asian legal business nov 2008

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ISS

UE

8.1

1

n AnAlysis n lATERAl MOVEs n DEAls ROUnDUP n REGiOnAl PERsPECTiVEs n UK, Us REPORTs n siGn Off

ALB Special Report: Japan 08The ‘lost decade’ yields prosperity

Middle East reportThe Gulf goes off

China M&AsMEs to buy-up on the cheap?

India market liberalisationAwaiting the third umpire’s decision

1

ALB ASIAN LEGAL BUSINESS

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EDITORIal >>

Asian Legal Business ISSUE 8.11


22

in THE fiRsT PERsOn

Have you had your daily dose of micro-managed autonomy?

Take a straw poll of a thousand lawyers throughout the region asking them why they became lawyers and chances are you will get close to a thousand different answers: prestige, status, power, high salaries, fast cars, palatial abodes. A thousand different answers with one commonality: lawyers

become lawyers because they lust after the autonomy and discretion that being a professional, being a lawyer, offers.

But the extent to which this traditional view still applies is a source of intense debate. Jurists, sociologists and anthropologists alike all suggest that a confluence of factors including globalisation, technological change, competition, law firm growth, profitability and changing management styles are challenging notions of autonomy and discretion, not to mention the concept of the ‘lawyer’ itself.

More so than at any stage in the past, lawyers are ceding control and coordination of their work to risk managers, change facilitators, managerial cadres and integration committees. Autonomy and discretion are being micromanaged: coopted, reappropriated, deconstructed and commoditised, and fed back to lawyers in perilously small doses.

Lawyers, of course, disagree. They roundly claim that autonomy and discretion are still hallmarks of the trade, management is an encumbrance, yes, but nothing more than a rubber stamp – the real work, and the real locus of power resides with them, after all, it is they who bring clients through the door.

However, as much as they may argue the point, the tensions between micro concerns – those things such as individual independence and broader factors such as firm management, strategy and direction is and will remain contested terrain, yielding no clear winners or losers, but only a series of fractious compromises.

So what is left for lawyers seeking to wrest back control? It seems that the key lies with resisting change. As we have seen on countless occasions in the past, contesting the new logics that this process creates will create new logics of independence, autonomy and discretion. Lateral movements, moves out of the profession, law firm mergers and hybrid firm management structures are but a few examples, all of which present the region’s lawyers with a surfeit of opportunities to this end.

If a consequence of growth is decreased independence, then the virtues of staying small have never been clearer.

“China’s economy is still growing at high speed. Local and foreign expansion in and outside the country is still very necessary for profit-making”Gavin Wang, partner at Run Ming Law Office, on Chinese M&A (p10)

“Those that are interested in the [Gulf] only because there’s no growth elsewhere won’t survive… You have to find a winning strategy here”Sean Korney of Baker Botts cautions new entrants into the Middle East (p56)

“Japanese law firms and lawyers are now more proactive in relation to how they liaise with the government”Bonnie Dixon, partner at Atsumi Partners, on approaches to cross-border work (p68)

More so than at any stage in the past, lawyers are ceding control and coordination of their work

4

NEws | deals >>



CONTENTs >>

contents

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Asian Legal Business can accept no responsibility for loss.

AnAlysis

10 China M&AWhile the rest of the globe struggles in the financial turmoil, China M&A hits record levels

12 Korea Korea is on the verge of partial liberalisation. ALB investigates the effects on the legal market

13 The world post-Lehman BrothersWhat is in store for firms in the wake of the Lehman Brothers collapse? ALB takes a closer look

14 India liberalisation The pending decision on foreign law firms in India may change the legal landscape

fEATUREs

56 Middle East report A comprehensive overview of its legal market

68 ALB Special Report: Japan 08The Japanese economy is a regional best, and brings a wave of new work

78 Securitisation Finding the silver lining of the US sub-prime cloud

80 Document storage Efficient document storage systems can help firms save time and money

82 ALB In-house Summit: Hong Kong On 25 September, 200 senior in-house counsel converged on the Excelsior Hotel in Hong Kong to discuss pressing topical issues. ALB reports

REGUlARs

6 NEWS • King&WoodsetsupintheBigApple• TheimpactoftheTianjinClimateExchange• ChinaleadsAsianIPOs• HellerEhrmanpreparestoclosecurtains• ChinaResourcesLogicacquiresChina

ResourcesGas

COlUMns

18 UK report

20 US report

22 International arbitration Court proceedings vs arbitrationDrew & Napier

24 International taxEUcommontaxbaseprojectazure

26 IP Love&Co.Pte.LtdcasealbaN Tay MahTaNi & De Silva

32 REGIONAL UPDATES • China

paul weiSS • Philippines

SyCip Salazar herNaNDez & GaTMaiTaN

• Singaporeloo & parTNerS

• MalaysiaTay & parTNerS

• IndiaSiNGh & aSSoCiaTeS

PROfilEs

55 Law Alliance

72 Mori Hamada & Matsumoto

74 Nagashima Ohno & Tsunematsu

92 Sign off

ALB ISSUE 8.11

56

80

COVER sTORy36 AlB Hong Kong law Awards: the winners

An event review and summary of those lawyers and firms recognised at the ALB Hong Kong Law Awards 2008 for their impressive, innovative and complex legal work during 2007/08

68

36

6

NEws | deals >>


Bank of China– ►La CompaGnie finanCiere edmond de roThsChiLd sTake aCquisiTionus$342m

China’s IBs show no signs of slowing down

firm: Allen & OveryClient: Bank of China Lead lawyers: Michael Liu, Cathy Yeung

firm: Freshfields Bruckhaus DeringerClient: La Compagnie Financiere Edmond deRothschildLead lawyer: Teresa Ko

• BankofChinaacquireda20%stakein La Compagnie Financiere Edmond deRothschild

• Frenchfundmanagementcompanyand Bank of China will establish asset management and private banking venturetosellRothchild'sproductstoChinese market though Bank

monsTer WorLdWide– ►Chinahr aCquisiTion us$172m

firm: Baker & McKenzieClient: Monster WorldwideLead lawyer: Howard Wu

•MonsterWorldwide,aglobal

BoeinG–China aviaTion ►indusTrY CorporaTion Jv

firm: Mallesons Stephen Jaques Client: Boeing Lead lawyer: John Shi

• Boeing,ChinaAviationIndustryCorporation entered into JV to expand BHAAeroCompositesPartsCo

• JVproject,BHA,locatedinTianjinspecialises in producing structures, interior parts for aerospace industry

6

NEws | deals >>

deals in brief

Teresa Ko, freshfields

| CHINA |

China resourCes LoGiC– ►China resourCes Gas aCquisiTionus$488m

firm: Slaughter and May Client:ChinaResourcesLogicLead lawyers: Benita Yu, Joanna Lee

• ChinaResourcesLogicacquiredChinaResourcesGasfromparent,ChinaResourcesHoldings,forapproximately US$488m

• Financingacquisition,Logicproposed HK$3.42 per rights issue share offer, offering four rights shares for every existing Logic share

hunan vaLin sTeeL TuBe & ►Wire JoinT sToCk–GoLden WesT resourCes invesTmenT

firm: Mallesons Stephen Jaques Client: Hunan Valin Steel Tube & Wire Joint StockLead lawyers: David Olsson, David Perks,JohnShi,Louis Chiam

firm: Lavan Legal Client:GoldenWestResources

• HunanValin

willacquire11.4%stakeinironoreexplorerGoldenWestResources

• TransactionunderreviewbyAustralia'sForeignInvestmentReviewBoardandHunanProvincialGovernment

TeLefoniCa–China neTCom ►sTake aCquisiTionus$1,600m

Telefonica ups stake in Netcom: Takeover on the cards?

firm: Clifford Chance Client: TelefonicaLead lawyer: Cherry Chan

• SpanishtelcoTelefonicaacquired5%stakeinChinaNetcom

• DealincreasesTelefonica'sstakeinChinaNetcomto9.9%

“The deal was complex, as it comprised two tranches of shares, acquisition of second tranche dependant on successful completion of China Unicom”

Cherry Chan, Clifford ChanCe

David Olsson, Mallesons

NEws | deals >>

7www.legalbusinessonline.com

online careers and recruitment resource, acquiredChinaHR,one of the largest online recruitment companies in China

•MonsterpaidUS$174mfortheremaining55%stakeinChinaHR.Monsterhadpreviouslyacquired45%ofChinaHRandmadeotherloans to the company, for a total ofUS$95m

shanda Bond offerinG and ►share purChaseus$175m

firm: Cleary Gottlieb Steen & Hamilton Client:GoldmanSachs,JPMorganSecurities Lead lawyers: David W Hirsch, RobertKWilliams

firm: David Polk & WardwellClient: Shanda Interactive Lead lawyer: James C Lin

• DavisPolk&WardwelladvisedShanda Interactive Entertainment LimitedonitsRule144Aoffering

• Inconnectionwithoffering,ShandaalsoenteredintoUS$175maccelerated share repurchase agreementwithGoldman,Sachs&Co

NEws | deals >>

7

Your monTh aT GLanCe ►Firm Jurisdiction Deal name Value(US$m) Deal type

allen & overy shook Lin & Bok

singapore iTe College West ppp 220 project finance/ppp

ali Budiardjo nugroho reksodiputro

indonesia smelting refinancing 250 finance

appleby hong kong swire pacific Limited medium note term programme 3,000 finance

ashurst singapore iTe College West ppp 220 project finance/ppp

qatar Chubu electric power–ras Laffan project equity acquisition 3,320 m&a

Baker & mckenzie China monster Worldwide–China hr acquisition 174 m&a

Cassels Brock & Blackwell

China/Canada China petroleum & Chemical–Tanganyika oil acquisition 1,800 m&a

Cleary Gottlieb steen & hamilton

hong kong shanda bond offering and share purchase 175 finance

Clifford Chance singapore/netherlands

Jp morgan–Ballarpur paper Group investment 175 investment funds, fdi, m&a

singapore actis–Teknicast acquisition 48 m&a

China/spain Telefonica–China netcom stake acquisition 1,600 equity market, m&a

singapore Barclays Bank–Bank akita proposed acquisition undisc. m&a

davis polk & Wardwell

hong kong shanda bond offering and share purchase 175 finance

dLa piper singapore acertec engineering–hG metal share sale 32 finance

dechert Cambodia/nepal Teliasonera–telco acquisitions 484 m&a

freshfields Bruckhaus deringer

China Bank of China–La Compagnie financiere edmond de rothschild stake acquisition

342 m&a

hong kong/Canada

sky Gain holdings–dynasty Gaming reverse takeover 105 m&a

China allianceBernstein–China netcom stake disposal undisc. finance

hong kong petroChina–China national petroleum stake acquisition 972 equity market/m&a

