What next for DLA Piper's Asia practice as partner exits mount up?
Last week's departure of a further three partners from DLA Piper's Asia Pacific office sums up what has been a difficult 18 months for the firm.
July 29, 2014 at 07:08 PM
7 minute read
Last week's departure of a further three partners from DLA Piper's Asia Pacific office sums up what has been a difficult 18 months for the firm.
The trio – which included one 15-year veteran and another partner whose tenure lasted just 12 months – bring the total number of departures this year to seven, according to Legal Week's count, added to the round dozen who left the UK outfit in 2013. Of these, three were Singapore office managing partners and one was the firm's head of corporate for the region.
According to one partner at the firm, some of the recent exits can be attributed to a decision to consolidate DLA's Hong Kong and Singapore practices – part of a process aimed at making the Asian operation more profitable. As part of this move it has reduced the size of the capital markets practice in favour of targeting restructuring work and China M&A.
"Our decisions surround the fact that… there was a huge amount of Hong Kong IPO and Singapore transactional activity, and that slowed down in 2012-2013 and we found ourselves over-lawyered," says the partner. "Some of the partners' roles didn't align with what we wanted the practice to be. That process has been completed [and] we are a slightly leaner partnership coming into our new financial year."
In the most basic terms, the problem seems to boil down to low profitability in the region, rendering it a significant expense for the firm. In Singapore, the situation has been exacerbated by the lack of local or QFLP (qualifying foreign law practice) licence, which the firm is understood to have applied for twice unsuccessfully.
Slimming down the partnership should help boost profits, but while some of the recent departures are a result of being pushed, there are others who have jumped.
As for those who left of their own volition, sources cite a mix of possible reasons. Competitiveness between offices and a feeling that the firm lacks long-term vision, are certainly among ex-partners' main frustrations.
One says: "The problem with DLA is that even though they have tried to create a concept of one firm there is quite some way to go to create a sharing culture. Competition is not just between the US and UK LLP but also between offices. Each has to meet its budget. So even if one office is more appropriate to handle work, it might be given to another office so they can meet their budget."
Others reference significant lateral hires that didn't work out and the frequency of management changes as puzzling for partners. Indeed, last December's appointment of a new US-led Asia management committee is the fourth change in management in the region since 2004.
"You just don't know what the strategy of the firm is," is how one lawyer who has left the firm puts it.
In the short term, it is expected that the firm will continue to focus on boosting the profits of the Hong Kong office, the largest base in Asia and a hub for the region. Despite some concerns in Singapore, most anticipate the firm will keep this office open.
"[At the moment] they're really just keeping the loss to a minimum," says one ex-partner. "I think they will definitely keep it because they want to have offices in all the major cities."
Other former members of the DLA family add that the push for more US-qualified lawyers in Asia will likely be a stepping stone towards financial integration between the US and international LLPs.
"[A merger] has always been the aspiration," says one ex-partner. "There have been discussions on that. Plans are in place to integrate and then financially integrate. I see Asia as a pilot scheme."
Another adds: "We have been talking about it for a few years. But there is a major obstacle because Asia isn't making money…. If they come in they will have to share the loss…. That's why the US [partners] have to fix Asia. Before they have integration the first step is to fix the Hong Kong office. Hong Kong is the only big office in Asia. It can make money but it can also lose a lot of money because it's so big."
DLA's global co-CEO Terry O'Malley did not comment specifically on the recent spate of partner departures or the future plans for the firm, but made clear that Asia continued to be an important part of DLA's business in spite of the recent adjustments.
"Asia is a prime area of strategic focus for the firm," he explains in a statement to Legal Week. "That priority is reflected in our commitment of significant resources to support our partners delivering the highest levels of client service, and to add to our talent base in core practices. Some change in a business of our size and scale is inevitable as we better align our Asia practice with our global business."
Partners who have left DLA in Asia Pacific since January last year:
• Ben Sandstad – finance partner, Hong Kong and Singapore – July 2014
• Jolyon Ellwood-Russell, finance partner, Hong Kong – July 2014
• Giovanni Marino – corporate partner, Hong Kong – July 2014
• Esther Leung – head of capital markets in Hong Kong and co-head of Asia capital markets, Hong Kong – June 2014
• Sheela Moorthy – head of corporate, Singapore – April 2014
• Michael Kim, marine and international trade partner, head of Korea practice, Seoul – February 2014
• Mabel Lui – head of Asia corporate, Hong Kong – May 2014
• Damian McNair – head of Asia Pacific finance and projects, Melbourne – November 2013
• Tony Holland – Australian chair and head of Asia finance, former Australia managing partner – November 2013
• Jenne Tzavaras – workers compensation insurance partner, Sydney – November 2013
• Joanna Apostolopoulos – workers compensation insurance partner, Sydney – November 2013
• Ivan Medak – workers compensation insurance partner, Sydney – November 2013
• Will Harrison – head of Hong Kong insurance – September 2013
• Matthew Glynn – former Singapore MP and head of Asia intellectual property and technology group, Singapore – August 2013
• Nick Ruskin – workplace safety partner, Melbourne – July 2013
• Amanda Turnill – head of Asia-Pacific life sciences; co-chair of global life sciences group, Sydney – May 2013
• Martin David – former Singapore MP and head of Asia finance and projects group, and energy, water and mining practice, Singapore – May 2013
• Wan Li – head of Shanghai corporate, Shanghai April 2013
• Richard Horton – corporate and technology partner, Silicon Valley – March 2013
Asia management since 2004:
o Nick Seddon – managing director, Asia – May 2004 – April 2008
o Alastair Da Costa – head of Asia Pacific and emerging markets – April 2008 – April 2012
o Bob Charlton – managing director, Asia Pacific – April 2012 – December 2013
o Terry O'Malley, Andrew Darwin and Jay Rains – Asia advisory committee – December 2013 – present
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