CLB March 2012 by Yvette Chiu

Joining Forces: The Rise Of Law Firm Mergers In China

合力开拓中国市场，律所并购掀热潮

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亚洲法律杂志 - 中国版 CHINA

IPO REFORM Proposed changes promise greater clarity and efficiency

IPO法规改革：通往清晰与高效 YANGTZE SPOTLIGHT

POLLUTION POTENTIAL

COMPLIANCE BATTLE

INSIDE

Transportation convenience spurs legal market integration 长三角的同城时代

Lawyers capitalise on growing environmental awareness 污染事件频发，环境诉讼任重道远

In-house counsel focus on training and communication 企业法务：合规的培训与沟通

n THE BIG STORY

n Deals SPOTLIGHT

PAGE 20

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n LAW FIRM LEAGUE TABLES

n SUNDRIES

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yongheng partners

Yongheng Partners’ Steady Growth and Commitment to Quality has it Poised for International Success

Chen Yingning

ongheng Partners has been a leading firm focused on commercial law in the Yangtze Delta region since 1997. The firm originated with very humble beginnings. As Mr. Chen Yingning, a managing partner since the firm’s creation, says, “We were very small. We only had five partners and three associates. However, we grew up rather quickly.” Today Yongheng has 68 practicing lawyers and 14 partners. While this number does not stand out in quantity compared to other large domestic firms, Mr. Chen maintains that it is the firm’s commitment to quality and developing talent internally that has allowed it to stand apart. “Only 1 or 2 partners came from other firms. I think that is one reason why our firm has remained so stable this decade. Very few people ever leave our firm.” The commitment to developing talent does not only apply to young associates at Yongheng. Under the support of Nanjing Normal University Law School, the firm has made a commitment to integrate legal theory and the actual practice of law. The firm has long provided scholarships for outstanding students, hosted summer and winter internship programs and for the last 3 years has helped set up an exchange program with Northwestern University in Chicago. Seven practicing attorneys are also full time professors at the law school. Yongheng’s founding ideals of “Strategic Planning, excellence in service, teamwork, and goal-oriented productivity” have also played a role not only in keeping

talent but allowing that talents to thrive, leading to the success the firm has experienced for the last 15 years. “Our product is our service,” Mr. Chen says. “When our service is accepted by our clients we keep a stable client base.” Like internal talent Yongheng’s clients tend to stay: Mr. Chen continued: “And actually most of our clients have been with us for over ten years.” Yongheng has long been highly regarded in Jiangsu province but over the past several years has been expanding and succeeding in other Chinese provinces as well as internationally. Mr. Chen attributes this success to being a local firm familiar with local regulations as well as government while having vast international experience. “Law firms in the delta are more traditional. Domestically they are full service but we are more specialized and experienced internationally. On the other hand, compared to international firms in Beijing or Shanghai we have focused more on Jiangsu. We have a lot of experience with the local government regulations and the big companies in region. We are more localized but at the same time we can provide high quality work for international clients.” According to Mr. Chen, Yongheng will continue to grow at a stable pace while developing internal talent and promoting the firm’s culture. Moreover, as Yongheng transitions from a regionally lauded firm to an international player, it is clear quality legal service will still be at the heart of Yongheng Partners.

永衡昭辉律师事务所稳健的增长和对服务质量的承诺，使其获得了国际性的成功

自

江苏永衡昭辉律师事务所地址：南京市珠江路222号长发科技大厦13层，邮编：210018 电话：+86 25 8319 3322 传真：+86 25 8319 1022 电邮：chenyingning@yhpartners. com 网址 : www.yhpartners.com Yongheng Partners A: 13/F, Changfa Science & Technology Building, 222 Zhujiang Road, Nanjing, China, P.C. 210018 T: +86 25 8319 3322 F: +86 25 8319 1022 E: chenyingning@yhpartners. com W: www.yhpartners.com

1997年成立以来，永衡昭辉律师事务所已成为长三角地区专门提供商事法律服务的行业翘楚。该所在成立之初并不起眼。陈应宁先生是该律所成立以来一直于此执业的执行合伙人之一，其业务专长包括企业上市和并购等领域。他称：“ 我们当时规模非常小，只有5名合伙人和3名律师。不过，我们成长得很快。”如今，永衡昭辉已有68名执业律师和14名合伙人。虽然与国内其他大型律师事务所相比，这些数字在数量上并不出众，但陈应宁先生认为，正是永衡昭辉的质量承诺和内部人才培养方略使得它卓然独立而自成一家。“我们所只有一两名合伙人来自其他律所。我想这就是我们所这十年来一直很稳定的原因之一，很少有人离职。” 培养人才的承诺并不仅限于针对永衡昭辉内部的年轻律师。在南京师范大学法学院的支持下，永衡昭辉承担起了法律理论联系实务的责任，永衡昭辉长期为该院优秀学生提供奖学金、寒暑假实习岗位，永衡昭辉的七名资深执业律师同时也是该法学院的全职教授。同时，永衡昭辉与美国西北大学法学院成立了一个合作的交流项目，在过去的3年中持续向该法学院学生提供暑期实习岗位。永衡昭辉秉持“专业筹划、勤勉服务、团队智慧、成就价值”的创立理念，不但要留住人才，而且要让人才茁壮成长、走向成功，

这就是永衡昭辉在过去的15年中所经历的。“我们的产品就是我们的服务”，陈应宁先生说，“当客户认可了我们的服务，我们就有了稳固的客户基础。” 陈先生接着说：“而且实际上，大多数客户都已经跟我们合作了十多年之久。” 在江苏省内，永衡昭辉得到了长期的高度评价，而在过去的几年中，永衡昭辉也将业务拓展到了中国其他省份，甚至在国际领域取得了一定的成就。陈先生将永衡昭辉的成功归因于以下方面：作为一家本地律所，通晓当地法律法规，熟悉当地政府，并具备丰富的国际经验。“长三角地区律师事务所都比较传统。在国内方面，他们能提供周到而全面的服务。而我们则在国际方面上更为专业，经验也更为丰富。另外，与北京或上海的国际性律师事务所相比，我们的关注点更多在江苏省内。我们熟知当地政府的法规、条例、制度等，在这一地区的大型企业的法律事务处理方面有着丰富的经验。一方面，我们更本土化，另一方面，我们同时又可以为国际客户提供高质量的服务。” 就像陈应宁先生所说的那样，在培养内部人才和加强企业文化的同时，永衡昭辉将以稳健的步伐继续进步、成长和发展。此外，在永衡昭辉从为人称道的地域性律师事务所转变为国际性事务参与者的过程中，提供高质量的法律服务毫无疑问依然会是永衡昭辉律师事务所的重中之重。

mARKET MOVEMENT

If you canâ&#x20AC;&#x2122;t beat them, join them

ASIAN LEGAL BUSINESS MARCH 2012

REUTERS/Petar Kujundzic

The rise of law firm mergers in China With competition among law firms in Asia hitting an all-time high, more mergers are expected in the coming year. Rob Green explores the growing trend of tie-ups between international and Chinese law firms

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owards the end of 2011, the legal industry press seemed to be full of whispers - followed by confirmations and then details - of the exciting merger between Chinese legal giant King & Wood and market leading Australian firm Mallesons Stephen Jaques. This much publicised merger clearly indicates the growing strength of the Asian legal market, and the importance of China’s role in the region. With the balance of the global economy moving away from the U.S. and Europe towards Asia, international law firms that are looking to gain a foothold in the potentially hugely profitable China market are starting to pursue ways in which they can buy into the action. Some of these firms may have existed in the region for years, but may have never really been able to get the critical mass that they enjoy in other markets. However, by tying into a relationship with a prominent domestic firm, they could get the foothold they are looking for practically overnight. Globally, there has never been so much merger activity among law firms. About 60 mergers took place across the globe last year, and it is forecast that this number will be even greater in 2012. One reason that can be pinpointed to explain the increase in mergers is that competition among law firms is at an all-time high. With respect to law firms in Asia, as the Chinese market emerges, both regional and international firms are continually fighting for a leading position in the Asian legal market. Rather than stand by and allow other firms to take the lead, firms must deal with this competition, and one of the most obvious ways to deal with it may be to join forces. The combination that formed King & Wood Mallesons represents the largest merger deal involving a local Chinese firm till date. The new firm has more than 1,800 lawyers across five countries. Chinese firms looking to increase their footprint outside their home market appear to be attempting to follow in King & Wood’s footsteps. As the widely reported King & Wood Mallesons merger takes shape, two of China’s largest law firms, Dacheng and Yingke, are opening offices in London, while smaller Chinese firm Broad & Bright is reportedly in merger discussions with Clifford Chance; all in a bid to gain access to a wider international market. The benefits for a China-based firm tying

mARKET MOVEMENT

“There are arguments that the success or failure of partnership with Chinese law firms could largely depend on decisions made by the ever-changing policies of a rapidly developing nation.” Rob Green, CML Recruitment

up with an international brand are obvious: they may gain more international exposure and access to technology over time; they may be able to garner the expertise and marketing power they may not have had before, without the risk of losing significant amounts of referral work from UK or U.S. firms. Clifford Chance is by no means a stranger to mergers, having “rebranded” two mid tier Australian law firms last year to give them a firmer presence. By joining forces with a Chinese firm, however, they hope to achieve the presence they have desired in Asia. As the Asia market strengthens, international firms are increasingly seeing the need for Chinese partners in their firms. But mergers aren’t always plain sailing. It can take time for the old firm to become the new firm, and takes more work than a change of letterhead and signage. Attitudes and cultures, and most importantly clients’ attitudes towards pricing structures, can be hugely conflicting and lead to complications. It may be difficult to ascertain which of the two firms is the more dominant and which should receive the larger share of the business; something which is bound to affect the overall efficiency of the business. There are arguments that the success or failure of partnership with Chinese law firms could largely depend on decisions made by the ever-changing policies of a rapidly developing nation. The business rationale for a combination between a Chinese and international firm is not necessarily as straightforward as one between, for example, an Australian firm and a British firm. Another factor which might be a cause for concern is that the finances of the other firm may not always be as expected, and this could easily result in failure for one or both firms. Both King & Wood and Mallesons are avoiding this risk by remaining financially independent of one another as King & Wood Mallesons. They will share a common name, and thus reap all the benefits of the merger, while maintaining separate budgets and expenses. Only time will tell if these mergers between two hugely culturally different firms will work. There are speculations that if the King & Wood Mallesons merger succeeds, it could only be the beginning. Mallesons is reportedly also in discussions with Singapore firm WongPartnership. But some believe the alliance would not stop in Asia. Instead, in order to gain more of an international presence, the merger will only really take off if it ends up forming a further merger with a UK or U.S. firm. If this initial merger succeeds, it is impossible to predict how many firms will try to follow suit. Suffice to say, 2012 could be a very interesting year to watch. Rob Green is Managing Director, Asia at CML Recruitment