China Zhuzhou Csr Times electric 15 equity, m&a

hao Tian Law office China CapitaLand China Central China stake acquisition 76 m&a

harry elias partnership

singapore acertec engineering–hG metal share sale 32 finance

Jsm hong kong dunearn investments share subscription undisc. finance

hong kong dah Chong hong holdings–silver precious international acquisition

China/hong kong Winnington Capital–rightchina stake acquisition 272 m&a

khattarWong China smrT Corp–shenzhen Zona Transportation acquisition 89.7 m&a

kim & Company south korea Gangnam City Belt highway project financing undisc. finance

kim & Chang south korea komarf transaction finance undisc. m&a

Latham & Watkins qatar Chubu electric power–ras Laffan project equity acquisition 3,320 m&a


Li & partners China CapitaLand China Central China stake acquisition 76 m&a

Linklaters allen & Gledhill

singapore iTe College West ppp 220 project finance/ppp

makarim & Taira s indonesia smelting refinancing 250 finance

Howard Wu, Baker & McKenzie

8

NEws | deals >>


Lead lawyer: Lawrence Wong

• ArtivisionTechnologieslauncheditsIPOatSingaporeExchangeSecurities Trading on main board

• ArtivisionraisedUS$10minIPObyissuing75millionnewshares

aCTis–TekniCasT ►aCquisiTionus$48m

firm: Clifford ChanceClient: ActisLead lawyers: Lee Taylor, Andrew Gambarini

| SINGAPORE |

Lion poWer–senoko ►poWer Bidus$2,700m

firm: Allen & GledhillClient: Temasek Holdings Lead lawyers: Lim Mei and Christopher Ong

firm: Latham & Watkins Client:LionPower

firm: Rajah & Tann

• TemasekissellingSenoko,andtwo power generation companies in a plan divest all of its Singapore power generation companies by end of next year

• LionPowerconsortiumcomprisedMarubeniCorporation,GDFSuez,KansaiElectricPower,KyushuElectricPowerandJapanBank

• Consortiumwoncompetitivebidding process which began in July 2008

iTe CoLLeGe WesT ppp ►us$170m

Lion Nation’s first eduction PPP

firm: Ashurst, WongPartnership Client: FundersLead lawyers: Matw Bubb, Susan Wong,TayPengCheng

firm: Allen & Overy Shook Lin & BokClient:GammonCapitalLead lawyers:SarjitSinghGill, Andrew Digges, Stanley Lim

firm: Linklaters Allen & GledhillClient: ITELead lawyers:ErnestTeo,NathanDodd

• Ashurstadvisedfunders(HongKong

Shanghai Banking Corp, Sumitomo Mitsui Banking Corp, Bank of Tokyo Mitsubishi UFJ Ltd, DexiaBanqueInternationaleàLuxembourg SA, Singapore Branch andDZBANKAG)

• Schoolwillincludebusiness,ITandengineering departments, and is scheduledtoopeninmid-2010

arTivision TeChnoLoGies ►ipo

firm: KhattarWong Client: Artivision Technologies

firm: Shook Lin & BokClient:ABNAmro

• Privateequityinvestor Actis acquiredmanagement buyout of Teknicast, a Malaysian manufacturer of aluminium die-casting products

• Dealseesanotherpartnershipbetween Clifford Chance and Actis, previouslyworkingonenergyprojectinEgyptinearly2007

Jp morGan–BaLLarpur ►paper Group invesTmenTus$175m

firm: Clifford Chance Client:JPMorganLead Lawyers:PhilipRapp,MelissaNg

• CliffordChancepartnersworkedacross Singapore and Amsterdam officestoadviseJPMorgonon its investment into Ballarpur PaperGroup

• BallarpurhasacquiredSabah ForestIndustriesin2007and

lee Taylor, White & Case

NEws | deals >>


Your monTh aT GLanCe (ConT) ►Firm Jurisdiction Deal name Value(US$m) Deal type

mallesons stephen Jaques

China/australia hunan valin steel Tube & Wire Joint stock - Golden West resources investment

26 m&a, equity market, fdi

China Boeing–China aviation industry Corporation Jv 21 Construction

minter ellison China/hong kong Winnington Capital–rightchina stake acquisition 272 m&a

milbank, Tweed, hadley & mcCloy


nishith desai associates

india/usa mGm networks–star den media distribution deal undisc. finance

india reliance Big entertainment–Willow Tv acquisition undisc . iT/ m&a

india/uk Clyde Blowers–Textron businesses acquisition 645 m&a

shearman & sterling China Gheco-one independent power project financing 748 finance

shook Lin & Bok singapore actis–Teknicast acquisition 48 m&a

skadden qatar Chubu electric power–ras Laffan project equity acquisition 3,320 m&a

slaughter and may China China resources Logic–China resources Gas acquisition 488 m&a

hong kong swire pacific Limited medium note term programme 3,000 finance

hong kong haeCo–sichuan airlines Jv 146 finance

stikeman elliott China/Canada China petroleum & Chemical–Tanganyika oil acquisition 1,800 m&a

vinson & elkins China/Canada China petroleum & Chemical–Tanganyika oil acquisition 1,800 m&a

White & Case qatar Chubu electric power–ras Laffan project equity acquisition 3,320 m&a

Wongpartnership singapore Wilmar/olam share purchase in sifCa 120 finance

singapore Cj Group–planet fitness share purchase undisc. finance

singapore Temasek holdings–singapore Computer systems share sale undisc. finance, m&a

Wongpartnership LLp singapore/norway norske skog panasia share sale 735 m&a/equity market

singapore Yellow pages–Global magazines acquisitions undisc. m&a

Wongpartnership singapore iTe College West ppp 220 project finance/ppp

Wongpartnership LLp singapore acertec engineering–hG metal share sale 32 finance

Yulchon China siliconfile Technologies–hynix semiconductor share sale 20 finance

Does your firm’s deal information appear in this table?Please contact [email protected] 61 2 8437 4700

CorreCTions ►on page 10 in the article entitled ‘The rise and rise of compliance in hong kong and singapore’ published in aLB issue 8.9, aLB mentioned ‘Joyce Tan’ of ‘Wongpartnership’. This should read Joy Tan of Wongpartnership.

on page 34 in the article entitled ‘aLB hot 100’ published in aLB 8.9, aLB noted that desmond ong and the singapore office of dLa piper led the ‘heckmann Corporation deal’. in fact, the heckmann Corporation deal was led by stephen peepels, head of us Capital markets, asia, from the hong kong office of dLa piper.

on page 36 in the article entitled ‘asia’s leading ip firms’ published in aLB issue 8.10, aLB mentioned ‘mayer Brown Jsm’. This should have read ‘Jsm’. aLB regrets these error.

BallarpurGraphicPaperProductsLimited in 2008

| INDIA |

TpG CapiTaL–shriram ►CiTY union finanCe invesTmenT

firm: Kanga & CompanyClient: Shriram City Union Finance

firm: J Sagar AssociatesClient:TPGCapital

• PrivateequityfirmTPGCapitalacquireda49%stakeinShriramRetailHoldings

• ThisisTPG’ssecondinvestment inShriramGroup;in2006itinvestedUS$100m,acquiringastake in its subsidiary Shriram Transport Finance Company

| UAE/JAPAN |

ChuBu–ras Laffan ►equiTY aCquisiTionus$3.32bn

firm: White & CaseClient:ChubuElectricPowerCompany Lead lawyers:MarkGoodrich,HendrikGordenker,ToshioDokei

firm: Latham & WatkinsClient:RasGirtasPowerCompany

firm: Skadden Client: Islamic Development Bank, Qatar Islamic Bank

firm: AshurstClient: Japan Bank for International Cooperation

firm: Allen & Overy Client: Mitsui & Co

• Chubuacquired5%equityinterestinRasLaffanCIndependentWaterandPowerProject

• US$3.32bnfinancingforprojectraised through Japanese and Qatari banks

• RasLaffanCwillbelargest power and water plant in Qatar. DealfollowsChubuElectric’s earlieracquisitionofa10%equityinterest in Mesaieed A Independent PowerProjectfromMarubeniCorporation

| CHINA/Hk |

WinninGTon CapiTaL– ►riGhTChina sTake aCquisiTionus$272m

firm: Minter Ellison Client: Winnington CapitalLead lawyer: Matw Hibbins

firm: JSMClient:RightchinaLead lawyer: Jeckle Chiu

• Winningtonacquired25%stake inRightchinafromScoreHighLimited, to be followed by another 25%stakeforUS$136m

• Rightchinainvolvedinhigh-riseproperty development in China

10

NEws | analysis >>


ANALYSIS

Top 5 Cross-Border m&a deaLs: inBound China ►Date Status Target Acquirer Rank value

(US$)3/9/2008 Intended ChinaHuiyuanJuiceGroup Atlantic Industries 2.5bn

27/5/2008 Pending China Construction Bank Corp Bank of America Corp 1.86bn

9/5/2008 Pending FortuneDragonGroup JadeGreenInvestments 1.35bn

18/3/2008 Pending Huaxia Bank Co DeutscheBankAG 552m

7/1/2008 Completed HeilongJiangXingAnGroup SongzaiInternationalHoldingGroup

550m

Top 5 Cross-Border m&a deaLs: ouTBound China ►Date Status Target Acquirer Rank value

(US$)1/2/2008 Completed RioTintoPLC ShiningProspect 14.3bn

2/6/2008 Pending ChinaNetcomGroup China Unicom 7.7bn

7/7/2008 Pending Awilco Offshore ASA COSLNorwegianAS 3.8bn

19/3/2008 Cancelled Fortis Investments PingAnInsuranceCoofChina 3.3bn

14/3/2008 Completed TuasPower SinoSingPower 3bnSource: Thomson Reuters, Third Quarter Preliminary Review, Mergers and Acquisitions

China’s M&A power surgeAs other jurisdictions in Asia prepare for a round of belt-tightening on a scale unseen since the financial crisis last decade, China finds itself in a bubble of prosperity. M&A volume involving China has hit record levels, totalling US$131bn, also making it the most targeted nation for investments in Asia

While other economies in the region are preparing to use that dreaded ‘R’ word after quarter-on-quarter of real

GDP decline, China’s economy, it seems, is only getting stronger with many of Asia’s lawyers tipping more of the same in the months ahead.

The rise and rise of M&A in ChinaAccording to figures from Thomson Reuters, cross-border M&A activity for the quarter closing September 2008 was up by 150% on the same period last year – amounting to a deal volume of nearly US$69bn. The nation is now the most targeted in Asia (ex-Japan) for investment, garnering 23% market share from US$75bn worth of deals in the region.

