The largest Japanese international law firms have been expanding in Thailand during the past few years, but few other global firms have much of a presence there.

U.K.-based insurance specialist firm Kennedys, which opened an office in Bangkok in 2017, was the last international firm to enter the market. Clifford Chance actually closed its Bangkok office last year after operating in Thailand for about two decades. Only a handful of global firms – Baker McKenzie, DLA Piper, Allen & Overy, Linklaters and Hunton Andrews Kurth – currently have a substantial presence in Thailand.

But Japan's top law firms view the market differently. Next month, Nishimura & Asahi, the biggest Japanese firm, will have 70 lawyers in Thailand after it merges its 10-lawyer Bangkok office with domestic firm SCL Law Group. Tokyo-based Nishimura partner Ryutaro Nakayama, who is a member of the firm's executive committee, said the merger will give the firm immediate scale in Thailand, which is the second-largest southeast Asian market.

"Thailand is a very big market," said Nishimura's Bangkok office head Hideshi Obara. "We are looking for opportunities."

He noted that his team in Bangkok sometimes gets overwhelmed with litigation cases and would work with outside firms to handle the workload. However, after the merger, the office will be able to manage the work without outside help.

The Nishimura merger is actually the second Japanese-Thai merger in recent years. In 2017, the  Bangkok office of Japan's second-largest firm, Mori Hamada & Matsumoto, combined with 45-lawyer top Thai firm Chandler & Thong-ek Law Offices.

And two other large Japanese firms – Nagashima Ohno & Tsunematsu and Anderson Mori & Tomotsune – both moved into new Bangkok offices earlier this year; Nagashima Ohno's new space is big enough to double its current lawyer count of 14 lawyers, said office head Shohei Sasaki.

The firms are busy in Thailand largely because Japanese companies are looking abroad for growth and have focused especially on the southeast Asian nation. Since 2013, Japan has been the top investor in Thailand, according to a 2016 report by Chandler MHM, the merged entity of Mori Hamada's Bangkok office and Chandler. In 2013, Mitsubishi UFJ Financial Group Inc., Japan's largest bank, bought Thailand's Bank of Ayudhya PCL for $5.6 billion. In 2017, Japan's biggest glassmaker, AGC Asahi Glass, acquired a controlling stake in Thai plastics company Vinythai PCL for $291 million.

Last year, Japanese investment into Thailand totalled more than $1.2 billion, contributing 29% of total foreign direct investment into the country, according to the Thailand Board of Investment. And next year, bidding will begin for a $15 billion railway linking Bangkok to the northern city of Chiang Mai, in cooperation with the Japanese government.

About 90% of the work Nagashima Ohno does in Thailand is from Japan, Sasaki said. And for Chandler MHM, about 20% of its work is from Japan, according to project finance partner Joseph Tisuthiwongse. Inbound work from Japan is so significant for Thailand that even Baker McKenzie has a Japanese-speaking team in Bangkok, including mergers and acquisitions partner Noriko Sakamoto.

With so much focus on Japan-related work, it would be surprising if more international firms were to enter Thailand now, said a global firm partner in Bangkok who spoke on the condition of anonymity.

"It's not over-lawyered, but if you look at who's already in the market, I don't think it'll be an easy decision to come in," the partner said. "There's a limited number of large deals and all the current players are already entrenched."

Tisuthiwongse, who joined Chandler MHM last year with a three-lawyer team from Clifford Chance, said having a key Thai corporate client is crucial for firms to survive in the market. "If you're not linked with a key corporate client, or don't have established names, it'll be difficult," he said.

Tisuthiwongse regularly advises Thai-listed power producer B.Grimm Power PCL on the development of power plants in Thailand.

Tony Grundy, a Singapore-based counsel at Mori Hamada and a former longtime Linklaters partner, said non-Japanese global firms also may not see Thailand as a strategic enough market to try to break in, especially if they already have an office in one or both of Asia's financial hubs – Singapore and Hong Kong. Clifford Chance, for example, explained its decision to close the Bangkok office as an effort to concentrate its southeast Asia practice in Singapore.

For the global firms already in Thailand, most don't see the fast-growing Japanese firms as a threat. Stephen Jaggs, Allen & Overy's Bangkok office managing partner, said the Magic Circle firm targets a different segment of work from the Japanese firms. "Our focus is on the larger, often complex, cross-border deals that may involve a Thai law element but often also a U.K. and/or U.S. law component, as well as multiple offices," he said.

In 2017, for example, a cross-border Allen & Overy team of lawyers from five offices, including Bangkok partner Suparerk Auychai, advised Thai retail conglomerate Central Group on the establishment of a $500 million joint venture with Chinese online retailer JD.com. In addition, Auychai, together with former Tokyo partner Simon Black, advised Mitsubishi on the 2013 acquisition of Bank of Ayudhya; Nishimura served as Japanese counsel to the Japanese bank on the deal.

Baker McKenzie's Bangkok office, however, does compete with the merged Thai firm of Mori Hamada, and soon Nishimura, as it focuses on advising Thai companies on local matters.

"Competition will be fierce. Fees will be impacted in the coming few years," said Bangkok office managing partner Wynn Pakdeejit, noting that Japanese firms' fees are lower than Baker McKenzie's.

But Pakdeejit is confident the Japanese firms' expansion won't affect his Bangkok office. "We have the history," he noted, pointing to the office's 42 years in Thailand. Plus the firm has a size advantage, he added. Baker McKenzie has 240 lawyers in Bangkok, including 62 partners – larger than all the Japanese firms in Thailand combined.

While the Japanese firms may not directly compete for clients, they do compete for top lawyers. When Tisuthiwongse, a U.S. lawyer, was deciding which firm to join when Clifford Chance was closing its Bangkok office, he looked for a firm that is committed to Thailand and the region, and ended up choosing Chandler MHM. "The merger was a show of commitment," he said.

Chandler MHM was also able to attract former Bangkok Allen & Overy partner and veteran mergers and acquisitions lawyer Arkrapol Pichedvanichok, and DLA Piper disputes lawyer Chatchai Inthasuwan. Both Pichedvanichok and Inthasuwan are Thai lawyers.

"Lawyers in Thailand regard Japanese-managed firms as a safe haven," said Mori Hamada's Grundy. "They are worried about the U.S. firms, which historically have been quick to go in and quick to leave, and the U.K. firms also look wobbly in terms of commitment to the market.

"Japanese firms take a much longer-term view," he added.

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