Analysis

ASIAN LEGAL BUSINESS march 2012

Polluted w

make way for environmental A series of large-scale incidents in China have recently turned the spotlight onto water pollution. At the moment, environmental litigation in China is not easy for the victims or the lawyers. But hopefully, this market will develop with heightened public awareness and proposed amendments to environmental laws. Zhen Liu reports

Analysis

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he arrest of 10 chief officials of two companies responsible for a massive water pollution disaster in southern China on Feb. 15 did little to eliminate peoples’ doubts about the execution of environmental protection laws in the country. On Jan. 26, 2012, the 3.7 million residents of Liuzhou city in southern China were warned by officials to avoid drinking tap water because of a carcinogenic cadmium discharge from two mining and metal processing companies in upstream Hechi city. It was found that this discharge by these two companies in the Guangxi region had polluted a long stretch of the Longjiang River since Jan. 15, and had left an enormous amount of fish dead. Some 20 tonnes of cadmium from the plants’ waste water was pumped into the river, and ultimately flowed into the heavily populated Pearl river area. Local firemen poured hundreds of tonnes of neutralisers into the water, hoping to dissolve and precipitate the toxic heavy metal substance. This disaster was followed by more industrial accidents that resulted in large-scale water pollution: a South Korean chemicals barge sank in the Yangtze River on Feb. 2, releasing phenol that caused tap water to smell strange in the city of Zhenjiang located 290 kms upstream from Shanghai. Two weeks later in Guangdong, export industrial city Foshan had its water supplies disrupted after a fish farm discharged sewage into the local water source. The arrested officials responsible for the cadmium spill included the board director, the CEO, the environmental department head of the Guangxi Jinhe Mining Co, in addition to three shareholders and four operational officials of the Hongquanlide Powder Material Co. They were accused on the “suspicion of environmental pollution” offence, a charge that could lead to up to seven years imprisonment if convicted. In the meantime, the Hechi city government announced it would assist the affected fisheries to claim indemnity from the polluters. However, many worried that the governmental interference once again demonstrated the powerlessness of the law to protect the environment in China.

waters

environmental opportunities

Running the show Among the three applicable types of accountability systems in China, namely the administrative responsibilities, civil liabilities and criminal liabilities, the government normally prefers the first one when handling environmental disasters. “The government prefers exercising its administrative power as it feels more comfortable with this,” says Zhao Jingwei, partner at Yingke Law Firm. Zhao represented the 107 fishermen from the coastal province of Hebei, who were attempting to sue oil giant ConocoPhillips for damages caused by a massive oil spill that originated in the latter’s

REUTERS/Stringer Shanghai

“So far the environmental litigations are basically non-profit ones, mainly for the public interest.” Zhao Jingwei, Yingke Law Firm

Analysis joint venture oilfield with China National Offshore Oil Corp (CNOOC) in the Bohai Sea. In January this year, China’s Ministry of Agriculture, as the caretaker of all fisheries in China, reached an agreement with the oil duo. A total of one billion yuan ($159 million) was agreed upon for compensation and the restoration of polluted areas. Regarding the case itself, Zhao and his clients found it in a stalemate at the very initial stage. “The government runs the whole show,” says Professor Zhou Ke, the head of the Institute of Environmental and Natural Resource Law at Renmin University. Critics believe government involvement should not replace legal action, and relevant legal liabilities should not be overlooked even if the government resolution has made some progress. In fact, the agriculture authority’s legitimacy in representing maritime interests or human health rights was also questioned during the Bohai case. After an oil spill took place in the Bohai Sea in 2006, a settlement was reached between the victims and the oil company via a legal procedure. A group of burglars damaged the equipment at the Sinopec Shengli Oilfield (SLOF), causing oil to leak into the sea water. Eight fishermen from the Hebei province filed a lawsuit, and eventually reached a final agreement of compensation in 2011 after a court conciliation. The legal advisor to the fishermen in this case, Xia Jun of Zhongzi Law Office, suggests that the successful legal resolution was, to some extent, due to its relatively low profile and smaller scale. “When an accident involves a large amount of victims, maintaining social stability becomes the top priority,” he says. “In this type of case, governments in China are used to handling things themselves instead of processing it through the courts.” One such high-profile case was the explosion of a chemical plant of the China National Petroleum Corp (CNPC) in Jilin province in December 2005. This sent an 80 km long toxic benzene slick flowing along the Songhua River. The water supply of 10 million people in

“The government policy is favourable (for green industries), and there are plenty of opportunities everywhere.” Lin Wei, Zhonglun W&D

Northeast China and Russia was cut off for five days. It took the government 7.84 billion yuan ($1.24 billion) over the next five years to treat the polluted water and restore the environment. However, very little of this amount was contributed by CNPC. Current laws and regulations set the maximum fine imposed upon environmental polluters at an embarrassingly low 100,000 yuan ($15,887). The media reported that CNPC, the largest oil company in China, paid just one million yuan ($159,000) to the state environmental agency, and only another five million yuan ($793,000) to Jilin province. “It is unfair that the government foots the polluters’ bill with taxpayers’ money, resulting in the polluters’ cost being very little,” says Zhao.

ASIAN LEGAL BUSINESS march 2012

Environment protection agencies do not have the teeth to enforce laws. “The environmental protection administration should be empowered, and their supervision over natural resources be enhanced,” says Zhou. Rocky road Many lawyers who are working on environmental litigation cases are willing to sacrifice some profit to build their reputations as socially responsible crusaders. They see potential for this market segment to mature and become lucrative, even though going through the full course of a case can be unpredictable and toilsome. As public attention to environmental issues grows and a possible environmental law amendment is discussed, the profiles of these lawyers are also expected to be enhanced. Some environmental lawsuits end up going nowhere, while others are not even considered by the courts. “The main problem is the evidence collection,” says Lin Wei, partner at Zhonglun W&D. The victims of environmental disasters are most likely vulnerable individuals who do not have enough technical capability, legal knowledge, or financial support to provide clear and sound proof required by the court. “Many environmental pollution incidents are not as obvious as other kinds of accidents in which you can easily identify the responsible party,” says Zhao, who notes that the polluters of the Longjiang incident were confirmed only weeks after the toxic spill. For instance, damage assessment is necessary evidence for the court. But it is not fully acceptable unless it is issued by an officially licensed institution, either governmental or third party. It is a long and complicated procedure which ranges from sampling the polluted substance to finally estimating and calculating the economic loss. Every step has to strictly follow the relevant technical manual. The problem is that there are very few institutions being licensed to make such assessment reports, and the qualified ones are either less than efficient or excessively expensive for the victims, according to Xia. “Theoretically, once the court accepts a case, a certain degree of presumption of causation is supposed to be used to reduce the burden of proof upon the victims,” says Zhao. “But in practice, this principle is not

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implemented that well.” Supposing that a court verdict is made, the problem of execution then comes to a head. The polluters are often key industry players who drive local GDP growth. As a result, they enjoy a degree of immunity as they carry much more weight with local authorities than the government’s environmental protection aspirations. But Xia suggests the bigger enterprises are more likely to be compliant. “There is local protectionism in many places and smaller companies might be financially unable to afford the decided compensation,” he says. From public interest to profit? Laws and regulations on water pollution are relatively more complete than other environmental laws due to the repeated occurrence of water-related incidents across the country. The Law of Prevention and Control of Water Pollution was last updated in 2008. In contrast, the Marine Environmental Protection Law has not been revised since 1999, and some of its items contradict the Tort Law that came into force in 2009. “The legislation is still loose,” says Lin. According to Zhao, an obvious gap is that almost nothing regulates environmental damage. The laws are mainly concerned with human property rights or personal rights. But in the Longjiang case, it was not only the fisheries that were harmed, but also the water, the soil, and other environmental elements. Although the officials said the detected cadmium level had dropped to normal levels after the neutralisation treatment, the long-term impact of the cadmium compound sediment that has settled at the bottom of the river is worrisome. Cadmium poisoning can soften human bones and cause severe pains in the joints and spine, and sometimes lead to anaemia and kidney failure resulting in the death of a person. In Japan, it is known as the Itai Itai (“painful painful”) disease, with hundreds in the country suffering from the illness after being subjected to decades of cadmium pollution by Japanese mining companies. Zhou suggests that China add “public environmental rights” into the current laws, which contain entity rights to live in a good environment and procedural rights such as the right to know about them as well as the power to supervise and litigate environmental issues. By 2000, over 200 countries had officially recognised