That China is leading the way in terms of global M&A, however, is only half the story. According to Gavin Wang, a partner at Run Ming Law Office, the far more interesting tale is that Chinese M&A is still yet to peak, especially with state-owned enterprises seeing the prudence in taking equity in foreign firms. “China’s economy is still growing at high speed,” Wang said. “Local and

foreign expansion in and outside the country is still very necessary for profit-making. The failure of the markets in the US and UK is temporary compared to the long-term view taken by sovereign wealth and private investors in taking equity in overseas markets. They aren’t just financial investors, they’re also strategic investors.”

At the core of this strategic investment is looking to the materials, energy & power and telecommunications sectors – three areas which have witnessed a doubling of M&A volumes on this period last year.

Roger Denny, Clifford Chance’s head of M&A (China), said that the global downturn has increased local interest in making acquisitions, and that M&A activity has “bounced back” despite a two-month quiet period before and during the Olympics. “Opportunities that were not previously available overseas have now been thrown up by the downturn. The protectionism previously exercised by the West has also been lowered by the need to seek outside interests. This has led to a very active inbound and outbound M&A flow for China,” Denny said. Buying up foreign interests on the cheap, it seems, is the way to go.

Freshfields’ head of China M&A practice Robert Ashworth agrees. “Clearly, recent financial turmoil has directly led to a number of deals being done in the financial sector, and we anticipate this will broaden out to other sectors as companies and funds without cash or with limited credit requirements seek to strengthen their weighting here.

“The current turmoil will undoubtedly give rise to unique opportunities for M&A, and help to re-align pricing expectations which had reached rather unrealistic levels prior to the start of the year,” he said.

But while the global financial crisis may not be having an overt effect on the quantum of transactional activity into

NEws | analysis >>


LeaGue TaBLes of LeGaL advisors To ►GreaTer China m&a

Rank Firm Value (US$bn)

Deal count

1 Freshfields Bruckhaus Deringer

45 17

2 Linklaters 40 13

3 Sullivan & Cromwell 39 6

4 Skadden 38 7

5 Slaughter & May 30 2

6 Shearman & Sterling 29 1

7 Clifford Chance 25 12

8 Mallesons Stephen Jaques

13 7

9 Ashurst 13 2

10 Simpson Thacher & Bartlett

13 2

Source: Thomson Reuters

and out of China, it is having a profound impact on both the size of deals and their structure.

Seung Chong, an M&A partner at White & Case’s Hong Kong office, notes that deals that are occurring now are not the ‘mega’ M&A deals that China has grown accustomed to in the past.

“Overall, we see the current conditions as creating a fertile environment for small to medium-sized M&A, with momentum continuing to build into 2009 and beyond,” Seung explained.

Zhou Chuanjie, a partner at Fangda Partners, agrees noting that deals are either being structured differently or calling on alternative financing models. “New investments will no doubt be affected by the current economic climate. And a lot of the future deals will depend on private equity initiatives,” he said.

local industries to stick to long- term strategyFor many of China’s SOEs the lure of buying overseas assets on the cheap may be just too tempting, but for others, the trepidation and conservatism that always accompanies economic slowdowns are likely to dictate behaviour and may yield a deference to long-term strategic acquisitions rather than short-term bargain hunting. “It is likely that local firms will be looking at more acquisitions, although the drop in value of recent outbound investments will likely lead investors to be very cautious before investing large sums of cash overseas,” said Ashworth.

And indeed this was the opinion of many of the region’s M&A lawyers ALB spoke with. They all asserted that while outbound acquisition levels would spike, local Chinese investors would prudently seek out longer-term revenue streams – with issues such as strategic fit and the value of intangible assets such as IP and international branding being looked at more closely. “Local Chinese companies have always looked for a strategic fit, not for undervalued assets. We’ve seen in the last several years strong strategic interests in overseas assets by the government and by corporations that are largely driven by the need to secure new resources,” said Denny.

New resources may include anything from raw materials such as oil & gas to international branding and management know-how in the financial services industry. But while this will always remain a factor driving international acquisition, the fact that some local enterprises have surplus capital at hand may see them pondering world, or at least market, domination.

“There’s no reason for players with sufficient cash, or access to it, not to continue to execute market strategies driven by market share or access, or the acquisition of brand names. They continue to be active in the consumer, retail, services and heavy industrial sectors where the drivers for these industries remain the same,” said Seung.

More inbound M&A?While outbound M&A is tipped to flourish in the medium to long term in China, it is inbound transactional activity that is dominating the market at the moment – or at least, rumour, speculation and interest in inbound investment. “While we are seeing speculative enquiries, in terms of real deal activity inbound M&As continue to outstrip outbound ones,” said Seung.

According to Thomson Reuters’ findings, although outbound activity surged from US$12.3bn in 2007 to US$49.1bn in 2008 by a ratio of nearly 4:1, outbound investments are focused in Hong Kong, with US$15.3bn worth of deals making up the 31% market share of all outbound M&As. Inbound activity also saw a spike with investments amounting to US$19.7bn this year and posting a 40% growth from last year’s volume.

One such notable inbound deal was Electricite de France’s joint venture agreement with China Guangdong Nuclear Power Co to construct, operate and maintain two third-generation reactors in Taishan city. About US$45bn in scientific and industrial contracts between the two countries were inked.

Significant not only in terms of structure and deal value, the deal is also important for a host of other reasons. For while it highlights that M&A activities continue to be driven by the need for new materials and resources at all levels, it also demonstrates the importance of the intangible factors, such as knowledge transfer, technical know-how and the

like. This increasing importance of the ‘value add’ in M&A is set to become the key ingredient in making or breaking Chinese M&A in the future.

The effect of the new lawThe announcement of Coca-Cola’s US$2.4bn all-cash offer for China Huiyuan Group Ltd, a Hong Kong-listed company that owns the Huiyuan fruit juice business throughout China, stirred up the excitement of the business community throughout the region for a number of reasons. Not only was the deal struck against the backdrop of worldwide economic tumult, but also served as the perfect litmus test of China’s newly inked Anti-Monopoly Law.

The most salient questions are: How would the government treat the Coke-Huiyuan deal vis-a-vis the provisions of the new Anti-Monopoly Law? How would this deal – if allowed by authorities – set the direction for China-related M&A?

Lawyers who have been cutting M&A deals in the country did not think the new law would affect M&A deals negatively.

“On its own, I think the Anti-Monopoly Law will only have marginal impact on M&A activity,” said Ashworth. “The international norm is that only a small percentage of announced transactions are blocked due to anti-trust review. Deals that involve significant industry consolidation will therefore be subject to hurdles, though those that are likely to don’t get announced. National security review and local brand protection will continue to feature in view of the Anti-Monopoly Law and M&A.”

seung Chong, White & Case

12

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ANALYSIS

Lawyers get busy in the land of the morning calm

Although protectionism was a hot topic during the US Civil War and later the focal point of the Monroe Doctrine, it

has since been on the backburner, but it is an argument that always gets a run when the topic of legal market liberalisation arises.

Liberalisation critics suggest that allowing foreign firms to enter newly opened markets will only prove counterproductive for domestic legal industries, claiming that age-old problems such as lawyer retention and recruitment, salaries and the like will only become exacerbated by such moves. More often than not they point to the case of Germany, which saw eight of its top 10 law firms taken over by larger British competitors little more than a decade after opening its legal services market, and draw comparisons with the opening up of financial services sectors throughout Asia, to substantiate their argument that liberalisation is the root of all evil.

However, as Korea inches ever closer to opening its legal service market (partial liberalisation allowing US firms to establish joint law ventures with Korean firms is expected within the next five years), lawyers there are decidedly more optimistic as to the virtues of liberalisation ostensibly because it is unlikely to have a major impact on domestic firms.

Kim Beom-su, executive director of international relations at the Korean Bar Association and an attorney at Shin & Kim, told Korea Times that the larger firms in Korea are likely to remain

immune from the entry of foreign firms into the Korean legal market.

“Any US firm, or British firm, no matter how big it is, will have trouble absorbing a major Korean practice hiring legal staff in the triple digits. The possibility of a ‘US invasion’ is just not there.” Sound familiar? It reads, almost verbatim, like the same line spouted by partners in big firms in other Asian jurisdictions preparing for legal market liberalisation.

And to be fair, Kim has a point. We need only look to Japan as an example of how little impact the entry of foreign firms has had on the complexion of domestic market there – the top five firms are still Japanese domestic firms.

Nonetheless, the threat it seems is

not so much that mega Wall-Street and Magic Circle law firms will look to gobble up Korean firms. In fact, one could justifiably state that the strict hierarchical culture that pervades Korean law firms makes moves of this kind difficult if not impossible. The more likely move may be assimilation – with international firms either choosing to ‘cherrypick’ partners, associates or even whole practice groups from domestic firms (or even luring foreign attorneys away from Korean domestic firms) or strike strategic tie-ups to test the waters before committing.

In regards to the latter, Kim is adamant that strategic tie-ups between domestic and international firms will ultimately prove unpopular, with both

Some lawyers are of the view that the new law may even give dealmaking a much-needed shot in the arm. “Essentially, the old regime before the Anti-Monopoly Law came into effect already applied merger control elements to M&A deals with a foreign investment element. A merger control regime does not in itself limit M&A activities, it provides a framework to work within and around it. Complying with the regime may in fact increase M&A activity as businesses may

be required to be disposed of or restructured,” said Seung.

The authorities will no doubt examine the transaction and the Anti-Monopoly Law serves to make this process more transparent. In addition, it could also provide a precedent so M&A transactions are conducted with guidelines, even if this particular transaction fails. Said Wang: “If it fails, it may affect foreign investors’ interest for a short time, but in the long run, it will make the government processes more apparent

and make M&A … more attractive.” The new Anti-Monopoly Law was

drafted after extensive review of anti-trust laws in the European Union and US. National security and local protectionism may still feature strongly in considering M&A deals like Coca-Cola’s bid for Huiyuan. In any event, the new law will surely mould the quality and quantity of future M&A transactions, as much as the outcomes shape the country’s legal and economic infrastructure in its hurtle towards globalisation. ALB

NEws | analysis >>


BEIJING: SLAUGHTER AND MAy MOVES IN WITH FRIENDS If you are going to set up a representative office in China, it is good to have friends around for moral support. This seems to be the approach at Magic Circle firm Slaughter and May, which has announced plans to apply for a licence to set up an office in Beijingandco-locatewithtwoofits‘bestfriend’firms,DeBrauwBlackstoneWestbroekoftheNetherlandsandUríaMenéndezofSpain.

However,assomeofthese‘bestfriend’firms have offices in the same cities, such as London and Brussels, there will inevitably be some level of competition between them. However, Slaughter and May is confident that rivalry will not be a majorproblem.

“What we have to gain by working together and supporting each other is vastly more important and significantthantheoccasionaljobhereandtherewhere we are competitors,” said Slaughter and May partnerGregGoulding.

news in brief >>

PRC LAW FIRM OPENS AUSTRALIAN OFFICE Beijing-basedboutiquefirmMMLCGroupopened its first Australian office in Brisbane, to meet the growing demand for cross-border work between China and Australia.

