The Singapore Ministry of Law (MinLaw) stopped receiving applications from foreign law firms seeking a Qualifying Foreign Law Practice (QFLP) licence at the end of August. Twenty-three firms have applied for a QFLP, with UK-based Ashurst, Berwin Leighton Paisner, DLA Piper, Olswang and Stephenson Harwood all confirming that they have applied for licences alongside US firms Jones Day, K&L Gates, Watson, Farley & Williams, Gibson, Dunn & Crutcher and Shearman & Sterling.
Singapore used to only allow foreign firms to work alongside domestic practices in limited joint ventures. However, in 2008 MinLaw granted six QFLPs to Allen & Overy, Clifford Chance, Herbert Smith, Latham & Watkins, Norton Rose and White & Case, allowing those firms to practise Singaporean law with some restrictions. The latest moves reflect the increasing interest of international firms in practising local law.
‘We have operated in Singapore since 1996,’ said Bill McCormack, managing partner of Shearman’s Singapore office. ‘Although our focus is on growing the “offshore” component of our business, we do see benefits in being able to supplement our English law and New York law practices with the ability to offer Singapore law advice on transactions with a Singapore nexus.’
According to McCormack, a QFLP could benefit his firm in practice areas such as capital markets, projects and finance, M&A and international arbitration, all of which are Shearman’s core practice areas and could all involve a Singaporean law angle. Local law issues could be key in ‘the listing of a company in Singapore, the financing of a power project in Singapore or the acquisition of a company incorporated in Singapore’, according to McCormack.
Rob Bratby, Olswang’s Singapore-based Asia managing partner, described how a QFLP was important to the development of his firm’s practice. ‘Our objective is to be the “go-to” law firm for technology, media and telecoms across Asia and a QFLP would allow us to also play the local counsel role in Singapore and to compete on a level playing field when pitching with those firms already holding one,’ he said.
Jai Pathak, partner-in-charge of the Singapore office at Gibson Dunn, said the firm did not apply for the first round of licences in 2008 but had applied recently. ‘As we grow the office more work comes to us which is Singapore-law based, it becomes increasingly important for our lawyers to have a Singapore licence,’ he said. ‘We have a couple of Singapore lawyers who have given up their local practice to join us, so one reason why we would get a QFLP is so their career paths would be taken care of,’ he added.
‘A QFLP would allow us to also play the local counsel role in Singapore.’
Rob Bratby, Olswang
Despite the rush for a QFLP, Singapore is still attracting firms that only wish to practise international law, including offshore firm Maples and Calder, which opened in the middle of September. Although Maples has not applied for a licence itself, James Burch, a partner at the firm, thinks the raft of applications is a good thing.
‘We work extensively with both local firms and international firms. It is a good thing that Singapore is expanding as our competition comes from other offshore firms,’ said Burch.
However, the clamour for licences has caused some consternation among Singaporean firms that had not previously viewed international law firms as a threat. ‘I’m very surprised by the number of firms that have applied for a QFLP. It looks like the Ministry of Law is going the way of Hong Kong, allowing lots of firms in to practise local law,’ said Julian Kwek, head of the Indonesia desk and co-head of the corporate insolvency and restructuring practice group at Drew & Napier.
There is also concern that as the previous restrictions attached to a QFLP have been lifted, it could allow international firms to compete with domestic firms in areas that were previously beyond their remit. In February, foreign law firms were permitted to take up to a 25% equity stake in Singaporean firms. This, combined with a QFLP, would now allow foreign firms to get involved in domestic litigation and rumours abound that some international firms are hiring senior counsel to do just that.
One firm that exemplifies the appetite of international law firms in Singapore is Freshfields Bruckhaus Deringer. Having originally established an office there in 1980, the firm has retreated from the jurisdiction twice, most recently in 2007. The firm announced last month its intention to return to the City state with an impressive line-up. The office will be led by Stephen Revell, who is co-head of the firm’s global capital markets practice, and Gavin MacLaren, a recent lateral hire from Allens where he led the South-East Asia practice from Singapore for many years. Acknowledging Singapore’s growing reputation as an arbitration centre Lucy Reed, global co-head of the firm’s international arbitration group, will be in charge of developing the firm’s practice in Singapore.
With traditional Western markets remaining flat due to economic turmoil, such as the spiraling EU debt crisis and the US being horrendously overdrawn, Singapore seems to be the jurisdiction of choice for clients and firms naturally follow their clients. But what if applications for QFLPs are rejected?
‘We have no plans to withdraw – a QFLP gives us an incremental capability, but is not strategically important – this is because almost all of our work is cross-border regional work,’ said Bratby.
In a similar vein, Shearman’s McCormack said: ‘Our focus would remain on the “offshore” business. The work that is directly impacted by the QFLP will remain a small part of the overall business.’