Analysis

environmental or similar rights, he says. According to Professor Cao Mingde of the China University of Political Science and Law, if such rights are confirmed, a foundation will be set up to amend the Environmental Protection Law and Civil Procedural Law. This will, in turn, encourage environmental and civil public interest lawsuits. Legal practitioners would also then see a surge in litigation mandates, not only from the direct victims seeking justice in court, but also from other individuals and non-governmental organisations (NGOs). In fact, organisations could then voluntarily cite environmental rights to sue the polluters. “The eligible organisations are not that interested in doing this. On the opposite end, many NGOs, grass root groups and activists that have the willingness and resources to do this are currently sidelined by the laws and regulations,” says Xia. After the 2005 Songhua River benzene disaster, several faculty members and students of the Peking University Law School filed a lawsuit against CNPC on behalf of the victims and affected wildlife, water, and islands in the Songhua River. But the claim was rejected by the court as the group was not regarded as proper plaintiffs. Together with an expected increase in the number of environmental litigation cases, lawyers might enjoy better pay. To realise this, Cao believes China should set up a rule (that many other countries already apply) which states that volunteer plaintiffs would receive a considerable share of the final compensation award as a reward if they win. Non-litigation Post-pollution is when revenue can be generated, given that the Chinese government is generously investing in pollution treatments and environment friendly projects to improve the growth of encouraged industries (for example, clean tech and green tech) and upgrade their technologies. A historical example is found in Japan, where the infamous “Four Big Diseases” caused by industrial pollution – including the Itai Itai disease – broke out in the second half of the 20th century. The island nation has since established its health damage compensation fund. Some of the bigger state-owned enterprises (SOEs) and energy giants in China are now considering the need to set up special environment compensation funds in light of heightened risks. Moreover, a compulsory insurance system in which most industrial companies are mandatorily charged in accordance to their environmental risk levels is being discussed by legislators, says Cao. Although these funds are yet to be structured, law firms will undoubtedly be able to seek opportunities in the founding and operation of these presumably massive fund pools. Meanwhile, a burgeoning demand for water treatment technologies and facilities will lead to an active market which will incorporate various practice areas such as cross border M&As, project finance, intellectual property, and tax among others. “These businesses are growing rapidly,” says Zhao, “They are strongly backed by the state. They make commercial profit from the market, while getting subsidies from the government.” In other developments demonstrating China’s commitment to improving its environmental image, the China Banking Regulatory Commission (CBRC) recently introduced the “Green Credit Guidelines”. These were aimed at facilitating the financial needs of the “greener” enterprises. “The government policy is favourable, and there are plenty of opportunities everywhere,” says Lin.

In-house survey: compliance

ASIAN LEGAL BUSINESS march 2012

The battle against corruption

Life after the UK Bribery Act It has been eight months since the UK Bribery Act came into effect. Combine this with the U.S.â&#x20AC;&#x2122; Foreign Corrupt Practices Act and stringent local laws, and it is clear that there is a global effort to purge corruption from within corporations. In-house counsel in Asia today are facing unique challenges in educating and training their companiesâ&#x20AC;&#x2122; employees, and creating effective, but practical compliance programmes. Candice Mak reports REUTERS/Christian Hartmann

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In-house survey: compliance

“The rather stringent policy arising from the UK Bribery Act has given rise to a lot of practicality concerns from the business folks. Hence, we see the need to draft local policies to better fit their needs and circumstances.” Kitty Yu, Assa Abloy

here was an anecdote floating around last summer that spoke of a global law firm down in Southeast Asia which had recently held a media and client briefing to discuss the impact of the newly-enacted UK Bribery Act (which came into effect on July 1, 2011). The message from its lawyers was stern: that corruption would not be tolerated. In particular, the firm highlighted the practice of gift-giving – a business cultural norm for Asians – and how this would need to be severely clamped down upon with the broadened definition of what a ”bribe” constituted. As the attendees shuffled out after the presentation, each was handed a gift bag – inside which was the firm’s marketing material and a shiny, brand new bottle of Moët champagne. “Is this a test?” one departing in-house counsel reportedly quipped. Others politely refused to take the goodies. Since the UK Bribery Act became effective and U.S. authorities ramped up enforcement of their tough Foreign Corrupt Practices Act (FCPA), in-house counsel in Greater China have also tightened their focus on compliance and training. Although many agree that compliance had always been a long-term objective, the intensified scrutiny by anti-corruption officials around the globe and the rising number of high-profile corruption cases have added further urgency to their training programmes and policies. “We have been putting a lot of emphasis on anti-bribery in recent months,” says Kitty Yu, an in-house counsel at Assa Abloy, a Sweden-based lock manufacturer. “The rather stringent policy arising from the UK Bribery Act has given rise to a lot of practicality concerns from the business folks. Hence, we see the need to draft local policies to better fit their needs and circumstances.” Putting a compliance programme in place to prevent bribery is now a standard practice for many companies operating across Asia. Andrew Martin, Singapore-based principal of Baker & McKenzie. Wong & Leow, tells TrustLaw, a Thomson Reuters Foundation Service that implementing a compliance programme entails establishing a culture on what is considered behaviour that will not be tolerated. It also involves sending a message to employees that appropriate action will be taken if they are caught in acts of bribery. “Otherwise the compliance programmes will be just a piece of paper,” he says. In this regard, many companies are increasingly looking to adopt a riskbased approach while developing their compliance programmes. The UK Bribery Act and its relatively recent inception has in-house counsel holding their breath. Its long extraterritorial reach and stand on holding companies accountable for acts of bribery from thirdparty service providers are yet to be tested, and nobody is quite sure how the law is going to be enforced. “Because of this, people are holding up their compliance standards to a very strict level,” says Yu of Assa Abloy. In the TrustLaw report, Hong Kong-based Baker & McKenzie dispute resolution partner Gary Seib singles out third-

party agents as one of the main challenges to firms when they put processes and procedures to prevent bribery in place. “It is consistent under the principles of guidance, and would require proper due diligence,” she says. Bad examples The first person to be convicted under the UK Bribery Act was jailed for three years on Nov. 18, 2011. Munir Patel, a court clerk who worked in London, had pleaded guilty to accepting £500 ($786) to “get rid” of speeding charges by keeping the details off a court database. “The sentencing demonstrates the significant sentences that the courts are willing to impose on individuals who commit an offence under the (Bribery) Act,” said London-based dispute resolution partner at Ashurst, Angela Pearson, while speaking to Reuters. “It is only a matter of time before the SFO (Serious Fraud Office) bares its teeth and prosecutes the first corporate or its directors under the Act. In the meantime, the business community collectively holds their breath.” Closer home, just before Patel’s sentencing on Nov. 10, 2011, China executed Luo Yaping – an official dubbed the “land granny” – after she was found guilty of having amassed 145 million yuan ($23 million) in bribes and illicit wealth. Luo was head of a land sub-bureau in a district of Fushun, a city in northeast China; not an especially high position. Despite this, she was able to use her power over land development and compensation to accumulate a fortune in bribes and embezzled compensation. A leader of the ruling Communist Party’s anti-corruption agency said Luo’s crime involved “the lowest ranked official, the biggest amount, and the most evil means”. On July 22, 2011, former China Mobile vice president Zhang Chunjiang was sentenced to death with a two-year reprieve for

In-house survey: compliance

accepting bribes. He was convicted of accepting more than $1.15 million in bribes between 1994 and 2005 while working at various state-owned telecommunication companies. The same week, two former vice mayors of Hangzhou and Suzhou, Xu Maiyong and Jiang Renjie, were executed for bribery. In 2009, 60-year old Chen Tonghai, former chairman of Sinopec, was also given the same sentence as Zhang for taking more than $2 million in bribes. Ex-food and drug safety chief Zheng Xiaoyu was executed in 2007 after a swift sentence that found him guilty of derelict duty and taking bribes worth 6.5 million yuan ($850,000) from eight companies. His execution marked China’s first death sentence imposition on an official of Zheng’s rank since 2000. This parade of examples demonstrates China’s increasingly rigorous efforts to root out corruption. Five years ago, many executives would not have thought twice about how their actions could be construed in terms of accepting or giving gifts, says a Shanghai-based Asia general counsel of a multinational company (MNC). “We are helping senior executives and senior leaders to realise that compliance is not just about protecting the company’s interests, but it’s about protecting them as individuals too,” he says. “Recently there have been many cases and whereas before it may have been difficult for them to buy into the concept, now they see people sitting in jail or being executed, so they really believe it.” Tone from the top The tone of the top management of companies with regard to compliance programmes and their involvement in championing the cause against corruption is crucial. Statements issued by several prosecuting agencies in the UK commenting on cases of bribery also pointed out that companies involved in such acts often had a culture of non-compliance, and lack proper procedures with the top management turning a blind eye to these issues. One of the principles that the guidance of the Bribery Act has identified is top-level commitment. Speaking on the

ASIAN LEGAL BUSINESS march 2012

subject, Seib says: “Compliance programmes will not be effective unless there is proper tone at the top. It is important that the senior management instill a culture within the organisation that bribery is never acceptable.” Senior level executives are now paying more attention to compliance, and realising their stake in the process. All in-house counsel surveyed agree they are adequately supported by their top-level management. “You have to scare them a bit,” says the Shanghai-based MNC general counsel. “But they do understand the seriousness of it, and definitely see how the corruption laws can go all the way up.” A China-based legal counsel at a European conglomerate emphasises that his superiors follow the tone of his company, and will act swiftly to keep its reputation untarnished. “Our principle is integrity and once we know a franchisor or an advisor is being corrupt, we will terminate the relationship without any hesitation,” he says. Hospitality and gift-giving Another major area of concern outlined in the TrustLaw report is hospitality; a common feature of building business relationships in Asia. According to Martin of Baker & McKenzie.Wong & Leow, the UK government has stated that reasonable promotional expenditure incurred to generate goodwill and in the context of business contacts should be acceptable. Although the UK Bribery Act has put the onus primarily on UK firms and individuals, Martin says that Asian companies will find themselves burdened to help their foreign partners avoid liability for bribery. They will do so by assisting them to establish the so-called “adequate procedures” defence if they were to continue with the commercial partnerships or arrangements. Martin says Asian companies will increasingly find that they will be expected to provide more information about themselves to their foreign partners, who might also ask for certain contractual undertakings with respect to the former’s conduct, to suitably comfort these partners. “There will be a lot more demand placed on them by not just UK firms, but also U.S. and other companies subject to the FCPA. Companies that have established international codes of conduct for doing business will also have higher expectations on Asian third parties,” Martin adds. Even seemingly innocuous actions will need to be tested and approved by legal officers of companies. In a 2009 case that shocked locals in Hong Kong, an employee from the construction company Brilliant Ray was sent to prison for two months for offering 15 boxes of mooncakes to police officers who had helped direct traffic around a project he had been working on. The mooncakes were offered just 11 days before the mid Autumn Moon Festival, when the delicacies are traditionally offered as gifts. Charged with violating Hong Kong’s Bribery Ordinance, the employee was sentenced by the city’s Independent Commission Against Corruption. Evidently, it is not just the UK Bribery Act and FCPA that companies need to be aware of. Yu says local regulations can be even tougher, pointing out India and China as examples. “We try to incorporate local relevant laws and regulations in policy as well,” she says.