Firm founder and managing partner Matthew Murphy said the Brisbane office will serve as a base for work mainly focused on inbound China-relateddeals.“Wefeelit’sveryimportanttoofferpersonal face-to-face assistance for corporations or government that operate in Australia. In the past, we had to fly into Australia for meetings, but there is a lot more you can do face to face as opposed to with the telephone or e-mail,” he said.

“Chinese companies are looking to takeover Australian distribution networks and businesses … They need to make big deals because they want to make it worthwhile, due to Chinese government controls and the time taken to get approval,” he said.

parties unlikely to cede ground on any number of issues, not to mention the fact that, in his opinion, cracking the Chinese market is higher on US firms’ to-do list.

“Most of Korea’s major law firms are likely to remain independent, rather than forming ‘lock-in’ affiliations with foreign partners that risk limiting their client base,” he told Korea Times.

But it remains to be seen whether Korean firms will be in a position to resist the overtures of international firms. The important role that international lawyers play in driving the growth of Korea’s nascent financial services industry is no secret and domestic firms may indeed find joint law ventures to be one of the few ways that they are able to maintain relevancy in terms of both market share and talent retention in an open market.

Meanwhile, Horizon Law Group and Jisung Law Offices have finalised the merger agreement inked back in May of this year, in a move many industry experts see as pre-empting legal market liberalisation.

The new firm, to be known as Jisung Horizon Law Offices (JH), will create Korea’s seventh largest law firm with close to 130 attorneys. JH already has a presence in China (Shanghai) and Vietnam (Ho Chi Minh City) in addition to its Korean offices, but various sources

told ALB that the opening of a second Vietnam office in Hanoi is “imminent”.

Korean law firms have something of a penchant for mergers. In addition to JH’s entente, Kim Chang & Lee’s merger with Kim & Company and DeRyook’s alliance with Aju Law Firm are but two examples of this pattern. All of these, at least according to the firms, were about relevancy, synergy and synchronicity – or reading between the lines, bigger is better.

But it remains to be seen whether bigger is actually sustainable, for while alliances may make perfect business sense, it is set to create a logistical nightmare for Korean law firms, with office space, of all things, likely to dictate the plausibility of any such moves in the future.

The Law Times and the Korea Law Blog both suggest that the vacancy rate of commercial office buildings is perilously low. The vacancy rate in commercial buildings with at least 10 storeys is at or below 1%, and there is absolutely no spare room in 65.5% of office buildings across the Seoul CBD. In Kangnam, Mapo, Yeoido and the Kwanghwamun area CBD, close to 70% have lit their neon ‘no vacancy’ signs.

Seeking a merger partner may soon be less about seeking out synergies than finding vacant office space. ALB

ANALYSIS

The world post-Lehman BrosWhat is in store for firms in the wake of the Lehman Brothers collapse? ALB takes a closer look

When the economy is down, restructuring and insolvency work go up.

That is one of the great cliches of law firm management, but we are starting to get a profound

insight into the truth behind it. At Linklaters, to name but one example, a team of 20 is advising on Lehman’s UK administration while the firm is also advising Lloyds on the HBOS takeover. Lovells has also picked

Greg Goulding, slaughter and May

14

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alone, with senior executives including CEO Dick Fund receiving the biggest payments. According to Slater & Gordon lawyer Ben Phi, there may be grounds to allege that the bonuses paid to senior Lehman staff constituted a fraudulent conveyance, a civil course of action that is available to creditors under US law. Creditors may choose to file individually or as part of a class action.

Some of the litigation, of course, is already underway. Lehman Brothers itself is continuing its legal battle to recover US$345m from Japanese trading house Marubeni Corp in a case of alleged fraud. Oh-Ebashi LPC & Partners and Takano Law Office are representing Lehman, while Nishimura & Asahi is defending Marubeni.

All this does not necessarily mean that M&A is off the agenda. In fact, less than a week after the bankruptcy, the first rumblings of major deals were being heard. Not long after, Nomura Holdings announced a successful US$225m acquisition of Lehman’s Asia-Pacific assets in Japan and Australia, with Skadden Arps and Linklaters advising on the deal. Meanwhile, British bank Barclays took over parts of Lehman’s US

up work, with the firm advising the Financial Services Authority over the Lehman collapse.

The other ‘usual suspects’ that observers are confidently predicting will do well are litigation lawyers, with the UK’s Lord Chancellor recently telling lawyers at a litigation conference to strap themselves in for a heady ride: “There is going to be litigation on a scale that we have not seen before, that will give rise to a new era for dispute resolution and litigation.”

The Lord Chancellor, who is a consultant for Gibson Dunn & Crutcher, also predicted the rise of a new breed of investment vehicle that will feed off the carcasses of the collapsed investment banks. “Now we are going to see hedge funds whose only activity in practice is to fund litigation arising out of collapsed institutions,” he said. “It will become a much more significant factor than ever before.”

Certainly there are indications that creditors of the company may bring a class action suit seeking to recover some of the more obscene bonus payments made to senior executives. Lehman paid out US$5.7bn in bonuses in 2007

business, but decided not to pursue any further acquisitions.

Employment implicationsMeanwhile, the prospect of 145 retrenched Lehman in-house lawyers is understandably not thrilling lawyers currently searching for a role. But Paul Burgess, director of Burgess Paluch Legal Recruitment, said that the retrenched lawyers would be able to find other legal work relatively easily. He said that they may pursue private practice or relocate to other markets that are not as badly affected by the credit crunch. However, he said that lawyers who decide to stick with similar in-house roles will undoubtedly find it harder to secure a position, and may even go without work for some time. “It may be more difficult for those lawyers who are at a very senior level, as law firms are less inclined to employ lawyers at a senior level,” he said.

“Furthermore, those lawyers whose experience is highly specialised in finance, particularly securitisation, will find it more difficult than lawyers with broader corporate, banking and finance experience,” he added. ALB

Setting an open field: Liberalisation and India’s legal services market

ANALYSIS Despite the old adage that business grinds to a halt during cricket season in India, the Bombay High Court (BHC)

appears to be edging ever closer to reaching a decision in a case which came before it almost 12 years ago concerning the legality of foreign law firms (FLFs) establishing liaison offices in India (see box on p15). And while predicting the outcome may be about as difficult as picking a good leggie on a dusty fourth-day track, Indian lawyers agree that the outcome is likely to have a profound impact on the cause of legal market liberalisation.

The BHC barometer: awaiting the umpire’s decision“The outcome of this case could prove important in the context of the broader path of liberalisation,” noted Som Mandal managing partner of FoxMandal Little. “Should the court adjudicate in favour of liaison offices there may be some movement in terms

som Mandal, foxMandal little

NEws | analysis >>


INTELLECTUAL PROPERTy FIRM ExTENDS ASIA OPERATIONS IN HONG KONG Marks & Clerk Solicitors, well known in British legal circlesforitsspecialistintellectualproperty(IP)practice,has decided to take root in Asia through a newly formed firm in Hong Kong, Anthony Evans & Co. The move followsitsmergerwithIPfirmLloydWiselastyeartoextend its reach into Singapore and China.

The new Hong Kong office cements a long-standing referral relationship that Marks & Clerk Solicitors has had with the local lawyer, Anthony Evans,whowasformerlyapartneratRobinBridge&JohnLiu.Evans,whohaspractisedIPlawinHongKongfor27years,willbeheadingAnthonyEvans&Co as senior partner.

news in brief >>

LOVELLS OPENS SECOND VIETNAM OFFICE While partners at other firms in Asia may be busy reserving their chalets and cabins in Whistler and Chamonix for the Christmas break, the lawyers at Lovells have had to put their holiday plans on hold as theyreadythemselvesfortheopeningofthefirm’ssecond Vietnam office in Hanoi.

RecentlyrecruitedseniorconsultantGregoryBuyhoff,formerlyofBaker&McKenzie,willleadthefirmontheground in Hanoi while Singapore-based James Harris and Hong Kong-based duo Henry Where and Tim Fletcher will oversee and supervise the development of the office – a clear sign that for Lovells, Asia expansion is also about regional synchronicity.

“Our aim is to continue to win international work involving the Vietnam market working alongside specialist teams in Hong Kong and Singapore,” said AsiaregionalmanagingpartnerCrispinRapinet.

EDWARDS ANGELL PALMER & DODGE ENTERS HK US-basedfirmEdwardsAngellPalmer&Dodge(EAPD)isfinalising plans to deliver on a commitment its managing partnerWalterReedmadeinMayofthisyear-tokickoffits Asia operations by opening a Hong Kong office.

Aspartofthearrangement,EAPDwillenterintoastrategicalliancewithListerSwartz-afirmwhichwillbecreatedon1Octoberbythecombinationoftwo previously established Hong Kong firms -- Martin Lister(ML)andSwartzSolicitors(SS).MartinListerthesoleprincipalatML,isalsoapartneratEAPDwhileSwartz,alsoasoleprincipalatSSwillalsobecome a partner in the newly merged firm.

pLaYinG on The BaCk fooT: ►snapshoT of resTriCTions faCed BY indian LaW firms

Partnernumberslimitedto20•Business structures other than unlimited liability •partnerships prohibitedStrict prohibitions on raising capital•Lawfirmadvertisingprohibited(althoughlawfirms•arenowallowedtomaintainbasicwebsites)Remunerationisnotallowedtobesharedwithany•person or legal practitioner who is not an advocate

The 12Th man: inTernaTionaL firms ►WiTh a ‘presenCe’ in india

Allen&Overy(referralagreementwithTriLegal•Partners)JonesDay(referralagreementwithP&ALawOffices)•Linklaters(referralagreementwithTalwar•Thakore&Associates)Ashurst(liaisonoffice)•SmithDornanDehn(ownsSDDGlobalSolutions•–Indianlegaloutsourcingcompany)Baker&McKenzie(exploringoptions)•White&Case(exploringoptions)•Vinson&Elkins(exploringoptions)•Morrison&Foerster(exploringoptions)•NortonRose(exploringoptions)•CMSCameron(exploringoptions)•DentonWildeSapte(exploringoptions)•

*By ‘presence’ ALB is not implying that the firms listed are looking to establish physical offices in India, the Advocates

Act of 1961 prohibits foreign law firms from doing so.

of foreign firms wanting to start to establish footholds in India.” Others that ALB spoke to agreed. “The case before the BHC is a test case in the truest sense of the word,” said a partner at one of India’s largest firms. “While a positive outcome for FLFs may speed up opening of the market, a ruling against may see the cause of liberalisation set back somewhat.” The source added that the final verdict will prove a watershed moment in Indian legal history.

