After a long time in planning Cadwalader sets out its Asian ambitions
The US firm wants to position itself for the future, says China is "too big to ignore"
February 03, 2015 at 10:30 PM
6 minute read
Seven years ago, a seven-partner team of Hong Kong corporate lawyers from Allen & Overy (A&O) shocked the local market when they moved to US outfit Latham & Watkins. Their exit, at that time considered among the most dramatic departures ever seen from the foreign network of a magic circle firm, marked the start of a new trend in Asia. As was already the case in London, Hong Kong partners at UK firms were growing increasingly susceptible to the advances of their US rivals, and could be lured in groups.
In January this year a significant portion of that team made the move to Cadwalader Wickersham & Taft – a smaller but still prestigious US outfit, albeit one with traditionally a far more conservative approach to international expansion. Coming as Fried Frank made the decision to pull the plug on its Asia operations, the move highlighted the different approaches US firms are taking to investing in the overcrowded, competitive and price sensitive market.
"Different firms take different views on it," says Cadwalader's head of international practice development Gregory Petrick. "Our view is that China and the Asia market is just too big to ignore. You can't look at the future of the firm based on a one year or two year projection. We try to position [the business] for the future. Any way you look at it, China is the future for a big part of this world, so not to be there we think is short-sighted."
The new team includes former Latham Hong Kong managing partner and ex-A&O corporate chief for Asia Michael Liu, along with another corporate partner Jane Ng, senior associate Stephen Chan (now promoted to partner), four counsel – Simon Berry, Olivia Wong, Terris Tang, Eva Tam – and several associates. The hires mean Cadwalader now has seven partners in Hong Kong including its Asia head Rocky Lee, and ex-Jones Day partners Maddox Jeffrey, David Neuville and Joseph Lee. Asked why it has taken some time to build the practice – Cadwalader has been in Beijing for six years and Hong Kong for three – Petrick says it's a marathon, not a race.
"We are a relatively new entrant to the market compared with magic circle firms and other American firms who have been there for decades.
"And while we're anxious to grow we're also very disciplined in trying to look for the right team. We talked to many people over an extended period of time, but it took time to find the right team in terms of quality of practice and clients and a view that is consistent with Cadwalader's.
"We don't jump at any opportunity; we're not looking to buy revenue. We're building a sustained practice that's going to be there for many years, we pass on opportunities that appear to us to be transient because that's not what we want to do."
The original reason for opening in Hong Kong was to be close to the firm's financial institution clients, he adds, with Hong Kong complementing the firm's existing presence in the other two key financial markets – New York and London. For the last three years the firm has been working with Hong Kong outfit Joseph Lee & Associates, as per local regulations, but will merge these operations and begin practicing local law in its own name later in 2015.
According to Petrick, while the finance sector has the most immediate business opportunities the firm is also trying to push into China outbound M&A and Hong Kong IPOs, and also litigation (mainly FCPA and regulatory investigations work) .
"Our strategy is to compete with the best lawyers, but that takes time. You can fill up an office relatively quickly if you're willing to hire [quickly]. We're not doing that, we're going to be very disciplined, very patient, if it takes a couple of years it takes a couple of years. But we will get the best people and that's how we intend to compete.
"We don't have a target size, how fast and how big we get will be a function of the practices and the people that we can attract. But we will continue to be opportunistic."
Outside Hong Kong, there are also potential opportunities for growth. Though Cadwalader is typically among the more conservative outfits with just three international offices, one of Petrick's mandates is to explore new markets such as Singapore and Shanghai.
"We don't have anything on paper but one of the things that's in my remit is to look at Singapore, to look at Shanghai and to determine if there is an opportunity there for us. For example, a big part of the international arbitration practice has moved to Singapore – it's a favourable jurisidcition for that – and that's a business we want to get into and grow."
Asked about the possibility of a joint venture or merger in China, he is also rather open-minded.
"It's not something we have really considered. I think it's challenging so I don't think it's something we'll be racing down the street to get into. But that whole market and the business model is evolving – I don't think any firm can foreclose any kind of possibility. We're very strategic, we will look at opportunities, we'll consider things."
Going forward, Petrick will split his time between London and Asia, tasked with communicating challenges back to New York and implementing the Cadwalader culture as best as possible, overseas. He says his three decades at the firm give him the ability to know "what works and what doesn't".
Ultimately, the plan is to make Asia a profit centre in its own right, not an outpost, and to build a practice which is a match for any Wall Street or magic circle firm.
"We see the China opportunity as being huge for the future. Maybe not necessarily this year or next year but for the next 10 or 15 years going forward. We want to position Cadwalader to be in that market, to be where our financial institution clients are, and to really compete in that jurisdiction."
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