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In-house survey: compliance

REUTERS/Bobby Yip

In this context, the in-house counsel of the European conglomerate says: “We impose an upper limit of value on any business gifts and enact a supervision and approval system.” The MNC Asia general counsel also confirms that his team goes through a list of typical “gifts”, and discusses each item to deem what is appropriate and what is not, and then conveys this to company members. “Where there are some grey areas or if someone is not sure, they need to approach us and we will make a judgment caseby-case,” he says. “We are sure to pass a clear message as there are definite black areas of actions you absolutely cannot do, and some things we cannot touch.” The Assa Abloy compliance team prefers a more pragmatic approach of telling its employees to use common sense and business judgment to determine what’s reasonable and culturally acceptable for gifts or entertainment. Yu says that her team is still in the middle of discussions about what constitutes a “reasonable amount”, but stresses the need to be practical. One item on the agenda for her team is possibly drafting up a list of approved restaurants to visit or entertain at. “Disclosure is very important,” she says. She encourages employees to write in as many details as possible when claiming expenses, such as where the expense was incurred, how many people were entertained, what was ordered, and what the purpose of the dinner was. Having these items on

record goes a long way in preventing malpractices. “The more we encourage people to disclose details and they know someone is watching them, the less likely it is for them to try something fraudulent,” she says. According to a recent Reuters report, U.S. law enforcement officials are pursuing several high-profile investigations, including one into whether Avon Products used bribes to win the first-ever license given by China to a Western company to sell products door-to-door. The Securities and Exchange Commission is also looking into Wynn Resorts’ $135 million donation to the University of Macau and its gaming licenses in the Chinese gambling hub. Suffice to say that in the light of the increased scrutiny from officials across the globe, Asia-based in-house lawyers will continue to wage war on corruption with more focused training and localised compliance programmes.

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Braving a bleak equity market PRC firms strive towards resilience

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he CSRC is considering passing on the rights of registration management to the Securities Association of China. China’s major brokerages too are lobbying the regulator to green light the launch of buyout funds, ease capital rules and give them more power in the marketing of and pricing of IPOs. “The reform presents a new regulatory thinking, and heralds a road map for China’s IPO market in the next five years,” says Wang Yi, a Shanghai-based partner at Jun He Law Offices. The new move is expected to speed up China’s IPO approvals process and shorten it to three months from six, Wang believes. “It will give more certainty to IPO applicants and their advisors,” he says. Meanwhile, PRC law firms are carefully studying other proposed aspects of the IPO market overhaul to ensure their capital markets offerings are in line with the new policy. To them, the key to smooth sailing is staying nimble and remaining resilient. “As a full-service firm, we have always tried to maintain a healthy balance of our capital markets work — we are handling a large amount of restructuring, M&As and PE (private equity) advisories now in addition to IPO matters,” says Zhao Xiaohong, a Shanghaibased partner at King & Wood.

REUTERS/Claro Cortes

Disclosure demands One of the reform’s focuses is market transparency. The CSRC published details of more than 500 IPO aspirants in January 2012 to expose them to public scrutiny. In fact, beginning from February 2012, the regulator has made the information of potential issuers, their underwriters and law firms public in weekly announcements. A glimpse of these listing applications has provided lawyers with valuable market data that can help them formulate their business strategies better. “Looking at hundreds of these listing applications, more than 40 percent of them are funded by VC (venture capital) and PE firms such as Sequoia Capital, Intel Capital and Jiuding Capital. It shows that the A-share market is still a favourable exit for PE investors,” says Wang Wei, a partner at Zhonglun W&D Law Firm. For many firms, the interconnectedness of their IPOs and PE teams has become more apparent as PE investors intensify their search for competitively-priced targets during the down cycle. This keeps lawyers busy with the due diligence work, and pairing cashstrapped PRC entrepreneurs with the right funders. Wang of Zhonglun W&D often comes to the aid of less experienced corporations and advises them on common pitfalls such as meeting the profit requirement when they receive their first round of funding from a PE investor. He also warns them of the risks of the valuation adjustment mechanism. As the CSRC maps out the reform blueprint, practitioners differ on the effectiveness of these measures to reinvigorate the sluggish equity capital market. Some believe the overhaul is a move towards the market-driven, disclosure-reliant model of U.S. bourses. “The reform will not be done overnight,” says Guo Kejun, a Beijing-based senior partner at Zhong Lun Law Firm. “I believe the CSRC will gradually lessen its approval power of IPOs and let the market regulate them instead.”

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ASIAN LEGAL BUSINESS march 2012

But Wang of Zhonglun W&D takes a different view. He believes the CSRC is aiming to relax the IPO approvals process in the long run, but will tighten regulatory oversight for listed companies in the meantime. Hence, more public companies will need to meet higher compliance requirements and seek advice from lawyers. “The added scrutiny may result in a drop in the IPO approval rate initially, but the higher hurdle for IPO entrants will play in the favour of first tier firms who are more careful in vetting high-quality clients,” says Wang of Jun He. His firm achieved a 100 percent approval rate for all of its IPO applications in 2011, and has 35 partners, who have served as members of the CSRC’s listing committee in the past, on board. For many firms, 2012 is the time to rework some of their clients’ IPOs that were stalled last year. Lawyers are required to update and resubmit their clients’ financial data so that these IPOs can receive the necessary regulatory clearances to come to the market when the timing is right. Protecting minority shareholders China’s securities watchdog has been vocal about busting insider trading and protecting the interests of minority shareholders, who make up 85 percent of China’s traders. In the first six months of

2011, the CSRC accepted 83 new cases of market malpractice, with 45 of them concerning insider dealings. China is poised to publish a precise definition of what constitutes insider trading and make it easier to punish the wrongdoers. According to an article published by the New Century magazine in February, China’s Supreme Court will soon make its interpretations, which allow the use of indirect evidence such as phone conversation recordings or text messages, public in order to nail insider trading. China’s High Court will also formulate the legal basis for insider trading victims to seek civil compensation. However, the report said the nation is unlikely to create a mechanism that supports class action lawsuits that are common in the U.S. The clampdown on insider dealing requires all public companies in China to set up records of their suppliers and contractors. Such a tedious task is likely to drive more public companies to outsource disclosure work. “In the past, only PRC companies dually listed at A- and H-share markets hired outside counsels to make disclosure announcements. But more and more PRC companies are following the international practice now,” says Wang of Jun He. Pricing going Dutch? To cool down overzealous IPO pricing that is a common feature in China, the Securities Times reported that the securities regulator may introduce the Dutch pricing system to replace the traditional allocation mechanism. The CSRC is also mulling increasing the IPO shares earmarked for institutional investors beyond the current 20 percent. In a rare move, the securities regulator also slashed the size of jumbo IPOs. China Communications Construction downsized its Shanghai IPO by 75 percent to five billion yuan ($793 million) in January, while Shaanxi Coal faces similar pressures from the regulator and has lowered its expectation to raise about 17.3 billion

Top 15 PRC legal advisors for all ECM issuers in China for 2011 Firms Grandall Law Firm AllBright Law Offices King & Wood Zhong Lun Law Firm Grandfield Law Offices Jingtian & Gongcheng Beijing Kang Da Law Firm Llinks Law Offices Tian Yin Law Firm Jun He Law Offices DeHeng Law Offices Jiayuan Law Firm Dacheng Law Offices Tianhe Law Firm JunZeJun Law Offices Commerce & Finance Law Offices Shu Jin Law Firm Subtotal with issuer advisor Subtotal without issuer advisor Industry total

No. of Issues 51 24 23 19 17 16 14 13 12 9 8 8 7 7 6 6 6 399 4 403

Rank 1 2 3 4 5 6 7 8 9 10 11* 11* 13* 13* 15* 15* 15*

Market Share 12.7 6 5.7 4.7 4.2 4 3.5 3.2 3 2.2 2 2 1.7 1.7 1.5 1.5 1.5 99 1 100

Proceeds amount and overallotment sold ($ mln) 6,348.1 2,664.1 4,719.2 1,987.2 2,496.7 2,767.7 1,479.3 1,754.1 1,182.4 2,257.4 704.8 3,183.8 874.7 653.6 757.9 1,959 527.8 69,364 623.2 69,987.2 (*): tie (Source: Thomson Reuters)

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Top 15 PRC legal advisors for IPO issuers in China for 2011 Firms Grandall Law Firm Zhong Lun Law Firm AllBright Law Offices Grandfield Law Offices King & Wood Jingtian & Gongcheng Llinks Law Offices Beijing Kangda Law Firm Tian Yin Law Firm Jun He Law Offices Dacheng Law Offices Chen & Co. Law Firm GF Law Firm Shu Jin Law Firm Anhui Chengyi Law Firm Beijing Junzhi Law Firm DeHeng Law Offices Guantao Law Firm Hunan Qiyuan Law Firm V&T Law Firm Tian Yuan Law Firm Subtotal with issuer advisor Subtotal without issuer advisor Industry total