Yet, there are also those who feel that the outcome of the case will have a negligible impact on the broader process of legal market liberalisation, seeing it as nothing more than a barometer of the judiciary’s attitudes to opening India’s legal market. Saurabh Misra of Paras Kahud & Associates said that should the BCA declare liaison offices to be in violation of India’s foreign exchange laws, it will discourage FLFs from pushing for liberalisation. “I feel that the outcome of the case will not have a negative impact on the desire of FLFs to establish themselves in India. FLFs know that establishing in India means big business to them so they will continue to lobby the Indian government for the opening of the legal services sector.”

However, while the ruling of the BHC may be important in dictating the complexion of the whole process, liberalisation of legal markets in other jurisdictions in Asia has roundly demonstrated that one of the most important factors guiding opening a country’s legal market is the attitudes of lawyers themselves. In other words, a consensus in favour of liberalisation is needed, but in India such a consensus is sorely missing. Not only are the nation’s lawyers divided as to the merits of opening up the legal market to foreign competition, but even the Indian

government seems to oscillate between being for and against it.

Whither india’s legal market? “Most lawyers, partners and managing partners that I meet from Indian law firms are dead against this [allowing FLFs to enter India],” said Misra. “I know that some of them have gone as far as to write articles in Indian newspapers outlining their opposition.” One such protectionist apologia was written by Amarchand & Mangaldas partner Cyril Shroff. In his now quite famous ode to the Indian legal sector, Shroff suggested that there is no pressing need to open the Indian legal sector to foreign competition, framing his objection to liberalisation as a matter of national interest. “Indian law firms are at a nascent stage of development,” he said. “They [Indian law firms] are practising the

saurabh Misra, Paras Kuhad &

Associates

“Liberalisation of the legal service sector is undesirable at this point in time”

Cyril Shroff, AmArChAnd & mAngAldAS

16

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TesT Case for inTernaTionaL LaW ►firms in india: The Case CurrenTLY Before The BomBaY hiGh CourT

1994:• White&Case,Chadbourne&ParkeandAshurst(thenknownasAshurstMorrisCrisp)soughtpermissionfromtheReserveBankofIndia(RBI)toestablishliaisonofficesinIndiato assist India and international clients doing business in the subcontinentA liaison office is permitted to undertake liaison •activities only. It is not permitted to undertake the practice of law in India and accordingly it does not provide any legal servicesAllfirmsweresubsequentlygrantedpermission•undertheForeignExchangeRegulationAct(FERA)1995: • Lawyers’Collective;apublicinteresttrustset up by India to provide legal aid moved Bombay HighCourt(BHC)tochallengetheRBI’sdecisionto allow liaison offices, citing that the Advocates Act,1961onlypermittedadvocatesenrolledinIndiato‘practisetheprofessionoflaw’The BHC agreed, and ordered the Indian •governmenttoconductaninquiryandtakeappropriate action against these international firms1• 996: The foreign law firms appealed the orders of the BHC to the Supreme Court. The case wassubsequentlyreferredbacktotheBHCforadjudicationInterim orders were issued by the BHC •prohibiting foreign law firms from establishing liaison offices pending the outcome of the caseOf the three firms who originally established •liaison offices, only Ashurst remains in India

profession and cottage industry of law in comparison with the proportions that FLFs have assumed in their practise of the business of law.” Shroff goes on to suggest that currently Indian law firms have a disadvantage in matching the sheer “organisational magnitude and financial means” that FLFs command because of historical factors and because Indian law firms are subject to various restrictions.

Fighting words indeed. But according to both Mandal and Misra, India’s legal market is anything but underdeveloped, both citing the fact that India’s lawyers, Indian legal know-how and Indian experience are in hot demand the world over. “Arguments which assert that the Indian market is underdeveloped and cannot sustain the presence of FLFs are just untrue,” said Mandal. “If this was the case and the Indian legal market was underdeveloped, then Indian lawyers wouldn’t be employed overseas and Indian-trained lawyers wouldn’t be in extremely high positions at Magic Circle and Wall Street law firms. The fact they are suggests that there is voracity to such claims.”

But while those opposed to legal

market liberalisation are often accused of overplaying the scale to which domestic law firms will be affected by the entrance of FLFs, there exists strong data to suggest that the restrictions imposed on Indian law firms by the Indian Bar Council (IBC) may place them in a difficult position to fend off any challenge to their market share that FLFs may make. Ardent advertising limitations (although the IBC has now relaxed this practice to allow Indian law firms to maintain very (very) basic websites), a cap on the number of equity partners to 20, not to mention revenue sharing limits, are but a few examples of how Indian firms are on the back foot when it comes to competing with their international counterparts.

Hence, while Indian lawyers may hold diametrically opposed views on the utility of liberalisation, they all agree that domestic reforms are sorely needed.

super-sub: levelling the playing field“Indian law firms should be allowed to advertise,” said Mandal, pointing out that his firm has been lobbying the IBC to relax restrictions on Indian law firms. Misra agrees, noting that the restrictions on the number of partners at Indian firms “are an issue of concern for several law firms … and one that needs to be resolved”. It seems then, that the forerunner to the opening of India’s legal market should be the easing of restrictions faced by FLFs – but we must note that even though almost all of the country’s lawyers see liberalisation as somewhat ‘inevitable’ there are still no iron-clad guarantees that liberalisation will even go ahead with governmental attitudes shifting on the topic by the day.

Recent media reports encapsulate the see-sawing and at times contradictory nature of official rhetoric vis-a-vis liberalisation. For while the Indian Law Ministry (ILM) and its minister Shri HR Bhardwaj is in favour of it, others in the government, for instance Commerce secretary Gopal Pillai, have stated that liberalisation is anything but a given and India’s involvement in WTO negotiations will not necessarily lead to the opening up of the legal market. “In this round [The Doha Round of WTO talks] we won’t commit to the opening up of the legal services sector,” Pillai told The Business Standard.

And while, as Pillai subsequently noted, India does not have an

obligation to open its legal market under either its WTO or GATTS agreements, it is feeling intense pressure to do so from both the UK Law Society (UKLS) and the European Union who have been lobbying the government for almost 10 years on the issue. Of the two, the UKLS has perhaps been the most influential and has made no secret of its desire to pave the way for its lawyers to add the jewel which is the Indian legal services market to its crown. However, extraneous factors, namely the possibility of regime change at next year’s general election, may force neo-liberal ideologues at FLFs to put their legal imperialism on ice.

Playing through bad light: flf stop-gap measuresThere are a number of stop-gap measures that FLFs are already pursuing in the interim in an effort to establish their credentials in the subcontinent. The Economic Times reported that FLFs are well engrossed in talks with their Indian counterparts to establish informal tie-ups, strategic alliances and client referral relationships, of which Baker & McKenzie and White & Case were two such firms.

David Jacobs, Bakers’ Asia-Pacific regional chairman and head of the firm’s India focus group, noted that although regulations currently in place prohibit FLFs from establishing an onshore presence in India, the firm may look to enter India should this change in the future. “We have no intention to establish an onshore presence in India until such time when local regulation permits it. In the meantime we have a close relationship with several law firms whereby we refer work and clients to each other,” said Jacobs, adding that the progressive strength of the Indian economy and the increasing acquisitiveness of the firm’s clients are guiding its India strategy, factors which are enough to supplant the difficulties that foreign firms may face in the Indian legal market.

Indeed, a cursory glance at some of the subcontinent’s largest deals indicates that FLFs have the lion’s share of the market. Of the top list of 10 law firms

David Jacobs, Baker & McKenzie

NEws | analysis >>


NOMURA REVAMPS PANEL FreshfromitssuccessfulUS$225macquisitionofLehman’sAsia-PacificassetsinJapanandAustralia,Nomurahasrevampeditspanel.

Dewey&LeBoeuf,NortonRoseandTraversSmitharethenew‘faces’onthepanel,joiningexistingmembers Allen & Overy, Ashurst, Freshfields and Linklaters.NomurawillalsoreferemploymentworktoSJ Berwin and Osborne Clarke.

news in brief >>

KHATTARWONG FORMALISES THAI PARTNERSHIP When you have been bedfellows for a long time, it is nice to formalise the relationship – even if it is not an exclusive one.

Singapore firm KhattarWong has signed a cooperation agreement with long-term Thai partner ChavalitLawGroup.Theagreementwillseethefirms sharing precedents, expertise and resources and referring work to each other on a non-exclusive basis. The agreement follows the reaching of a similar arrangement by KhattarWong with Malaysian firm K K Chong & Company last month.

INDIA: LINKLATERS BEFRIENDS Ex COMPETITION COMMISSION CHIEF When acting chairman of the Competition Commission of India Vinod Dhall resigned four months before the completion of his tenure in June, the reaction was one ofgeneralsurprise.NowthepathforwardforDhallhas become clearer: he has signed up with Magic Circle firm Linklaters to offer legal consultancy services for foreign companies with a presence in India. The arrangement has been variously reported as a ‘best friends’andan‘independentandloose’arrangement.

Whatever the fine details of the agreement, it is a key strategic move for Linklaters which will help with facilitatingclientstonavigateIndia’scompetitionandM&A regulatory framework – while carefully avoiding the actual practice of Indian law, of course.

runs on The Board: foreiGn LaW ►firms and Their markeT share in india

Top firms by number of deals: Q1–Q3 2008Name of firm (home country)

Value of deals (US$m)

No. of deals

Rank

AZB&Partners(IND) 6,915 21 1

Desai&Diwanji(IND) 6,082 22 2

JonesDay(US) 4,667 4 3

P&ALawOffices(IND) 4,625 1 =4

VaishAssociates(IND) 4,625 1 =4

Linklaters(UK) 4,331 5 6

Shearman&Sterling(US) 3,913 4 7

Blake, Cassels & Graydon(CAN)

3,534 3 8

Ashurst(UK) 3,415 2 9

Hogan&Hartson(US) 3,305 3 10*This table does not purport to be exhaustive.

Source: Mergermarket & ALB Deal Centre (see http://asia.legalbusinessonline.com/deals/)

by deal value for the first three quarters of 2008, foreign firms account for no less than six of them, amassing a deal value of nearly a quarter of a trillion dollars. Similarly, FLFs dominate the list of top advisors to IPO managers, boasting a market share of 46%. These figures, however, raise more questions than they answer. First of all, given that FLFs already have such a substantial market share – a market share won without having a physical office in India – is there any utility in establishing operations there should regulatory change permit them to do so? And further, how will FLFs cope in an environment in which their legal fees are likely to be, at least according to one ALB source, as much as 40% higher than those of domestic firms; how will they combat Indian businesses much famed ‘discount culture’? Lastly, and perhaps most importantly, are the trials and tribulations that FLFs will face in India worth the hassle?

