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©The Edge Daily (Used by permission)
by Sharon Tan

PETALING JAYA: The RM50 billion Asian legal services market is inspiring Malaysian law firms to spread its wings abroad, as the prospects are too lucrative to ignore.

Two weeks ago, the country’s largest law firm Zaid Ibrahim & Co teamed up with Singapore-based Allen & Gledhill LLP in a strategic alliance to create a pan-Asean legal solution provider.

Although not the first in the country to do so, it has sparked interesting discussions. The alliance between Zaid Ibrahim & Co and Allen & Gledhill LLP is merely another step to turn it into a serious player in the Asean legal market.

Zaid Ibrahim already has offices in Bangkok, Jakarta and Singapore. Vietnam is its next destination, which will likely be a very lucrative one considering that many Malaysian and Singaporean businesses have relocated or are moving there.

Bar Council secretary Lim Chee Wee said that more Malaysian firms especially the big ones were set to follow suit.

“The bigger firms are looking at who else they can form alliances with. The Bar Council is supportive of this. They should go out as it is in the better interest of the members,” Lim said.

He said that the market for Malaysian firms was in Asean, especially Indochina. “There are many Malaysian companies there and there are opportunities for our law firms.

“Another place to go to is the Middle East. We have the Islamic finance competitive advantage over other foreign firms. In fact, the Malaysian legal profession is a talent pool for international firms to poach Islamic finance specialists. Malaysia is a pioneer in Islamic finance, and we have many Islamic finance specialists,” he added.

Lim said that there were many ways in which a firm could move into the regional market. A few firms such as Raslan Loong, Zaid Ibrahim & Co and Skrine have opened branches in various parts of the world. Collectively, these firms have offices in Germany, South Africa, Singapore, Indonesia, Thailand and Brunei.

“The firms have the option of being only a representative office, or it can provide the full service by hiring lawyers in that jurisdiction or form strategic alliances,” he said. Strategic alliances usually encompass referral of work to each other as well as the pitching of work together.

Besides Zaid Ibrahim & Co, other law firms that have formed alliances include Sharizat, Rashid & Lee which has ties with Khattar Wong in Singapore, Evershed LLP in UK and Adnan Kelana Haryanto & Hermanto in Indonesia. Abdul Raman Saad and Associates has also formed an alliance with Riyadh-based Al-Soaib.

Zaid Ibrahim’s partner Robert Liew said: “We see the move towards providing a regional capability as a necessary response to a need created by the increased cooperation and integration of the markets in Asean and around the world.

“Another way in which firms can move into the regional or international scene is by becoming members of associations.

“Some law firms are members of Lex Mundi, the International Association of Independent Law Firms.

“Being under associations such as Lex Mundi or MSI Legal and Accounting Network as Chooi and & Co is, allows networking among members and they tend to refer work to each other,” Lim said.

Asked if the strategic alliance would be restrictive and result in conflict of interests, Liew said: “The alliance does not preclude us from working with other firms. Any client engagement is always subject to legal conflicts and the client’s specific needs and preferences.

“It may be the case that in certain situations, the client’s needs may best be provided by a non-alliance firm. All parties acknowledge that. Ultimately, the client’s best interest comes first.”

He added that one of the major benefits of the alliance was to provide an opportunity for both firms to tap into each other’s wealth of resources, knowledge, experience and client base.

Nonetheless, Malaysian firms have some catching up to do as their Singapore counterparts have had a head start. According to Lim, Singaporean firms were better represented outside their country as the state had liberalised their legal profession earlier by allowing foreign firms to set up shop in the island republic.

“Singapore firms have a longer history of exposure to international law firms. They also invested overseas earlier and in more numbers than Malaysian companies.

Singaporeans tend to bring their own lawyers to the various jurisdictions they go to,” Lim said, adding that the case was the reverse for Malaysian companies.

“There are not many who bring their own lawyers and they prefer to engage a lawyer out of London,” he added.

To this end, the Malaysian government has made available a market development fund and services export fund through the Malaysia External Trade Development Corporation (Matrade) in its bid to assist local firms to move abroad. One of the beneficiaries of the fund is Zaid Ibrahim & Co, and there have been applications by a few firms.

“We have also made it known that the GLCs are not bringing local law firms with them overseas, and we hope they would be more supportive,” said Lim.

While the law firms, especially the big boys, are setting their sights on the region, Malaysia has finally decided to open its doors to foreign firms.

“We have decided to liberalise the profession after years of consultation with members and authorities. We are the last few jurisdictions in Asia to open up to foreign lawyers,” Lim said.

He hopes that the amendments to the Legal Profession Act would come into force by middle next year.

He said that liberalising the legal profession was inevitable. “When there is a trade agreement, the legal services are part and parcel of the process. It the reality of the global village,” he added.

Based on the successful Singapore model, the incoming law firm would not be allowed to set up own shop, but instead enter into joint ventures with local firms and form a separate entity. The firm will be restricted to practising only tier one legal work, which covers cross border transactions, international cap market and asset securitisation.

“These areas are governed by both conventional and Islamic laws. The firms are also not permitted to do litigation and conveyancing work — which they are not interested in, anyway. Their interests lie in the high value corporate world,” Lim said.

He also said that the joint venture model was chosen because it wanted a collaborative approach which allows the exchange of ideas and transfer of technology.

“This model has worked well for Singapore and has benefitted in terms of market development and practice management. It has opened up eyes to international best practices,” he said.

According to Lim, Bank Negara Malaysia (BNM) has been advocating for foreign firms to be allowed to set up their own business as part of Malaysia’s international Islamic finance centre initiatives.

“We hope BNM will agree to our model. Save for some complex high-value international transactions, Malaysian lawyers have the necessary skill and competence to handle, more so in Islamic finance where we are the pioneers,” he said.

Interestingly, Malaysia has been lagging behind Singapore as the preferred choice of arbitration seat. In the past decade or so, more foreign firms have been including an arbitration clause in their contracts with the seat of arbitration outside of Malaysia.

“Malaysia was the first country in Asia to set up an arbitration centre through the Kuala Lumpur Regional Centre of Arbitration. Singapore has overtaken the international arbitration market simply because there is a perception that its judiciary is better than Malaysia,” said Lim, adding that the recent video clip scandal did not bode well for the image of the Malaysian judiciary.

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