No. of Issues 40 16 15 14 14 13 10 9 9 7 6 5 5 5 4 4 4 4 4 4 4 270 3 273

yuan, according to International Financing Review (IFR), a Thomson Reuters publication. Practitioners believe the CSRC wants to cap the fundraising target at 10 billion yuan, or even better, to stay below five billion yuan. “Such an initiative can prevent issuers from freezing a large amount of capital from the market,” says Jincheng Tongda & Neal (JT&N) Beijing partner Zheng Xiaodong. “The last thing it (CSRC) wants to see is money sitting in the banks. But it is still debatable whether this is indicative of a sustained policy approach.” A-share listings: Strong demand remains The secondary market may look weak, but it does not necessarily reflect the state of the primary market. “The pace of regulatory hearings and approvals of IPO applications have not slowed down. An IPO is still an attractive financing platform for many enterprises,” says Chen Wei, a partner at Llinks Law Offices in Shanghai. Many first-tier PRC firms that ALB interviewed reported a strong IPO pipeline as cash-hungry enterprises flocked to the domestic bourses to enjoy higher valuations. “The need for capital is always there,” says Zhao of King & Wood. Currently, more than 3,000 companies listed on the mainland’s bourses coupled with the financing platform fail to satisfy the huge funding needs of China’s enterprises - especially those in sectors that are in line with national development mandates, such as new materials, pharmaceuticals, biotech, green tech, retail, and agricultural technologies. The CSRC has shown signs of green lighting the listings of restaurant businesses, which was once discouraged for their poor

Rank 1 2 3 4* 4* 6 7 8* 8* 10 11* 12* 12* 12* 15* 15* 15* 15* 15* 15* 15*

Market Share 14.7 5.9 5.5 5.1 5.1 4.8 3.7 3.3 3.3 2.6 2.1 1.8 1.8 1.8 1.5 1.5 1.5 1.5 1.5 1.5 1.5 98.9 1.1 100

Proceeds amount and overallotment sold ($ mln) 4,774.2 1,749.7 1,728 2,136.8 2,615.8 2,343.4 1,439.5 811.1 913.9 1,435.9 439.2 1,367.3 365.9 472.9 462.7 761.3 239.8 284.6 497.3 389.5 824 41,007.9 486.3 41,494.3 (*): tie (Source: Thomson Reuters)

record keeping, says Wang of Zhonglun W&D. Listings of lenders at the city and provincial levels will also be more commonplace from now on. Prospectus writing In China’s competitive IPO advisory landscape, sponsors and auditors often take home the lion’s share of IPO commission fees. Therefore, legal professionals are calling for an industry change so that they can pen IPO prospectuses and create another stream of revenue — Zhong Lun’s lawyers even belted out their wishes with their revamped lyrics of L’internationale (see Sundries, pg. 48). Zheng of JT&N believes lawyers’ nononsense and vigilant approach will best serve the investment community. “Right now, lawyers only write a few chapters or issue legal opinions for IPO prospectuses,” he says. “If it’s written by lawyers, we will certainly refrain from using the promotional tone that is used by underwriters.” Delisting, relisting Since U.S.-listed PRC companies are tainted by the recent spate of accounting frauds

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ASIAN LEGAL BUSINESS march 2012

“The pace of regulatory hearings and approvals of IPO applications have not slowed down. An IPO is still an attractive financing platform for many enterprises.” Chen Wei, Llinks Law Offices

and corporate governance mishaps of their backdoor-listed counterparts, many of them are considering delisting or going private. Some of them are even seeking to relist in China or Hong Kong to enjoy higher valuations. “Many PRC companies realised that listing in the U.S. didn’t serve their purpose, since the cost of compliance is high and the PE valuation is comparatively lower. Many companies cannot meet their financing needs by floating in the U.S.,” says Guo of Zhong Lun. While some PRC companies have managed to delist from London’s Alternative Investment Market or the Singapore stock exchange and relist on the Hong Kong Stock Exchange, a test case for a successful relisting on the mainland bourses is yet to happen. Zhao of King & Wood points out that relisting back home is often easier said than done. She has advised clients who entertained the idea, but could not move forward with it. A common problem she found was that these overseas-listed PRC companies failed to comply with China’s current restriction that bars small and medium enterprises from listing abroad. “Some of them overlooked their original registrations of foreign capital and remittance when they ventured abroad,” she explains. “And these historical problems could not be remedied.” Dismantling red chip structures As more PRC companies seek to relist back home, lawyers are also seeing a spike in offshore-incorporated Chinese companies that want to be PRC-domiciled. “Being a locally listed company can enhance its corporate branding and help gain better public recognition,” explains Chen of Llinks. “This has proved to be useful in their tendering and procurement process in China.” To meet PRC listing requirements, these offshore entities have to dismantle their red chip structures. Ripping off their offshore holding framework is a complicated process

which requires lawyers to confront issues over foreign exchange, remittance and tax that are governed by various PRC regulators such as the National Development and Reform Commission, the PRC State Administration of Industry and Commerce, and the tax bureau. “This requires careful planning and liaison with various regulatory bodies. Only firms that have mastered it, and are knowledgeable about the inner workings of these authorities can do it right,” says Chen. His firm has performed such corporate structure overhauls for more than 10 companies.

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“Right now, lawyers only write a few chapters or issue legal opinions for IPO prospectuses. If these are written by lawyers, we will certainly refrain from using the promotional tone that is used by underwriters.” Zheng Xiaodong, Jincheng Tongda & Neal

Surge in M&As The down market may have suppressed valuation, but it has spurred on cash-rich Chinese companies to shop for attractive targets and move up the value chain. “To put it simply, China’s M&A market has been red hot,” says Chen. His team advised on the Wanhua Group’s 1.3 billion euros ($1.66 billion) takeover of Hungarian chemicals maker BorsodChem in the summer of 2011. Similarly, King & Wood advised on one of the largest Sino-Austrian deals to date. The firm acted for the Wolong Group’s 100 million REUTERS/Bobby Yip

euros ($138 million) acquisition of insolvent Austrian electric motor manufacturer ATB in October, 2011. Restructuring needs rise As the valuation of stocks returns to a more reasonable level, more PRC conglomerates are seizing the chance to buy back their shares and reorganise their subsidiaries. In the fall of 2011, Llinks, Grandall and Jun He advised on China’s first asset restructuring and subsequent listing of a new media giant. This was a result of the share swap of the Shanghai Media and Entertainment Group Co (the SMG) and the restructuring of SVA Information Industry (SVA). SMG bought a 37 percent stake of SVA for 1.9 billion yuan ($287 million) and the latter acquired SMG’s subsidiaries BesTV and Shanghai Radio, Film & TV Production Co for 1.2 billion yuan. The landmark merger of radio, television, telecommunications and Internet networks also saw the combination of IPTV and Mobile TV. “Restructuring is a less competitive area. It requires expertise in M&A and capital markets work,” says Wang of Jun He, who finds that his team has seen an increase in restructuring mandates which balances out the drop in IPO work. Other law firms too are helping their clients streamline their corporate structures. King & Wood’s Zhao has been advising on the restructuring of China’s largest hotel operator Shanghai Jin Jiang International Hotels (Group) Co since last year. She is helping the Hong Kong-listed conglomerate to better manage its resources and assets in its portfolio after it acquired the NYSE-listed Interstate Hotels & Resorts in 2010. Despite the ups and downs in the equity market, professional advisory is often most treasured during times of crisis. “In a bear market, clients are more concerned about reining in risks in their transactions and will appreciate our advice on such matters,” says Zhao.

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ASIAN LEGAL BUSINESS march 2012

Singapore

Cheer despite the slowdown The economic growth may be slow, and the forecasts may be negative, but not everything is doom and gloom in Singapore. M&A work, while having declined somewhat, is still fairly robust, arbitration is moving ahead in leaps and bounds, banking and finance is seeing the country benefit from the woes of the West and Singapore is emerging as one of Asiaâ&#x20AC;&#x2122;s major entertainment hubs, providing much to savour for the legal community, finds Ranajit Dam

ith the global financial outlook continuing to look uncertain, it is no surprise that the Singapore economy has been slow-moving as well. In the third quarter of 2011, the last quarter for which statistics are available, domestic economic activity rose modestly; at the same time, key industries like electronics continued to contract alongside global economic demand. As the Eurozone crisis simmers, and the U.S. economy seems stuck in second gear, Singapore can look ahead to slower growth amid a downturn in external demand. According to the Monetary Authority of Singapore (MAS), the countryâ&#x20AC;&#x2122;s economic growth for 2012 is expected to be between 1 and 3 percent, with traderelated sectors likely to face significant headwinds over the next few quarters. From a law firmâ&#x20AC;&#x2122;s perspective, work is declining in some cases as a result of the slowing economy, and firms are feeling the pinch, the least of which is not the continuing downward pressure on fees.

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“Singapore is increasingly recognised in addition to Hong Kong – and overtaking Tokyo – as a thriving international finance centre for South and Southeast Asia, and a necessary second limb to any Asian strategy for international business not just for western MNCs, but for private equity – both the international houses and local ones – and for Asia's own multinationals.” Andrew Martin, Baker & McKenzie.Wong & Leow

REUTERS/Tim Chong

Singapore currently has 100 foreign law firms involved in a variety of structures – joint law ventures, law alliances, QFLPs and so on – to go with the myriad local practices. Competition is understandably intense, as investors look to exploit the potential of the ASEAN region and India. But despite the negative forecasts, Singapore isn’t all gloom and doom. M&A work, while having declined somewhat, is still fairly robust, arbitration is moving ahead in leaps and bounds, banking and finance is seeing the country benefit from the woes of the West, aviation is seeing the rise of the low-cost carriers, and Singapore is emerging as one of Asia’s major entertainment hubs.