The statistics dictate that while all of the above may be pertinent questions in the short term, in the medium to longer term, should FLFs be permitted to enter India they are likely to be beneficiaries of a steady flow of work from India’s burgeoning corporate sector – conglomerates which have already shown that money serves as no impediment to international expansion.

“Some of the overseas deals involve hefty fees and some of the companies have paid US$2m–3m per session,” said Anand Prasad, a partner at Indian firm Trilegal, noting that it is not just transnational heavyweights such as Tata, Bharat and Essar who are willing to fork out the big bucks to Magic Circle and Wall Street law firms, but also state governments which were showing an increased predisposition to use the services of FLFs.

Taking one for the teamHowever, as always, there is a greater good to be considered in the opening up of India’s legal services market

to FLFs— a greater good which is fundamentally about improving standards within Indian firms and attracting further investment into India.

According to Bharat Vasani, group general counsel at Tata, liberalisation of India’s legal services market is inextricably linked with economic development. “If India really wants to be an attractive destination for the foreign investor, we can ill afford to say that we don’t want foreign lawyers to have offices here,” he told The Financial Times, adding that while the Indian corporate sector is consciously trying to make India’s economy more outward looking, lawyers and the legal sector need to be at the vanguard of change.

Misra agrees, noting that while India’s legal sector has a role to play in the country’s broader economic development, liberalisation may help raise the standards of domestic firms. “Liberalising will steer corporatisation in the Indian legal service markets, which is much needed.” Likewise, Mandal agrees: “Liberalisation will help broaden the skill set of Indian lawyers; it would give … lawyers the confidence to deal with international clients.” ALB

“If India really wants to be an attractive destination for the foreign investor, we can ill afford to say that we don’t want foreign lawyers to have offices here”

BhArAt VASAni, tAtA

18

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uk report

REGIONAL

Sir, we have a situation…. How are firms in the Asia-Pacific

responding to the current macro-economic crisis? Seems that, for a lot of firms, a special crisis calls for a special response. JSM has formed a dedicated special situations group which includes selected partners and consultants drawn from a wide range of specialisations including restructuring & insolvency, securitisation, distressed assets and structured finance to name but a few. The Asia team forms part of a wider global special situations taskforce which was set up in late 2007 to respond to the changing market conditions at that time.

JSM partner Steven Miller said that the coordinated nature of the response

CHINA, US

King & Wood sets up shop in New York Multinationals and Chinese

companies in the US now have more choice when they shop around for PRC legal services in New York, as King & Wood, one of the leading firms in China, has made Madison Avenue in Manhattan its newest global address.

The New York office opening is the most recent step in King & Wood’s global expansion. The firm has already established a presence in Silicon Valley, Hong Kong (in association with Arculli Fong & Ng) and Tokyo (in association with Miyake & Yamazaki), and formed a strategic alliance with Sydney-based firm Gilbert + Tobin at the end of 2007 to strengthen its position in Australia.

At the same time, King & Wood has increased its domestic offerings significantly by expanding into a number of developing cities, including Qingdao, Suzhou and Tianjin.

The firm’s relationships with an increasing number of American companies and law firms, coupled with China’s outbound investment trend, have led it to establish a branch office in New York, which will serve as a local presence in dealing with many of the firm’s American clients and also provide international support for clients from its home jurisdiction.

management structure to allow for more prompt decision-making, including giving the green light for a possible merger with a UK firm should the opportunity arise.

Under the scheme, implemented by new managing partner Duncan Weston, the firm willbegovernedbyasingle15-memberboard,including up to nine elected members and six global practice group heads – a slight change from the seven-member management board and executive committee that was previously used by the firm.

Heller calls it quits As Heller Ehrman slowly sinks into dissolution, its London team waits for the verdict on where they willgo.Heller’seightUKpartnersareapparentlyscrambling to find a new home for themselves, their associates and their support staff. Total redundancies intheUKlegalmarket:569.(Seep22formore.)

Smooth sailing for Salans A strong presence in Central and Eastern Europe has helped Salans grow, despite the credit crunch turmoil.TheFrenchfirmrecentlyreporteda20%boostinturnoverforthefirstthree-quartersof2008, bringing in €150m(£117.97m)–upfrom£94.38mforthesameperiodlastyear.

ROUNDUP

• DavidRyanhasbeenre-electedasmanagingpartnerofPinsentMasonsforafurtherfour-yearterm(beginningMarch2009),followinganuncontestedelection

• DLAPiperissettolaunchanofficeinRomaniabeforetheendoftheyear,withseniorassociateMarianDinutippedtoleadtheventure.Theofficeisexpectedtohousebetween10and15lawyers

• AddleshawGoddardreported16redundanciesthisyear,includingtwofee-earners–thehighestsinglenumber since 2003. Those affected were offered enhanced redundancy packages in line with the length of service

• DavisPolk&WardwellhavebeenhandpickedbySlaughterandMaytoassistinadvisingtheUKgovernment on US aspects of its financial institution bailout

• AhandfulofCityfirmsincludingFreshfieldsBruckhausDeringer,Linklaters,CliffordChanceandLovellshavelandedprimaryrolesinadvisingonUKaspectsofproceedingsrelatingtotheLehmanBrothers’bankruptcy filing

• Allen&OveryplanstolaunchinMunichthismonthfollowingthehireofShearman&Sterling’sMunichheadGottfriedBreuningerandM&ApartnerAstridKrueger

• Bird&BirdwillmergewithCityboutiqueLane&Partnersthismonth.ThefirmwillbeincorporatedundertheBird&Birdbanner,andtheadditionof30-lawyersfromLane&PartnerswilltakeBird&Birdtothe100-lawyermark

Freshfields joins the group of firms to cut Theconsequencesofthecreditcruncharestill battering the global business scene and Freshfields has become the first Magic Circle firm to yield to the impact and cut four of its associates from its London real estate group.

FreshfieldsjoinsahostofotherUKfirmswhohave made redundancies recently, including a handful of regional and national firms such as Olswang, Field Fisher Waterhouse, Eversheds, Cobbetts,DLAPiperandBevanBrittan.

Halliwells on redundancy trail Halliwells is also feeling the impact of the credit crunch and launched a redundancy consultation across its real estate practice last month, with as manyas40stafffromthefirm’sLiverpool,LondonManchester and Sheffield offices possibly on the chopping block.

Wragge & Co are another UK firm effecting a similar consultation with 30 lawyers in its London and Birmingham offices to be cut.

CMS management shake-up heralds UK expansionCMS Cameron McKenna is on track for expansion into the UK, with the firm recently revamping its

NEws >>


REGIONAL

Sir, we have a situation…. was important: “When a financial institution or corporate is forced to close you need, for example, financial, regulatory, litigation and employment law advice at your fingertips.”

Baker & McKenzie also has a global financial restructuring team which has been in operation for many years now, guiding clients through the 1980s debt crisis in Latin America, the early 1990s debt crisis in the US and Europe and the 1997 Asian financial crisis.

Jeremy Pitts, head of Baker & McKenzie’s global banking & finance practice, said that the past month had been one of unprecedented volatility in the financial markets. “What’s different about this crisis is the degree

CHINA, US

King & Wood sets up shop in New York

to which trade and economies today are much more interdependent. While there has been some decoupling, economies remain closely linked and global businesses need to address the volatility in multiple markets at the same time.

“The Asian crisis in the late 1990s didn’t create the same volume of concern; it was seen largely as a regional issue. Our well-developed global platform is an advantage for clients with multinational interests.”

K&L Gates has also formed a cross-disciplinary global financial markets group and is also looking to improve its profile in the field with a regular newsletter on global financial markets. ALB

According to Bloomberg, in the first half of 2008 overseas investment of Chinese companies had more than doubled from last year and, by September this year, Chinese outbound investment had already reached US$23bn. King & Wood has seen an increasing number of its domestic Chinese clients invest abroad for both market-seeking and resource-seeking opportunities.

However, the new arrival may have to face a certain level of competition in the city as a number of PRC firms have already established a presence there.

Jun He, King & Wood’s closest rival, opened its New York office in 1994, the first PRC firm to expand overseas. Other PRC firms that claim to have a New York office include Beijing Deheng, Shanghai’s Richard Wang & Co and Shenzhen-based Guanghe and Shujin. “The main functions of our New York office are marketing and client liaison. The New York office primarily provides PRC legal advice and is a facilitator of our practices in China,” said Kirk Tong, partner at Jun He.

Two partners are based in Jun He’s New York office. Both are US qualified, but Jun He will work closely with US firms when advising on complicated transactions and issues in the US.

“We don’t want to grow our New York office to a large-sized independent practice, so the New York office won’t compete with US firms. Instead, we actively work with US firms to ensure our clients receive quality legal advice in the US,” said Tong.

Although King & Wood’s new development in the US is known to Jun He’s partners, they are not concerned about the competition King & Wood will bring.

“As PRC firms are increasingly involved in large cross-border transactions, it’s necessary for top-tier PRC firms to establish a presence in important international jurisdictions,” Tong said. ALB

news in brief >>MALLESONS OUTRANKS FREEHILLS IN ASIA-PACIFIC M&A MallesonsStephenJaquescontinuestooutrankFreehillsonMergermarket’slatestAsia-PacificM&Aleague table.

The latest results show that, in the first three quartersof2008,Linklaterstoppedtherankingsbyvalue, followed by Sullivan & Cromwell and Skadden. AllensArthurRobinsoncameinatfourth,whileFreehills,whichtoppedthetablein2007,droppedtoeighth place.

With respect to deal volume, Mallesons Stephen Jaquestoppedtheranking,followedbyFreehills,Baker&McKenzieandBlakeDawson.

In the first half of the year, Freehills was in second place,havingaM&Avalue(US$233.4bn)aboutsixtimesmorethanthatofMallesons(US$36.7bn).

Baker&McKenziehasremainedinthirdplace. Inthefirstthree-quartersoftheyear,ithad47 deals(US$12.2bn)whileBlakeDawsonhad40 deals(US$204.1bn).

MUSIC STOPS: RAJAH & TANN CALLED IN TO BREAK UP THE PARTy SingaporenightcluboperatorLifeBrandzwillterminate its agreement with London-based Ministry of Sound, under which it operated a Clarke Quay nightclub under the famous Ministry of Sound brand.

The termination is a result of licence agreement problems and allegations of unpaid royalties which had already resulted in litigation in the UK. In turn, LifeBrandzhasinstructedRajah&Tanntofileasuitagainst the brand owners in the High Court of Singapore

Ithasn’tbeensmoothsailingforMinistryofSoundinitsquesttoextendthereachofitsbrand.FranchiseclubsinBangkok,TaipeiandNewDelhihavealsobeenunsuccessful,withthedemiseoftheNewDelhiclub also attributable to franchising disputes.

