Singapore swings

With Lovells the eighth foreign law firm to launch a joint venture with a Singaporean practice, Lucy Hickman looks at life and work in this hive of legal activitySingapore has long been acknowledged by western law firms as an important financial centre in south-east Asia.

International law firms have offices there and in Hong Kong to cover China and Indonesia.Since Hong Kong's re-absorption into China, Singapore has become more important.

Many City law firms have bases there, but it was only last year that the Singaporean authorities agreed to allow foreign law firms to link officially with local firms through joint ventures or less formal alliances.This relaxation of the ban on foreign lawyers practising local law is strictly controlled by the Singapore government, and only eight joint venture licences have been issued - four to UK firms and four to US practices (see table on opposite page).Although the Singapore government has indicated that more licences may be issued, Freshfields' managing partner in Singapore, Roger Dyer - whose firm launched a joint venture with Singapore's third biggest law firm Drew Napier in November 2000 - remains sceptical.He says: 'There were originally going to be five licences, but in the end there were eight.

My guess is there will be no more.'Lovells' director of international projects and Asia regional manager Mark Bartel - who was instrumental in setting up the joint venture between Lovells and local firm Lee & Lee which kicked off last month - says the status and future of the licences are uncertain, even if a firm already has one.Mr Bartel says: 'The licences are for two years, and we have to deliver and stay close to the business plan we gave to the Singaporean attorney-general.

Singapore tried this for a good reason - they wanted local firms to have the chance to be major players in the region.'He maintains that if it appears that local firms are losing out - that the western firms are taking over, and the local firms aren't getting access to the good deals - the government will not be keen to expand the number of licences.He adds: 'We could lose our licence tomorrow - we don't know what we need to do to get it renewed.

All we can do is stick to the business plan and carry out our commitments, and hopefully it should be renewed.'If the Singapore government does decline to extend the number of licences, this would mean that two notable losers in the scramble to find a suitable local joint venture partner, or to secure a licence in the first batch - Norton Rose and Clifford Chance - may never now secure one.Clifford Chance's bid to link up with Wong Partnership was scuppered firstly by the rejection of the two firms' original proposal by the Singapore government, and then by the October resignation of the local firm's second most senior partner, Lee Suet Fern.He went on to set up a new firm, Stamford, which entered into a joint venture in Singapore with US firm Shearman & Sterling last month.Meanwhile, Norton Rose did not apply for a licence - reportedly because it was left with too little time to find a new partner after its 19-year alliance with Lee & Lee broke up in March last year.Lee & Lee is now Lovells' joint venture partner, and according to Mr Bartel - a Linklaters & Alliance partner until January this year - it was all the Singaporean firm's idea.He says: 'For whatever reason, Lee & Lee broke off its long-standing relationship with Norton Rose and was left without a UK partner, so it approached Lovells and asked if we were interested in a joint venture.'The exploratory talks between the two took a few months and were done in a friendly way - not rushed.

Reputation-wise it is one of the top firms in the region.'That the negotiations went relatively smoothly because the two spent so much time talking outside the negotiations: 'When we got together we knew how we wanted it structured and what we both wanted out of the arrangement, ' adds Mr BartelHe and Mr Dyer agree that Singapore and south-east Asia generally are intensely competitive markets - but that firms in joint ventures will have the edge over their competitors.Mr Dyer says: 'It is a very competitive market - an awful lot more so than, say, London.

I think the market will divide into operations that have joint ventures and those that don't.

We will have access to the local market which the others don't.He explains that although Freshfields has had a presence in the country for more than 20 years, the benefits of the joint venture will come over time: 'There are pluses and negatives to tying yourself to one firm, but our relationship with Drew Napier doesn't stop us using other firms if clients want something different.'He admits that the local reception to joint ventures was not unanimously favourable at first.

'Like a lot of things, not everyone was in agreement that this should happen, but most have accepted that this is the way things are and they will have to live with it.'Mr Bartel says: 'This joint venture gives us the opportunity to practise local law and offer greater resources and expertise in the region.

We expect to expand our client base and deliver to clients a higher quality of work.

We are more interested in going after the more complicated deals which require a more sophisticated approach.'It's a very competitive market at the moment.

Everyone went in with the same aim - team up with a local firm to attract the very profitable deals.

Not everyone will win.'Peter Flynt, who is set to relocate to Singapore from the litigation department of Watson Farley Williams' (WFW) London office in September, says joint ventures will not corner the market.He predicts: 'The market in Singapore is expanding.

This gives rise to opportunities for joint ventures and non-aligned firms.'It is important to bear in mind that though some western firms have engaged in formal alliances, this does not limit the ability for firms like us to work with non-aligned local firms.

This is something we welcome and we look forward to further developing relationships with local firms.'Mr Flynt says that although WFW - which he says boasts the largest non-domestic litigation group in Singapore - is not allowed to appear in local courts, it can and does act in 'substantial cases' in the Singapore International Arbitration Court.He says: 'We will still attract the same sort of clients, and more so.

We are set on course to expand our presence in Singapore and the rest of south-east Asia.'To this end, WFW is set to open an office in Bangkok 'imminently' and Mr Flynt - who could not confirm rumours that he is to join the Singapore office as managing partner - says he plans to develop the firm's client base in China extensively when he joins.The lawyers are divided as to how the south-east Asia market will be affected by the current slowdown in the US.Mr Flynt says: 'The US and Japanese economies are very closely linked, but I would be surprised if the slowdown in the US had a particular effect in this region.'However, Mr Dyer says: 'The market is fairly busy, but we are all to a degree waiting to see what's going to happen.

There is likely to be a second wave of recession as a result of the slowdown in the US.

It will certainly have an effect here - in some areas more than others.'But even if there is a slowdown, there may not be so many IPOs [initial public offerings], but it will result in more restructuring work and perhaps M&As [mergers and acquisitions].'Mr Bartel adds: 'Because of the US slowdown, there is concern that there will be a slowdown here.

The telecom and banking sections are buoyant at the moment, but we know there are going to be ups and downs, and we are not here for the short term - we want to be a major player in the area.

I think the US slowdown won't recover as fast as expected but there will still be plenty of work.'Lucy Hickman is a freelance journalist

Singaporean Joint Venturesl Freshfields - Drew & Napierl Allen & Overy - Shook Lin & Bokl Lovells - Lee & Leel Linklaters & Alliance - Allen & Gledhilll Shearman & Sterling - Stamfordl White & Case - Colin Ngl Orrick Herrington & Sutcliffe - Helen Yeol Baker & McKenzie - Wong and Leow