UK and US law firms have been investing heavily in establishing a pan-Asian presence. But, as a recent Legal Week roundtable found, integrating these offices into the wider network presents major logistical challenges. Jonathan Ames reports

Digby (now Lord) Jones – the boisterous former head of the Confederation of British Industry and UK trade minister – has a favourite line that he wheels out at almost any opportunity: "China wants your lunch; India wants your dinner."

The former senior partner of one-time Birmingham powerhouse law firm Edge & Ellison is making a typically colourful business point.

Competition from the east is something that UK Plc ignores at its peril. But, likewise, Asia's economic and geo-political rise presents huge opportunities – not least for English and US law firms and other professional service providers.

"In 20 years or so, there will be big global Chinese brands," one senior law firm technology head told a recent Legal Week roundtable discussion on the opportunities and practical challenges of legal practice in Asia, which was held in association with Asia-Pacific telecommunications company Telstra. "And the question is, how do we go about building trust with them now?"

Indeed, that issue of trust was viewed around the table as crucial. Tom Homer (pictured), head of EMEA and Americas at Telstra, commented: "Asian companies are getting better at being global and pan-Asian and I predict there will be a surge in the number of truly global Asian brands in the next few years.

"Western professional services companies are seen as having years of experience and are trusted by Asian brands. Trust is the biggest issue. And we've all got to reduce our reliance on expats and continue to invest in the development of local talent."

Perhaps the biggest psychological issue to overcome for western businesses and their lawyers when dealing with Asia is that the region is not just China. While that giant country is undeniably important, other players – and not just India – should not be overlooked. The large band of UK and US law firms that have been investing heavily in Asia over the last decade or so recognise that Asia isn't all about China; this is reflected in the variety of jurisdictions being targeted by these firms.

Dentons' announcement in January that it is to merge with China's largest firm, Dacheng, to create the biggest law firm in the world by lawyer headcount has justifiably dominated the headlines. But international law firms are also investing in Singapore, Thailand, Indonesia, South Korea – the list goes on.

Infrastructure difficulties
The roundtable focused on the logistical challenges associated with supporting the regional Asian networks being built by international law firms – challenges that are forcing firms to revisit long-held assumptions about the need for a 'gold standard' of consistency right across their network. "Investment by law firms in Asia is key, but can also be expensive in terms of infrastructure as the market is still evolving," said Derek Southall, partner and head of strategic development at Wragge Lawrence Graham & Co.

"Ideally you want a consistent client and user experience but this requires real effort and investment. Asia obviously represents a huge opportunity but taking time to find the right infrastructure partners is key, from both a capability and cultural perspective. Resilience and the ability to respond to issues is also an important factor."

In operational terms, one view around the table was that law firms must deal with local people, as resolving issues from afar can be difficult. Nonetheless, sourcing local expertise raises its own problems. "You may think that there would lots and lots of IT specialists in Asia," related Paul Metson, head of ISS service delivery at Linklaters, "but we've been struggling to find the right people in local markets."

So severe is the shortage of appropriate technology staff that Linklaters has had several key IT roles open in Asia for more than 20 weeks. "Because we are a global firm," explained Metson, "we have fixed models in relation to culture, technical skills and price point. But in some regions of Asia we are having to go out of sync with other parts of the organisation. We try to operate the policy that, wherever you are in the organisation around the world, you will have exactly the same desktop experience. But that model is difficult and expensive to maintain in Asia – infrastructure costs can be staggeringly high."

Managing expectations
Chris White, the global chief information officer at City firm Clyde & Co, emphasised to the roundtable the delicate issue of managing lawyer expectations. "London-based partners travelling to the firm's offices in other jurisdictions still expect to get
the same service as they would in a building in The City," he said. "But local expectations can be very different."

For example, the firm's Singapore-based chief operating officer for Asia can't receive voicemail on his mobile phone outside the boundaries of the city-state. "And while he's not happy about that," continued White, "he accepts it as a limitation."

He added: "As global businesses, law firms have to accept that it is not always possible to have – at a price-point you are prepared to pay – an absolutely standard service operating in all of the jurisdictions. In some areas, we just have to accept that we'll do the best we can."

Metson – who was involved in mobile technology before moving to legal profession IT – agreed. "I've been surprised to see the lack of mobility in technology in the legal sector," he said. "And in some Asian jurisdictions, wifi and mobility can be extremely expensive."

However, King & Wood Mallesons general counsel and partner Peter Anderson was convinced that Asian technology infrastructure would catch up with western standards. "People in Asia will do it their own way," he told the roundtable. "But some of our European experience will be replicated, which, if nothing else, means there are great opportunities for telecoms lawyers."

Wragges' Southall agreed: "How western firms have set themselves up to date has real merit, but we also need to stay open-minded to new ways of working and fresh approaches. The same applies to efficiency as it does to infrastructure. We should not dismiss opportunities to innovate and perhaps be more diverse in our approach where this brings benefits."

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Asian promise
Crucial to the development of Asia is growth and unity across the 10-country Association of Southeast Asian Nations (Asean). The main Asean players – Indonesia (the biggest and with half its population of 240 million younger than 28), Malaysia, the Philippines, Singapore and Thailand – all have either established or growing relations with western businesses.

Attention is currently focused on whether those countries will meet a self-imposed deadline for the creation of the Asean Economic Community. Integration is set for the end of this year and would create a single market of some 600 million people, nearly 100 million more than in the EU.

However, the consensus view is the deadline will be missed. "There has been progress on several key issues," Michael Lawrence, the chief executive of London-based Asia House, told the roundtable, citing the reduction of tariff barriers as a key advance. "But they won't get the whole integration programme through by the end of the year. And it will be interesting to see whether the push for integration loses momentum."

But even if the drive towards economic unification wanes, Asean-watchers still see opportunities. For example, following elections last July, Indonesia has a reforming government under new president Joko Widodo (known locally as Jokowi). One of the Jokowi government's early moves was to grasp the politically sensitive nettle of fuel subsidies by allowing prices to rise.

Elsewhere in the region, India remains something of an enigma, with the main question being: will the country finally start to deliver on its promise?

Since taking office slightly more than six months ago, prime minister Narendra Modi has pushed ahead a reform agenda that could be positive for global businesses. A potentially crucial sector for modernisation is the Indian insurance industry, and it is expected that Modi will implement measures by the end of the year that will allow local firms to be 49% foreign-owned.

Nonetheless, those hoping for a rapid increase in the speed of Indian reform – not least around liberalisation of rules prohibiting foreign law firms from practising in the jurisdiction – could remain frustrated. "Modi is taking a 10-year view rather than a five-year or shorter view," Lawrence explained. "He thinks he's there for 10 years because of the scale of his victory – and he wants to leave a legacy."

But it is Sino-Japanese relations that remain potentially the biggest difficulty in the region. Territorial disputes between the two countries have dominated the Asian geo-political weather for the last 18 months. Tensions have recently eased slightly, with a carefully orchestrated and highly symbolic meeting in November between China's president, Xi Jinping, and Japanese prime minister Shinzo Abe.

The wider issue is that the security architecture of Asia is being realigned, with China committed to playing a greater part, while the role of the US potentially diminishes. On the positive side, the economy of the biggest regional player, China, is still growing, albeit considerably slower than the double-digit boom times of several years ago. Nonetheless, the most recent figure of 7.4% remains enviable and China's economic position sits in stark contrast to that of Japan's.

Recession continues to plague Japan, with experts maintaining that ultimately the country's leaders must tackle its debt mountain. Also, the country's aging population is a brewing problem – by 2030 it is estimated that 40 per cent of the population will be older than 65.

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