Orrick Herrington & Sutcliffe has revamped its Asia strategy, following the departure of the bulk of its China capital markets and corporate team.

In January, a nine-partner team, mostly based in Hong Kong and led by former global head of capital markets Edwin Luk and global co-head of private equity Maurice Hoo, resigned from the firm to join Morgan Lewis & Bockius, leaving only three partners in its 11-year-old Hong Kong office.

Zuklie concedes that it was very difficult to see partners he respects leave the firm, but the departures were consistent with Orrick's decision to de-emphasise the Hong Kong capital markets practice, he said.

"Going forward, we want to build around our small but stellar team, with focuses on the technology, energy and infrastructure and finance sectors," said Mitchell Zuklie (pictured), Orrick's global chairman and chief executive officer, in an interview with The American Lawyer.

"We are always reviewing our Asia strategy," he added. "Essentially, we are making investments. The Hong Kong capital markets practice is both very competitive and very price-sensitive."

The team that left took Orrick 11 years to build. The San Francisco-based firm entered Hong Kong in 2005 by taking over legacy Coudert Brothers' office in the city following the latter's dissolution. But what was later known as the office's strong suits – Hong Kong Stock Exchange listings and related corporate work – really began to take off with the 2006 hire of partner Luk, who had been senior counsel at O'Melveny & Myers.

Also in 2006, Bank of China went public with an $11.1bn (£9bn) initial public offering (IPO) in Hong Kong. More Chinese banks and other large state-owned enterprises would follow suit in the years to come, breaking world records of IPO size, one after another. The boom lasted all the way into the second decade of the 21st century, despite the global financial crisis.

Orrick and Luk enjoyed their fair share of that boom, focusing more on midsized deals by Chinese issuers. In 2009, Luk represented Chinese sportswear manufacturer 361 Degrees International on a $233m (£191m) Hong Kong IPO; the following year, he represented Chinese infant formula maker Biostime International Holdings on a $212m (£174m) listing. In 2011, Luk led a team acting for aluminum maker China Hongqiao Group on an $822m (£673m) Hong Kong debut.

But as the mega deals started to dry up by the end of 2011, the playing field had also changed. The IPO boom had created a highly competitive market among legal advisers, with UK, US and local firms all essentially competing for the same pool of deals. Inevitably, prices started to drop.

Orrick is not the first US firm to scale back on its Hong Kong capital markets practice. In 2014, Milbank Tweed Hadley & McCloy decided to drop its Hong Kong securities law practice and focus only on the US law piece of global offerings. David Zemans, Milbank's Asia managing partner, cited the practice's low profitability as the reason for leaving.

Zuklie saw another issue with its Hong Kong practice. In 2014, Orrick decided to focus on representing clients in three key sectors: technology, energy and infrastructure, and finance.

"Our Hong Kong capital markets team was obviously market leading… but ultimately, the companies they were serving were not the ones that are using our services on the corporate side, the M&A side, the litigation side or the investigations side," Zuklie said. "They are different from the clients [we serve in] the rest of the firm."

Luk declined to comment on Orrick's Asia strategy.

With litigation and arbitration partner Charles Allen and corporate partners David Halperin and Sook Young Yeu, Zuklie said the Hong Kong team will work with clients in those three sectors on cross-border M&A, litigation and intellectual property work. He also plans to increase the amount of energy and infrastructure work in Hong Kong for clients in China and Southeast Asia.

Currently, most of the firm's Asia energy and infrastructure work has been carried out of the Tokyo office, where partner Yoichi Katayama co-leads the practice with Hong Kong-based senior counsel Peter Cleary.

In Beijing and Shanghai, Orrick will continue its focus on representing Chinese companies in US-based intellectual property and trade secret-related litigation and other proceedings. Beijing partner Wang Xiang and Shanghai partner Ethan Ma both specialise in that practice. M&A partner Jeffrey Sun, who splits time between Shanghai and Beijing, represents Chinese companies, including state-owned enterprises, on outbound M&A deals.

"[We will] grow [our China practices] in a way that can actually benefit the rest of the firm," Zuklie said.

According to the most recent National Law Journal 350 survey, Orrick had 41 lawyers in the Greater China region, including 26 in Hong Kong, in 2015. It now has 18 across the three offices, including eight in Hong Kong.

Zuklie, who travelled to Hong Kong and China in late February for client meetings and recruiting, said the firm is in no hurry to expand even after the exodus. "We want to be deliberate and thoughtful," he said. "We are going to go about adding partners in a thoughtful way, making sure their practices fit our global strategy and their culture is consistent with us as a firm."