DLA PIPER LOSES SHARIAH COMPLIANT FINANCE HEAD IN DUBAI Some light was shed on the talk of high turnover for DLAPiperwhenthefirmannouncedthatitsglobalhead of Shariah compliant finance, Oliver Agha, had left its Dubai office.

Agha,whojoinedinFebruary2007andtakes a three-lawyer team with him, has not revealed his destination.

However, there is speculation of a possible collaborationwithex-colleagueAbdulazizBosaily,ofAbdulazizA-BosailyLawOffice,withwhomhehadjointlymanagedtheRiyadhoffice.Theyhavealsohadan association through Clifford Chance.

ItisnotknownwhowilltakeoverAgha’spositionbut Tony Holland, former head of banking & finance atMallesonsStephenJaquesinMelbourne,wasbroughtonboardtoleadthefirm’sMiddleEastfinance practice as the regional head in Dubai.

Inaddition,seniorpartnerandchairofthefirm’sinternationalboardPeterWaytehasrelocatedfromLondon to Dubai.

20

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us report

ROUNDUP

• FreshfieldsPartnerNigelBlackabywillheadthefirm’snewinternationalarbitrationgroupsettolaunch in Washington, DC

• USfirmSonnenscheinNath&RosenthalrecentlylauncheditssecondofficeinEuropefollowingtheacquisitionofZurich-basedhotelsandhospitalityboutique,Bloch&Partner

• FiveformerHellerEhrmanlitigationpartners,includingseveralwhowerelitigationpracticeheads,recentlybidgoodbyetothecrumblingfirmtojoinArnold&PorterintheirWashington,DCandLosAngeles offices

• Sullivan&CromwellandDavisPolk&WardwellrecentlyscoredrolesonUSinsurancegiantAIG’sadditionalUS$37.8bnfunding

• SimpsonThacherpartnerLeeMeyersonwillleadateamtoadvisetheUSTreasuryafterthefirmwontheroletoworkwithUSgovernmentonitsUS$700bn(£412bn)financialmarketsbail-outpackage

ASIA, CHINA

Carbon trading warms up in Tianjin

Many CDM projects and carbon transactions have taken place

in China since 2005, but some recent developments in the legal framework and marketplace may affect China’s participation in mitigating climate change. The new Tianjin Climate Exchange is one of the most important highlights of the recent development. The Exchange, co-founded by US-based Chicago Climate Exchange (CCX), will offer auctions of registered and issued certified emission reduction (CER).

The establishment of the Exchange has been beneficial for local firms.

A King & Wood team led by Beijing partner Yang Xiaolei was hired by another co-founder, CNPC Assets Management, to represent it in this joint venture while Tianjin firm Winners led by managing partner Li Haibo has provided legal advice to Tianjin government departments.

WhileUSfirmCovington&Burlington–Heller’smost recent failed merger partner – has already nabbedatleast15ofthefirm’sintellectualpropertypartners, other former merger candidates Winston &Strawn,Baker&McKenzieandMayerBrownmayalsobeinlinetoabsorbHeller’soffices,practicegroups or both.

Judge rules Nixon’s wayNixonPeabodyhaswonoutagainstTaylorWessingafter Judge Kenneth Fisher recently ruled that NixondidnotviolateanylawsorcontractswhenithiredadozenTaylorWessingpartnersthissummer– although the firm had agreed to a two-year moratorium on recruiting from Taylor in the wake of failed merger talks.

Inasomewhatcontroversialdecision,theNewYorkjudgebasicallyruledthatthenon-competeagreementwasunenforceableunderNewYorklaw.

CC lays off litigatorsIn a move that has shocked some in the legal industry, Clifford Chance recently announced that itwaslayingoff20associatesinitsNewYorkandWashington,DCoffices.Ithasa100-lawyer-pluslitigation and dispute resolution department.

The firm has blamed a mix of “sluggishness in litigation matters” in addition to recent market volatility which has produced a “countercyclical balance”. However, the firm maintained that the cuts were not performance related, and said that retrenched staff will receive severance packages and outplacement services.

End of an era as Heller Ehrman closes its curtainsFollowing collapsed merger talks, an exodus of staff and being hard hit by the credit crunch, San FranciscofirmHellerEhrmancalleditquitslastmonthafter118years.

Chairman Matthew Larrabee was the bearer of bad news as he confirmed that the partnership had decided dissolution was unavoidable.

The floundering firm formed a dissolution committee,chairedbyNewYorkbankruptcypartnerPeterBenvenutti,tooverseethewindingdownofthe firm and all employees were told they would be paidfor60days,withasmallgroupofstafftoberetainedafterthat.(Formoreseebelowandp22.)

Orrick scoops Heller staff Orrick Herrington & Sutcliffe has become the latest firm to take advantage of collapsed firm Heller Ehrman and has snapped up an impressive group fromtheSanFranciscofirm’swreckage.

The group – including former chairman Barry Levin,BertRosenfeld(Hellerchairman1993–99),andLarryPopofsky(co-chairofthefirm 1988–93)–is28strong,witheightHellerpracticegroupleadersintotalfromthefirm’sSanFransisco,NewYorkandLondonoffices.

Former merger candidates to pick up Heller pieces Firm management at Heller Ehrman has hinted that former merger candidates may be set to claim large chunks of the dissolving firm.

NEws >>


ASIA, CHINA

Carbon trading warms up in Tianjin

REGIONAL

China leads Asian IPOs The first three-quarters of 2008 have

seen a significant decline in the number of IPOs and listings in Asia, and the total funds raised in the equity markets have nose-dived.

Many companies have postponed their listing plans amid global economic uncertainty.

According to Thomson Reuters’ recent equity capital markets review, Asian IPOs (excluding A-shares) totalled US$17.3bn from 160 issues, a 58.8% decline from the same period in 2007.

The slowdown in IPO activity has affected law firms across the region to various degrees. Those that have a sole focus on capital markets practice are among the most vulnerable.

However, leading law firms in Hong Kong and the mainland reported that their billable hours have not been declining along with the sagging stock index, and the prospects for prosperity remain plentiful.

The latest statistics back up their confidence. According to the same review, IPOs of Chinese companies accounted for 42.2% of the Asian total, or US$7.3bn of the total proceeds raised from 35 issues.

China South Locomotive raised US$1.5bn through its debut in Hong Kong and Shanghai, and its H-share IPO is the third largest in Hong Kong so far this year, after those of China Railway Construction and Want Want China. Baker & McKenzie and

Jiayuan, as legal advisors to the issuer, have helped ensure the IPO was successful.

“We don’t see many securities issues this year, compared to last year, and, although Chinese companies will continue to want to raise funds in Hong Kong, the number of deals in the pipeline is smaller than 18 months ago,” said CY Leung, senior partner of the securities group at Baker & McKenzie in Hong Kong.

The equity capital markets group at Linklaters in the region is also having a relevantly quieter time compared to last year. However, Beijing partner Paul Chow said the number of IPOs they have been involved in has not changed much this year, and only one or two IPOs have been delayed due to market conditions.

Amid the global market turmoil, Chow holds a positive outlook for IPO activity in the Greater China region. “We are very confident about the pipeline of deals – not only the quantity, but also the quality of the deals that the China market will produce. Going forward, deals will become increasingly complex with novel structures and that’s where our expertise will become important to our clients.”

Having seen potential in China’s capital markets, the firm made an investment by relocating Hong Kong partner William Liu, who specialises in advising on debt and equity linked issues, to Shanghai. ALB

Law firms increasingly find CDM projects and carbon trading to be a lucrative source of revenue.

“It’s a new market and a new opportunity for lawyers. We expect to see a large volume of emissions trading work in the long term,” said Li Haibo of Tianjin Winners.

“Many clients have realised that emissions trading is an opportunity to generate income, but they need to be more familiar with how it works, potential risks and the international rules,” said Liu Wei, executive partner of Grandall Legal Group in Shanghai, who has advised on the high-profile CDM agreement between Shandong Dongyue and Nippon Steel and Mitsubishi.

“And there’s a lot of major work yet to de done in terms of designing and implementing the domestic emission trading scheme.” ALB

HONG kONG

Kirkland responds to growing Asian PE market

Asia’s growing private equity sector has seen law firm Kirkland &

Ellis send two of its partners to its Hong Kong funds practice.

Justin Dolling and Albert Cho will move from the London and New York offices respectively in January 2009 to expand the Asian practice and respond to the region’s increasing significance for private equity.

“Moving these two experienced partners to Hong Kong reflects Asia’s

growing importance in private equity fundraising and investment,” said Bruce Ettelson, partner in the private funds practice group.

The news comes as PE funds in Asia are reported to be beating their European counterparts in capital raisings. Research by Private Equity Intelligence found that, against the 31 funds in Europe that raised US$11.9bn, 25 funds based in Asia amassed US$12.5bn. ALB

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US

Heller Ehrman: is 28 November the last day? As expected, Heller Ehrman has given its lawyers 60

days’ notice of its intention to close its doors forever, with the last day being 28 November. It is a sad end, with the firm just two years away from what would have been its 120th year of operation.

The firm has formed a dissolution committee chaired by bankruptcy partner Peter Benvenutti.

The firm’s employees have been advised that, in the meantime at least, that “the firm has work for you and expects you to report to work”. Keeping staff engaged with their work is a challenge for managers at the best of times – the motivational speeches may currently be difficult fare at Heller Ehrman.

The time for recriminations will come later, but for now dazed partners are no doubt reflecting on what a spectacular fall from grace this has been. In December last year, Heller Ehrman seemed on the cusp of a new era with the opening of a Shanghai office to accompany its Singapore, Beijing and Hong Kong operations.

The firm signed up former DLA Piper Asia managing director Nick Seddon amid speculation of aggressive expansion plans. But Seddon’s tenure there was to be brief and many of the firm’s partners also decided to vote with their feet following stalled merger talks with Baker & McKenzie. Meanwhile, Baker & McKenzie, Mayer Brown and Orrick Herrington & Sutcliffe have all been variously tipped to acquire segments of the ailing firm. Baker & McKenzie, of course, pulled out of full-scale merger negotiations last month.

A group of partners, including two partners in the firm’s Beijing office, have either left or reportedly are about to leave the firm to join US rival firms.

Joseph Cha, the former head of Heller’s Beijing office and the firm’s Asian private equity and fund formation practice, and Ying Li, former partner at Heller who led the firm’s China business practice, have both joined Proskauer Rose as partners.

The departure of Cha and Li has left Heller Ehrman’s Beijing office partnerless and drifting into uncharted waters. ALB

HONG kONG, US

Meanwhile, the pain of Heller Ehrman’s dissolution translates to gain for Proskauer Rose. The addition of

Joseph Cha and Ying Li to Proskauer Rose’s partnership will facilitate the firm’s plan to expand into Asia.

The firm expects to set up an office in Hong Kong within one month and in Beijing within six months to a year, subject to licence approval.

