Photo by J. Albert Diaz/ALM

Global law firm Reed Smith is embracing change in Asia.

In Hong Kong, the firm is physically moving and has made strategic hires. In Beijing, Shanghai and Singapore, it also has made some tactical additions. The firm is repositioning itself in preparation for a recession in Hong Kong, increased disputes arising from the U.S.-China trade war and the growth of Singapore as a technology hub.

Not surprisingly, the firm's major changes begin in Hong Kong, where the office will soon undergo the biggest transformation of its 39-year history in the city, according to Reed Smith's Asia-Pacific managing partner Denise Jong. The physical office, which Reed Smith inherited with its 2006 merger with British firm Richards Butler, will be moving to a new location with a mostly new team – part of a rebuilding effort after one of the biggest departures to hit the office.

Turning lemons Into lemonade

Early this year, about 20 lawyers specialising in regulatory disputes, including nine partners, left to join the Australian firm MinterEllison. It was the largest team move among global firms in Asia in the past 12 months and the biggest team departure from Reed Smith Richards Butler since 2011, when some 35 lawyers broke off and launched their own firm, Howse Williams Bowers.

After the departures, Jong, who was appointed Asia-Pacific managing partner last year and is a Richards Butler lifer, decided to shift the firm's Asia strategy to capture more work from China and from disputes that didn't rely on securities-related issues, as a recession looms in Hong Kong.

Denise Jong

Reed Smith Richards Butler rebuilt the disputes team with the additions of partners Peter Glover earlier this month from Norton Rose Fulbright, Mark West in June from Kennedys and Stephen Chan in May from local firm Oldham, Li & Nie. Plus, one more disputes partner will join the firm in the coming months, Jong said.

It's a smaller team than before, but that's part of the new strategy, Jong explained. The previous disputes team focused on regulatory work related to Hong Kong's securities regulator, the Securities and Futures Commission (SFC). But that type of work has declined. The number of new investigations by the SFC started to drop in 2016, after the government agency installed a new enforcement chief. In 2018-19, it fell to 238 – the fewest since 2009.

"We have rebuilt to regain that capability, but not the same numbers," Jong said.

A disputes capability is especially needed as a recession looms in Hong Kong, which would be the first for the Asian financial hub since the global financial crisis. Hong Kong is already halfway there – the economy shrank 0.4% in the second quarter from the previous quarter. Economists expect it will also shrink in the third quarter and technically enter into a recession.

Since June, Hong Kong has been shaken by anti-government protests, which affected the city's crucial tourism sector. Last month, Hong Kong tourists arrivals plunged almost 40% year on year – the worst downturn for the tourism industry since the severe acute respiratory syndrome (SARS) epidemic in 2003. During a recession, there will be more disputes work, such as asset tracing litigation and international arbitration, Jong said.

Change in China and Singapore

Elsewhere in Asia, Reed Smith in May recruited regulatory enforcement partner Dora Wang in Shanghai from Morgan, Lewis & Bockius to meet increasing client demand that has arisen since the trade dispute erupted between the U.S. and China. Chinese companies have been going through extra regulatory procedures just to do business as usual in the U.S., Jong said.

In Beijing, Reed Smith's other office in mainland China, energy and natural resources partner Eric Lin joined in July from Simmons & Simmons to capture work from the Belt and Road Initiative – the Chinese government-led major economic project to build infrastructure across Asia, Europe and Africa.

And in Singapore, Reed Smith strengthened in technology and data, which are growth areas in Asia, said Jong. Fintech specialist Hagen Rooke joined Reed Smith as counsel from Linklaters in January, and data and technology lawyer Charmian Aw joined as counsel from leading Singaporean firm Drew & Napier last September.

In total, Reed Smith has about 150 lawyers in Asia. Jong noted that the firm's headcount in the region won't change significantly, especially in Hong Kong, where about 90 of the lawyers are based and where there is a strong likelihood of a recession.

In fact, Jong puts the odds that a recession will hit Hong Kong at 99%. But the firm is prepared, she said.

Early next year, Reed Smith Richards Butler plans to move away from the city's main business district of Central, where legacy firm Richards Butler opened its Hong Kong office in 1980 in Alexandra House. It will be the latest of a growing number of global firms to relocate to Quarry Bay, an emerging business district further east where rent can be one third the cost of comparable space in Central. The firm rented a similarly sized space of about 28,000 square feet in the 68-storey triple-Grade-A office tower of One Island East, which houses fellow global firms Freshfields Bruckhaus Deringer and Ince Gordon Dadds.

"The office move," Jong said, "that's our hedge for a recession."

Related stories:

MinterEllison Recruits Four More Disputes Partners From Reed Smith in Hong Kong

Reed Smith Richards Butler Rebuilds Hong Kong Disputes Practice With Kennedys Hire

Reed Smith Continues to Rebuild Disputes Practice in Hong Kong