, open communication so that the parties are clear and agreed as to their expectations).

Another difficult issue is limited information sharing. The trend in the UK, the US and much of Western Europe in recent years for increased and unprecedented levels of information disclosure and 'transparency' (whether in relation to anti-money laundering matters, tax information exchange or other matters) has not yet been fully embraced in much of Asia. In our experience, many clients that we deal with in the Asian region are reluctant to disclose to us fully all relevant background facts to their particular situation. 

While there may be a range of reasons for this (and such reasons are likely to differ between clients), the end result is always the same. Advice is necessarily based upon the background facts that are received – incomplete facts will inevitably lead to incomplete advice. While the omission of certain facts may not be critical, that is by no means always the case. We learnt very early on that it was critical to assume nothing, to ask as many questions as possible and to probe as far as one can to try to elicit as much relevant information as can be had in an effort to avoid unpleasant surprises later. 

Language barrier

A further challenge relates to language. The vast majority of clients from the Asian region that we deal with do not have English as a first language, but do speak it as a second or third language (in many cases to a very high standard – many having lived in and/or been educated for at least some time in an English-speaking environment). 

Despite speaking English, the complex and sensitive nature of many of the issues dealt with in legal advice is such that we find many clients (quite understandably) prefer at least some part of the process to be conducted in their first language – whether that be discussion at planning meetings or on conference calls or even the core transactional documents themselves (or explanatory summaries of them). 

That requires practitioners (either themselves or via senior and experienced members of their team) to have suitable language skills. And this is not simply an issue of having access to a suitable translation service provider – increasingly our clients are expecting that at least some of the team of professionals who are working on the relevant matter day to day and who have the relevant technical knowledge are able to provide the translations.

None of the challenges we've experienced in Asia are genuinely unprecedented. Practitioners will doubtless have experienced similar issues to some degree in other places. But in our experience the extent of such challenges is materially greater than elsewhere and requires practitioners to change the way they act to address them successfully.

Marcus Leese is a partner at Ogier Guernsey.

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