Corporate/M&A: Cautious optimism Two important developments looming ahead for Singapore include an overhaul of the Companies Act, which last saw a total revamp back in 2005, and proposed amendments to the Singapore Code on Takeovers and Mergers, as the country looks to keep pace with market innovations and international practices. While the Companies Act is expected to be overhauled in 2013, the amendments to the takeover code are could take effect sometime early this year. “We expect to see a number of changes being brought about by the amendments,” says Andrew Ang, partner at WongPartnership. “For example, it will alter the existing financial assistance rules, close the gap for compulsory acquisitions, and also bring changes to procedures for schemes and amalgamations under the code.” Ang adds that the code will be “good for some, bad for others,” and says that as it will be more difficult to squeeze out minority shareholders in an acquisition, he expects a number of M&As to happen quickly before the amendments come into play. Martin from Baker & McKenzie.Wong & Leow calls the ground rules of the takeovers code and the listing manual “well understood and encouraging.” “We note recent signs of greater flexibility on the part of the regulators, in line with international standards, regarding certain areas such as the tricky issue of special deal arrangements on takeovers,” he says. However, for many law firms in Singapore, a lot of the work has been cross border and multijurisdictional, with a focus on emerging markets like China, Indonesia and India. Ang says that more than half of his work in 2011 was related to China, particularly the delisting of Chinese companies listed on the Singapore Exchange (SGX) or S-chips, which are headed back to China and Hong Kong for relisting on the exchanges there. “I expect this to continue until all the S-chips are gone,” he says. “Good S-chips,” says Ang, or the ones with high PE ratios, are moving to Hong Kong as they find better value there

Special report than from the SGX. The ”bad S-chips,” on the other hand, are being forced out following corporate scandals involving embezzlement, forgery, accounting fraud and the like. Ng Wai King, also a partner at WongPartnership, says he has seen a sizeable amount of work come from Japanese acquisitions in Southeast Asia. Martin concurs. “In terms of acquirers, the Chinese and Japanese strategic acquirers have been very active,” he says. “For the Chinese entities, a lot of the focus has been on resources. For the Japanese, their focus is more across the board, especially food and beverage, but also financial services, principally insurance.” In terms of how deals are put together, Martin says that there is a lot more stress on due diligence, especially on compliance issues including antitrust and anti-corruption. Ang says that the market has evolved and become more sophisticated, with the introduction of what he calls a “PE approach to deals with unique structures.” Ng says that clients have become more discerning, asking for specialised lawyers to work on transactions. “Three years ago, the same lawyer may have been working on different aspects of a transaction,” he says. “These days, clients will ask for lawyers with different specialisations, such that a deal can be divided into different work streams with specialist lawyers working on each part.” Overall, the M&A picture has looked a bit bleak for the past year, and this is expected to continue into the first quarter of 2012 at least. “Partly because of the intensity of the competition, partly because of the shortage of real quality assets in emerging markets, and in part because of caution about the integrity of targets and the broader macro environmental uncertainty which has stifled some of the traditional sources of bank credit, we are still short of where we were in terms of M&A activity levels pre-GFC,” says Martin of Baker & McKenzie.Wong & Leow. Ng of WongPartnership says he remains optimistic even in difficult times. “The Eurozone crisis has made it difficult for a number of M&A transactions, particularly with respect to financing,” he says. “The crisis will continue to have an impact on deal volume and deal value in Asia”. That said, he notes that the firm has made a “pretty good start” in 2012, given deals that have been signed up in January and existing corporate/M&A work in the pipeline. Firms remain hopeful for the year ahead. Ng and Ang say they are “cautiously optimistic,” noting that in difficult times, M&A deals still take place, as there are a number of distressed assets available. Martin says that he is “quietly confident” for 2012 and beyond. “The macroeconomic picture may be one of uncertainty from which Singapore and the rest of Asia is not insulated, but there are areas of opportunity,” he says. “The depressed public markets raise prospects of ‘take private’ transactions, and so we expect to see several of these.” Arbitration: Singapore comes into prominence As reported in ALB’s December issue, Singapore is now seriously

ASIAN LEGAL BUSINESS march 2012

vying with Hong Kong to become Asia’s premier arbitration hub and this, says Chong Yee Leong, partner at Rajah & Tann, is no accident. “This has come about… as a result of the concerted efforts made by the Singapore government, judiciary, and the whole legal and arbitration industry over the last few years,” he says. But circumstances are also playing their part. “The current economic lassitude is leading to disputes stemming from failed transactions, deals and investments going awry,” says Randolph Khoo, director at Drew & Napier. “The extent of foreign investment into Asia has also led to the internationalisation of arbitral disputes being resolved in Singapore.” The numbers show that arbitration is certainly on the up: The Singapore International Arbitration (SIAC) Annual Report for 2010 said that SIAC arbitral filings had risen for the 10th consecutive year. Interestingly, a significant number of cases heard in the island state involved parties and matters that have no connection with Singapore, including matters from far-flung jurisdictions such as Iran, Cyprus and the UAE. “[Their] choice is driven mainly by Singapore's reputation for transparency, integrity and efficiency,” says Davinder Singh, CEO of Drew & Napier. India and Greater China contribute the bulk of international arbitration at the SIAC, with Southeast Asia (in particular, Indonesia) featuring prominently, notes Chong. There has been a spike in the number of arbitrations originating from the Indian subcontinent; the number of cases involving at least one Indian party at the SIAC has gone up by nearly 200 percent in the past two years. Not surprisingly, Singapore is beginning to attract law firms with the amount of business on offer. “In addition to the local Singapore practices, there are currently over 100 foreign law firms located in Singapore, many of which have arbitration practices to service the industry,” says Chong, pointing that the last couple of years have

“The current economic lassitude is leading to disputes stemming from failed transactions, deals and investments going awry… The extent of foreign investment into Asia has also led to the internationalisation of arbitral disputes being resolved in Singapore.” Randolph Khoo, Drew & Napier

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seen the arrival of new global entrants to Singapore like Bankside Chambers and Nabarro, and also specialist arbitration firms such as Hanotiau & van den Berg. Additionally, local Singapore law firms are fast gaining recognition as world players in arbitration. “At the same time as the landscape here is being liberalised to allow greater participation of foreigners in the corporate and dispute resolution spaces, Singapore lawyers are increasingly involved in cross-border work and are being seen in international arbitrations seated elsewhere,” says Singh. One of the ways in which the approach of Singapore firms to arbitration has changed of late is an increased emphasis on specialisation. “Rajah & Tann’s approach to arbitration has qualitatively moved to focus on high-yield, complex arbitration covering larger claims,” says Chong. “A major factor behind this approach has been the increase in client demand for specialised legal advice in industries such as oil and gas, telecommunications, power and energy, infrastructure development, and process engineering.” Singh says that because some of Drew & Napier’s cases involve esoteric issues, it has required the firm to “acquire indepth knowledge on the latest developments in the fields of bilateral investment treaties, international law, and technology.” Looking ahead, Singapore can expect to see the amount of arbitration growing. “With an economic slowdown predicted in Europe cast against the broader shift in economic influence from the West to the East, steady economic growth in mainland and maritime Southeast Asian jurisdictions is

likely to represent an increase in arbitration work for… all international arbitration practices in Singapore,” says Chong. Singh of Drew & Napier, who notes that the continuing global slowdown will result in more parties being “prepared to fight,” says that the bulk of the work will likely continue to come from Asia, in particular India, Indonesia, China and Vietnam. Projects and energy: A surprisingly busy year For a country that possesses a particularly well-developed energy and infrastructure sector, 2011 was a notable year for the number of major projects and financings that achieved key milestones in Singapore, say David Platt, project finance partner, and Ajoy Halder, senior associate at Pinsent Masons MPillay. The year’s biggest project finance deal was executed in May, when Jurong Aromatics Corp signed a S$2 billion ($1.57 billion) package to finance its Singapore petrochemical plant. In July, GMR Energy secured a limited recourse term-loan facility of $549.7 million, and a credit and working capital facility of $270 million for its 800 MW Island Power project, one of the largest independent power projects in Singapore. A consortium consisting of Siemens and Samsung will design and build the plant, which is expected to become operational in 2013. Meanwhile, in the water sector, Hyflux was awarded a contract in March to develop the S$890 million Tuas II desalination plant – Hyflux’s biggest project – and in early July, Sembcorp started construction on a $40 million integrated wastewater treatment plant in Jurong Island. In the energy sector, Singapore-based electricity provider SP PowerGrid started the tendering process for the construction of two multibillion dollar underground cable tunnels. Finally, in the transport sector, the Singapore Land Transport Authority has awarded contracts over the last year for the development of the 21 km Downtown Line Stage, the final and longest section of the 42 km Downtown Line. Around 12 contracts with a combined value of about $2 billion were awarded to 12 companies. With most projects and energy lawyers in Singapore handling work from around the region, 2011 has also been a busy year for countries like Indonesia and Vietnam, say Platt and Halder. Vietnam has seen progress in its infrastructure sector with the successful financing of AES' Mong Duong power project. “However, the boost that investors

Special report hoped this would give to private sector infrastructure development in Vietnam has not yet happened,” they say. “Uncertainties over the economic situation, and government concerns as to the level and nature of guarantees needed to support projects still persist.” On the other hand, the Indonesian government continues to be a strong supporter of infrastructure development. In May 2011, it launched the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development between 2011 and 2015. Around the same time, it also announced plans for 17 new projects (including infrastructure) across four provinces, with the total cost estimated at $21 billion. “In Indonesia, there is always a concern that the announcement of projects is not always followed by the implementation,” say Platt and Halder, “but this year, there are positive signs that indicate some real activity is possible in 2012.” One of the biggest energy projects, the Central Java Power Plant, in Indonesia was awarded in 2011 by the state-owned electricity firm, Perusahaan Listrik Negara, to a consortium consisting of JPower, Itochu and Adaro. The consortium will develop a 2x1000 MW power plant in Central Java at an estimated cost of $3.48 billion. The project is notable for two reasons: Firstly, it is the first project effected under Indonesia's publicprivate-partnership (PPP) law, and there are indications that future projects in both the power and other (for example, transport and water) sectors will be implemented next year. Secondly, it is the first project to enjoy the Indonesia Infrastructure Guarantee Fund’s support and guarantee, representing a major improvement in terms of clarity and transparency on the previous guarantee regime. The further development of the PPP model, say Platt and Halder, is possibly the most significant trend in the projects and energy sector around the region. “This may seem at first to be a strange statement as far fewer PPP projects have been announced than hoped for in 2011,” they say. “However, there are indications that, in the Philippines and Indonesia particularly, progress is being made in the capacity building that is a necessary first step to implementation of projects. Most participants are hoping that after the false starts we have seen in 2011, there will be some real progress in 2012.” Looking ahead to 2012, they say that an inevitable lull is expected in construction activity in Singapore, particularly given the number of public and private projects effected over the last two years, with construction expected to recover in late 2012. “The primary reasons for the expected growth in construction activity in 2012 are execution of several large-scale commercial construction contracts in 2011, the ongoing attempt by the government to boost supply of affordable housing for Singaporeans, and the completion of tendering process for most of the railway contracts,” say Halder and Platt. Meanwhile Indonesia, with its newly minted investment grade status, is expected to be a significant help in developing infrastructure investment. “More generally, the need for infrastructure (transport and energy in particular) is becoming more and more obvious around the region, and the pressure on governments to actually deliver projects is likely to increase,” they add. “Given this, guarded optimism seems to be the order of the day.” Banking and finance: Overseas woes bring benefits With U.S. and European banks mired in troubles, there has been a significant increase in regional banking transactions, with Singaporean banks benefiting from their troubles, says Susan Kong, director at Stamford Law Corporation. “More international loans and capital market transactions are now being denominated in Singapore dollars,” she says. “Previously, they were in other more international currencies like the U.S. dollar, or borrower’s or issuer’s domestic

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currency. This has happened in part due to the credit crunch in other parts of the world, and the liquidity of Singapore dollars.” Kong adds that she has seen a continued development in the wealth management space amid tightened regulatory controls and licensing requirements for professionals rendering financial advice and/or managing funds. From a professional firm’s perspective, with the introduction of the QFLPs, there is now stiffer competition for work in the Singapore-law-governed banking and finance space, says Kong. “Also, we see many mid and junior banking and finance lawyers leaving large Singapore firms to join foreign firms,” she adds. The proposed merger of Allen & Gledhill and Allen & Overy is also looking like it will complicate things. “The larger Singapore firms in the Tier 1 and Tier 2 space will be watching it closely, and will be under pressure to either find a partner firm to merge or collaborate with,” she says. “This merger is perceived to have the effect of putting pressure on these Singapore firms to compete for the Tier 1 and Tier 2 work, and poses great challenges for talent retention and recruitment.” Additionally, she says that she expects to see more fragmentation in the market, with some firms undertaking small local “vanilla” transactions, other firms undertaking such transactions and some larger domestic real estate driven transactions, and the rest undertaking large capital market transactions and regional transactions. Despite these pressures, she expects to see healthy growth in the banking and finance space as “Singapore becomes increasingly successful as a significant international financial center and is well-poised to take advantage of the growth in Asia.” Yu-En Ong, Singapore-based partner at Norton Rose, says that he expects to see some banks downing shutters in the country. “Singapore is a major financial centre with many Asian and international banks having a presence,” he says. “Any bank that wanted to establish a presence is already here. This year, we anticipate there to be some consolidation in the banking and finance sector, and even one or two banks exiting from the country.” Intellectual property: ADR comes into focus Among the significant developments in the intellectual property (IP) space in recent times, has been the boost to alternative dispute resolution (ADR) infrastructure

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“The larger Singapore firms in the Tier 1 and Tier 2 space will be watching the proposed merger of Allen & Gledhill and Allen & Overy closely, and will be under pressure to either find a partner firm to merge or collaborate with. This merger is perceived to have the effect of putting pressure on these Singapore firms to compete for the Tier 1 and Tier 2 work, and poses great challenges for talent retention and recruitment.” Susan Kong, Stamford Law Corporation

for IP conflicts in Singapore by way of the introduction of a joint dispute resolution procedure framework between the Intellectual Property Office of Singapore and the WIPO Arbitration and Mediation Centre (WIPO Centre) in 2011. “The procedure, which is expected to be available from early 2012, enables IP disputes to be resolved through mediation which is administered by the WIPO Centre in Singapore,” says Yvonne Tang, director in Drew & Napier’s intellectual property department. Tang says she has found more parties prepared to turn to the courts to resolve their IP disputes, and local courts signaling a willingness to depart from the UK approach in trademark infringement matters. For example, she says, in the Polo/Lauren Co v Shop-In Department Store case, the Singapore Court of Appeal, while adopting the “threestep” test in British Sugar v James Robertson & Sons, made clear the fact that a sign is similar to a registered mark does not automatically mean that there will be a likelihood of confusion. It also held that the court is entitled to look outside the mark and the sign, as well as the articles, to assess whether a likelihood of confusion exists. “This approach was followed or referred to in notable subsequent cases,” says Tang, citing as examples MiTac International v Singapore Telecommunications, City Chain Stores v Louis Vuitton, and Ferrero SpA v Sarika Connoisseur Cafe. Tang notes that ADR options and recent developments in local case law have become increasingly important in her firm's approach towards IP conflicts. “We can expect the alternative dispute resolution scene to gradually shape up, and play an increasingly important role in IP conflicts over the next one to two years,” she says. Shipping: A perfect storm While it is obvious that the shipping markets are in a fairly difficult state, what has surprised industry watchers is just how bad it is. “It’s obvious that this is a tough market,” says Martin Green, managing partner of Stephenson Harwood’s Singapore office. But this downturn is unlike any other. Unusually, both lenders and borrowers are facing problems - banks in accessing funding, and shipping companies in creating value from the loans they’ve taken.” The upshot, he says, is that there is bad news on the horizon. “Quite a few substantial shipping companies are having problems,” he says. “I foresee trouble ahead in 2012.” A consequence of this market, he says, is an increase in the amount of restructuring and enforcement work. “There’s a far greater requirement for enforcement of security,” says Green. It has been a

similar experience for Goh Mei Lin, partner at Watson Farley Williams’ Asia Practice. “There has been a marked decrease in predelivery (construction) financing of ships, and a marked increase in the number of restructurings and enforcements over the last 12 months or so, which is another area in which we have been actively involved,” she says. “We were, and are, involved in the majority of ship arrests undertaken by banks in Singapore.” Goh adds that with access to commercial bank funded transactions being tightened, there has been a significant increase in the number of ECA-backed ship finance transactions, particularly SINOSURE and K-SURE transactions. Hard times have meant that an increasing number of borrowers are now approaching courts in order to seek protection from creditors. Green from Stephenson Harwood says that one avenue is attracting increasing attention: U.S. courts. A verdict won last year by Netherlands-based global maritime shipping company Marco Polo Seatrade in the Southern District of New York showed that U.S. Chapter 11 proceedings were a viable restructuring strategy for international shipping companies, as long as they had the minimal connections needed to satisfy U.S. jurisdictional requirements, and confirmed that U.S. bankruptcy courts would maintain jurisdiction over foreign debtors as long as the Chapter 11 filings were made in good faith and with the intention to properly reorganise the business. “Since much of the shipping business is a U.S. dollar business, I think we will see more local shipping companies seeking recourse to U.S. courts now,” says Green. Looking ahead, Green sees the trend of enforcement and restructuring work continuing. At the same time, he says, banks

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will continue to lend in order to make loans to cover loans that have been repaid or otherwise recovered. “However, they will be a lot more selective about it,” he says. Goh expects about a year or more of pain before things begin to look up. “The continued tightening in the banking market, the still-challenging shipping market, and the fact that many companies no longer have the cash reserves which they had two or three years ago will make the next 12 to 18 months a difficult period. But with it come opportunities, and from this we anticipate a consolidation cycle occurring over the next 12 to 24 months,” she says. “Given our experience and expertise in the corporate, commercial, finance and dispute resolution areas within the maritime and aviation sectors, we are well placed to help the borrowers, lessors, lessees and the banks, and financial institutions through this challenging period.” Aviation: Budget carriers buck turbulence Much like the global economy, the world aviation industry has been facing turbulence of late. According to Paul Ng, partner and global head of aviation at Stephenson Harwood, the reasons are numerous. For one, new lending practices introduced under Basel III regulations, some of which will be enforced as early as 2013, will increase the cost of funding for banks, and whilst not specifically targeted at the aviation industry, is expected to be passed to borrowers (such as airlines) through increase in pricing of their loans. Aircraft flying into and out of European airspace began to be subject to the EU Emissions Trading Scheme from January, potentially increasing operating costs greatly, and a number of countries are talking about bringing into force retaliatory measures. Finally, under the 2011 OECD Aircraft Sector Understanding (ASU), the cost of export credit (ECA financing) has increased. ECA financing has become one of the backbone sources of financial support for the industry, and as the cost of such funds, in some cases, have doubled, industry players may be forced to seek cheaper financing in an already liquidity-scarce environment. This has contributed to a period of belt-tightening in the aviation industry, says Ng. Over the course of last year, quite a few aircraft lessors have also been going through a phase of divestment of their fleet; these include ILFC, Macquarie and the aircraft finance arm of RBS. This shortage of funds, says Mehraab Nazir, partner at Watson Farley Williams’ Asia Practice, is leading to more borrowers seeking funding from capital markets, and equity from third party funds. Nazir adds that the number of Japanese operating lease transactions has also been increasing. Assets covered by the Japanese operating leases include both aircraft, and an increase in the use of Japanese operating leases for container box transactions. There are also an increased number of private equity, junior debt, and mezzanine finance players and products available in the market. Ng says that the silver lining in the industry has come from low-cost carriers, especially regional low-cost carriers like Lion Air, AirAsia, Cebu Pacific and Indigo. “These airlines have the steepest growth trajectory at the moment,” he says. With profits continuing to grow – AirAsia made $500 million in 2010 – they are targeting corporate customers now by introducing business class seats and other perks. “Budget carriers are now established brands,” says Ng. “They are the ones who need capital now; they are the ones who the market arguably have the most confidence in. It is no surprise that the investors are circling.” Media and entertainment: A new level of excitement With Singapore growing in prominence as an Asian entertainment hub, financing opportunities for its entertainment industry have increased correspondingly. Samuel Seow, managing director of

Samuel Seow Law Corporation, says that Singapore’s Media Development Authority’s (MDA) recent announcements of new funding schemes have “sparked a new level of excitement in the entertainment industry in Singapore, and indeed, worldwide.” He adds that these should have the effect of renewing interest in Singapore as a fastdeveloping entertainment base. In October 2011, the 46 assistance schemes previously made available by the MDA were streamlined to just five, with a $88 million budget being set aside for these five schemes, all of which were open to the seven sectors of the media industry namely animation, broadcast, film, interactive media, music and publishing. Seow says that a key change in these new financing schemes is that MDA will no longer seek to own a share in funded projects, and companies under the schemes can own all rights to their works. “The regime has changed from one of ‘investment’ into ‘grants,” he says. “As much as the new found freedom is welcome, it also brings with it the responsibility of ensuring that companies develop their own expertise in the protection and exploitation of their intellectual property around the world, without the formidable shadow of the government funding body looking over them in protection.” Seow adds that he

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believes the new grant scheme will allow enterprises to build on their capabilities, and develop competitive advantages for long-term growth. Another development is that funding is now available to any company incorporated in Singapore, with the previous requirement of a minimum percentage of local shareholding being removed from the funding criteria. “This could have the effect of attracting even more international entertainment businesses to set up a base in Singapore for the financing opportunities,” says Seow. Seow adds that international cooperation between Singapore and other countries will lead to the creation of new work for consumption worldwide. “Singapore has signed many co-production treaties with other countries, including Australia, Canada, New Zealand and China,” he says. “However, few official co-productions have been completed and exploited under these treaties. It is anticipated that there will be increasing pressure to use these coproduction treaties in the coming years.” Seow’s firm has worked on Bait 3D, an upcoming horror film that is the first Singapore-Australia 3D co-production, and he says he believes this film could provide Singapore’s film industry a shot in the arm. In a similar vein, the partnering of the MDA and Singapore’s Cybersports and Online Gaming Association with China Information Broadcast Network has allowed Singapore produced games access into the Chinese market, which consists of an estimated 60 million gamers, says Seow. Looking ahead, he says that with international heavyweights turning their eyes to the region, as well as substantial government support in the form of funding and partnership platforms for local businesses to reach a regional and international audience, the media and entertainment industry should “grow more outward looking for its local players to become more mature in their negotiations and approaches to intellectual property.” “We are heartened by the tremendous growth in the industry within the region in the last few years, and anticipate sustainable future growth,” he adds. “The development of sound stages in Mediapolis in Singapore and Pinewood Iskandar Malaysia Studios in Malaysia is set to further establish the region’s significance in the global media and entertainment market.”

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UK Report Pinsent Masons, McGrigors step up merger plans UK law firm Pinsent Masons and Scottish firm McGrigors recently announced their previously agreed upon merger. The combined firm will have a reported turnover of more than £280 million ($442 million), and will employ more than 1,500 lawyers. The new firm will operate under the Pinsent Masons name, and will have four offices within the Asia-Pacific region. Offices in France and Germany are slated to open by the end of 2012. News of this latest merger, which will create a firm that is close to the Silver Circle within the UK, comes after related merger talks between two other firms, DWF and Cobbetts, broke down. Linklaters MP vote needs full partner meeting Managing partner of global law firm Linklaters, Simon Davies, failed to secure the required electronic voting numbers to declare his successful reelection. He will now have to wait until a full partnership meeting in April. Local media sources reported claims that the partnership restructuring underway at the Magic Circle firm had impacted the voting, which could mean that the partners will now have to ratify the appointment at the meeting. At the time this news was reported, Simon Davies was the only candidate who had been put forward for the position. Davies has been the firm’s managing partner since Jan. 1, 2007. Norton Rose confirms Parish as chairman Stephen Parish has been re-elected as the chairman of international law firm Norton Rose, and is scheduled to start his second three-year term on May 1. Parish was the firm’s former global banking head, and he succeeded the firm’s first ever chair, Paul Giles. Giles held the role for six years after it was created in 2002. The newly elected chairman has announced that his focus during his second term will be on growing the Norton Rose business, and on promoting cross referrals around the 43 offices in the firm’s network in particular. Parish will also continue to advance internal staff initiatives, including working on a diversity committee.

ROUND UP Herbert Smith and Linklaters have recently been named as the advisers for Vodafone’s takeover of multinational telecommunications company Cable and Wireless Worldwide (CWW). Herbert Smith is advising CWW, while Linklaters is advising Vodafone on the potential bid. Berwin Leighton Paisner plans to vote on the sale of Lawyers on Demand, its spin-off freelance legal resource service. The firm is expected to retain an 80 percent stake in the business, which posted a £5 million turnover in 2010 and 2011. In the wake of the Linklaters shake up, international law firm Simmons & Simmons is also set to restructure its partnership in an effort to boost profitability. Around 12 equity partners are expected to be asked to leave, step down from equity, or receive formal warnings for underperformance. Linklaters announced a retention rate of 86 percent for spring 2012. In late January, Allen & Overy, Clifford Chance and Freshfields Bruckhaus Deringer also announced that they were retaining 89 percent, 76 percent and 89 percent of their workforce respectively. Simmons & Simmons, on its part, posted a significantly lower retention rate for its trainees. The firm made offers to six out of eight of its trainees. However, only two accepted the offer which made the retention rate fall to just 25 percent; down from a comfortable 80 percent in spring 2011.

U.S. Report U.S. law firm results show “sustained recovery” possible The top 100 U.S. law firms have reported growth across the board, despite the issues plaguing the troubled euro zone and political grandstanding over the state of the U.S. economy, which led to a more difficult second half in 2011. The standout success so far has been Arnold & Porter, which reported a revenue increase from $555 million to $639.5 million, a 15.2 percent hike. Profits per equity partner (PEP) rose considerably more; from $1.12 million to $1.4 million, a 25.4 percent rise. The firm’s net income also rose by 27.4 percent, reaching $304.5 million. While the overall increase wasn’t as significant as Arnold & Porter, Latham & Watkins saw an 11.6 percent rise in revenue, and reached a record $2.15 billion. PEP rose 13.8 percent bringing it into line with its 2007 figure of $2.27 million. Among those who achieved the strongest growths is DLA Piper, which could be set to establish itself as the world’s largest practice by revenue, according to media reports in (the firm maintains separate profit pools for the U.S. and the rest of the world). It managed to grow revenue by 14.6 percent to reach $2.25 billion. Other notable increases include Kirkland & Ellis which saw an 8 percent revenue rise. But PEP for the firm rose by 23 percent off the back of the firm’s ambitious 2011 lateral hiring. The firm is now in the elite group of firms with partner profits above $3 million. Following on from Arnold & Porter, DLA Piper and Kirkland & Ellis, Sidley Austin and Weil Gotshal & Manges rounded out the top five firms that have released revenue figures, with revenue increases of 5.6 percent and 4 percent respectively. DLA Piper fixed-fee venture takes shape Law Vest, the DLA Piper-backed legal venture, which offers a team of solicitors and barristers to do high volume, fixed-fee work, recently unveiled its new business model and plans. Law Vest is set to offer a range of services including commoditised work, including small debt collection, remortgaging and low value litigation. According to reports, DLA Piper intends to use the service to funnel lowvalue, high-volume work from existing clients. The company will operate as an alternative business structure with Law Vest as the name of the parent holding company – much the same as Australian law firm Slater & Gordon will operate in the UK following its recent acquisition of a boutique UK firm.

ROUND UP Full-service law firm Debevoise & Plimpton has also seen its 2011 revenue results increase, thanks to its involvement in several notable M&A deals, and a number of Russian deals. Turnover increased 2.8 percent, hitting $615.5 million. Profit per equity partner was stable at $2.08 million, but revenue per lawyer rose 7.2 percent to reach $1.05 million. Global law firm Bingham McCutchen saw its London office revenue increase by 14 percent during 2011, well outpacing the performance of its other international offices. The London office posted a revenue of $49.1 million; a rise from $43.2 million in 2010. Firmwide, the story wasn’t as positive owing to a marginal dip in fee income, which ended 15 consecutive years of growth. K&L Gates and Paul, Weiss, Rifkind, Wharton & Garrison are recently named as the lead advisors on Grupo Elektra’s takeover of U.S. payday lender Advance America. Grupo Elektra is owned by Mexican billionaire Ricardo Salinas Pliego. Paul, Weiss, which is advising Group Elektra, has also represented Pliego in his capacity as chairman of Mexican broadcaster TV Azteca, a Mexican multimedia conglomerate owned by Grupo Salinas. International law firm Winston & Strawn recently hired Andrei Yakovlev from Norton Rose as partner, for its London and Moscow offices. Yakovlev is a U.S., UK and Russia qualified corporate finance lawyer, and used to split his time between Moscow and London when he was working with Norton Rose. Yakovlev is the fourth partner to leave the London-headquartered firm for a U.S. one in as many months.