Once the Hong Kong office is opened, Yuval Tal, a New York corporate partner who is an integral part of Proskauer’s Lodging & Gaming Practice, will become

Heller Ehrman’s pain is Proskauer Rose’s gain

updaTe >>

international arbitration

stay of court proceedings pending arbitration

When one party to an arbitration agreement commences court proceedings instead of arbitration proceedings, a classic stand-off occurs. Since there cannot be two separate

proceedings for a cause of action arising from the same facts, one set of proceedings will be stayed. One of the relevant considerations in deciding which set of proceedings will be stayed is whether parties have taken a “step in the court proceedings”. Under section 6 of the Arbitration Act (AA) and section 6 of the International Arbitration Act (IAA), any party can apply to stay the court action pending arbitration if the said party had not taken any “step in the proceedings”.

In the recent case of Carona Holdings Pte Ltd v Go Go Delicacy Pte Ltd [2008] SCGA 43, the Singapore Court of Appeal had to decide if an application for an extension of time to file the defence in the court proceedings would amount to a “step in the proceedings”, and whether the appellants should be compelled to adhere to court timelines and file a defence in the court proceedings accordingly when a stay application is pending.

The Court held that in deciding whether there has been a “step in the proceedings”, the Court will look to whether the party had acted to demonstrate clearly and consistently, that it is submitting to the court’s jurisdiction rather than to arbitration to resolve the claim and to advance the hearing of the claim in court. A party which acted with the consent of the other will also not have taken a “step in the proceedings”. “[S]tep(s) in the proceedings” are thus likely to include applications seeking leave to defend, seeking discovery from the other party and other such applications that show the applicant’s intention to move ahead in resolving the claim in court.

Accordingly, the Court held that an application for an extension of time to file a defence in the court proceedings will not amount to a “step in the proceedings”. Further, a party should not ordinarily be compelled to file a defence in the court proceedings when a stay application is pending.

Undoubtedly, this decision eased the particular distress to parties when they apply to stay court proceedings in favour of arbitration while simultaneously fighting off looming court timelines. The parties and the Singapore Court should, in the words of Justice of Appeal V K Rajah, “approach the issue of timelines in a commonsensical and practical manner infused with the spirit of fairness”.

Mr Tony Yeo is a Director of Drew & Napier’s Intellectual Property Department. He heads the Biomedical Sciences Practice Group and is a member of the Examination Committee of the Intellectual Property Office of Singapore (IPOS) for registered patent agents. He can be contacted at +65 6531 2512 or [email protected]. For his full CV, please visit www.drewnapier.com/directors.html.

Tony yeo

NEws >>


resident partner in the new office. All three partners will lead the firm’s entry into the region and help serve its clients as they build their businesses in China.

“The Chinese and Pacific Rim economies are expanding at a robust rate, with projections showing that business activity in the area likely will equal and even surpass that of the US and the EU

in the not-too-distant future,” said Allen I Fagin, chairman of Proskauer.

“This has not been lost on our clients, who also are expanding into Asia. It’s essential that we be there, too, not only to meet their needs but to capitalise on the many other opportunities available to us.”

The firm’s Asia practice will mainly focus on three areas: lodging and

gaming, a booming sector across the region; sports law, another growth industry as symbolised by the Beijing Olympics and the increasing globalisation of the world’s sports leagues; and investment funds as private equity, hedge and sovereign wealth vehicles search out and capitalise on the multitude of opportunities in the region. ALB

International arbitration: Giving China a fair go An underdeveloped legal system.

Problems with enforcement of awards in local courts. Cosy relationships between judges and local authorities. Biased Chinese arbitrators. These are some common concerns raised about arbitration in China.

But times have changed, said David Bateson, long-standing partner at Mallesons in Hong Kong. “In recent years, we’ve seen a lot of progress,” said Bateson. “For example, the Supreme People’s Court now automatically vets all decisions where a local court declines to enforce an arbitral award. This counters any perception that local courts may not decide these matters in an impartial manner.”

Other improvements made to Chinese arbitral law include allowing foreigners to act as arbitrators and allowing non-Chinese legal advisers to assist with disputes. “Parties can also choose to apply laws other than Chinese law, although there are certain exceptions,” said Bateson. “Chinese arbitral law is increasingly aligned with best international practice.”

China’s best known arbitral body, CIETAC, has been criticised for its system of appointing arbitrators which sees each party appoint one arbitrator of their choice and CIETAC appointing a chairman to the three-person panel. “This third person is usually Chinese, and foreign parties do sometimes raise concerns about perception of bias,” said Bateson, himself a CIETAC arbitrator.

“However, the anecdotal evidence these days is that foreign parties are, in fact, having more success than Chinese parties in these proceedings.”

Dubai has made the news lately with its recent efforts to attract international arbitration, but Bateson said that he cannot see Dubai overtaking the traditional Asia arbitration hubs in the near future in the race to secure China-related work. “Obviously, Dubai doesn’t have a strong arbitral history and UAE law is still something relatively unfamiliar to most parties,” he said. “There’s also a geographical disadvantage … And then there’s the perception that the Middle East is less safe because of terrorism – it’s an unfair perception for Dubai, but one you hear expressed a lot. What they’re doing in Dubai is a good thing, but I can’t see it attracting a lot of China-related work just yet.”

And the stakes are getting higher for China arbitration work. Mallesons have doubled their workload in this area over the past 12 months. “This is partly attributable to the expansion of our Shanghai office, but certainly not completely,” said Bateson. “The increase is very noticeable. PRC companies have become notably more comfortable with dealing with foreign lawyers in the last 12 months, as they are heavily investing overseas [particularly in resources in Western Australia] and getting involved in disputes.” ALB

CHINA

Heller Ehrman’s pain is Proskauer Rose’s gain

24

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some of Korea’s top companies have seen a dramatic drop in their share price after engaging in acquisitions,

according to an industry report, and local law firms are warning that M&A work is likely to follow the downturn.

Researching the nation’s top M&A deals worth more than US$71m over the last three years, chaebul.com found of the 16 companies engaged in acquisitions, 11 now face significant losses in share value.

Since 2005, acquisitions have been accumulatively valued at around US$12bn. As of 30 September this year, however, the companies’ collective share value dropped to around US$8bn.

Sang Gon Kim, partner at Korean law firm Lee & Ko, said that the decline is a reaction to the global financial crisis.

“The crisis has resulted in stock market plunges worldwide, which I believe has significant impact on the decline of share value of those acquired companies in Korea,” he said.

He also cites the acquiring companies’ excessive financing, which has led to a tightening of capital.

This is happening in a period when, as a nation of borrowers of credit from abroad, the global financial crisis is making borrowing problematic.

South Korea’s M&A market has shrunk since the crisis loomed and Korean lawyers are likely to continue to feel the effects in their practices.

“The recent financial crisis has had a significant chilling effect on the M&A market here,” said Kim. “Although we cannot predict the future for sure, it’s likely to continue to be in such a state for a while, because the crisis makes potential investors wary of difficulties in M&A funding due to capital liquidity problems.”

On the positive side, the private equity (PE) sector is seeing a turn of increased activity. Over the last month, the Korean market has seen local and international PE firms investing in the sector, which includes the recently announced US$3bn deal by US-based Oaktree Capital Management. ALB

kOREA

Korean M&A company values plummet: report

updaTe >>

international Tax

The eu will delay the common tax base project

To the surprise of many, the EU common tax base project has been delayed. The original intention was to present a proposal in the form of a draft Directive to the College of Commissioners and then in turn to

a meeting of ECOFIN before the end of the current year. At the opening session of the International Fiscal Association Congress in Brussels on 31 August Commissioner Kovacs, who has been championing this project, announced that the project was being postponed because he would rather present a ‘perfectly elaborated and well justified product at the appropriate time than present an incomplete one just to meet an artificial deadline’.

Possibly the Irish No vote in their June Referendum on the Lisbon Treaty plus considerations in relation to the re-election of the Commission next year has caused a delay in the project which is highly controversial in some Member States, including the UK, who had threatened to veto it.

But more importantly it now seems likely that the scope of the project will be extended to cover banks and financial institutions. There will also be more time to complete the various impact assessments of which there would appear to be four or five.

Presumably therefore the quarterly meetings of the Working Group made up of all the Member States will revive. However there is unlikely to be a repeat this year of the December meeting when outside professional bodies are invited to a meeting with the Member States and the Commission to review progress to date.

German prosecutors investigating new cases of tax evasionGerman prosecutors have opened 966 new investigations against suspects who may have evaded taxes by using bank accounts in Liechtenstein.

The investigations are based on 2,000 bank statements received by men currently on trial on charges that they blackmailed Liechtensteinische Landesbank (“”LLB”) over possible tax evasion by the bank’s clients.

The new cases, apparently cover more than €1 billion, or $1.47 billion, of bank deposits in Liechtenstein. They have been transferred to prosecutors all over Germany for follow up. Germany has been roiled by the nationwide investigation of hundreds of people suspected of failing to tell tax authorities about bank deposits in Liechtenstein, the principality sandwiched between Switzerland and Austria.

The men that have been on trial in the Rostock case since April, identified only as Michael F., Jens P. and Michael A., are accused of threatening LLB, and its customers that they would inform German authorities about funds that the clients had deposited with the institution.

By Debbie Annells, Managing Director, AzureTax Ltd, Chartered Tax Advisers Suite 1010, 10/F Lippo Centre, Tower Two, 89 Queensway, Hong Kong www.azuretax.com, a member of AzureTax Group (Tel) +852 2123 9339 (direct line), (Main Line) +852 2123 9370, (Fax) +852 2122 9209 Registered with the Chartered Institute of Taxation for purposes of anti money laundering legislation.

Debbie Annells

NEws >>


HONG kONG

Intellectual property firm extends Asia operations in Hong Kong

Marks & Clerk Solicitors, well known in British legal circles for its specialist intellectual property practice,

has decided to take root in Asia through a newly formed firm in Hong Kong, Anthony Evans & Co. The move follows its merger with IP firm Lloyd Wise last year to extend its reach into Singapore and China.

The new Hong Kong office cements a long-standing referral relationship that Marks & Clerk Solicitors has had with the local lawyer, Anthony Evans, who was formerly a partner at Robin Bridge & John Liu. Evans, who has practised IP law in Hong Kong for 27 years, will be heading Anthony Evans & Co as senior partner.

Hong Kong allows foreign law firms to practise there, but some international firms have preferred to form alliances with local firms in emerging Asian countries such as Singapore, Hong Kong and China to tap quickly into domestic markets. Hong Kong has seen several such moves vis-à-vis its position as one of the China’s key economic gateways.

IP practice in China was given a shot in the arm in the 12 months leading up to the Beijing Olympics, by IP laws in the republic being stringently refined to align with international practice. Moves by international firms to get a piece of the action – although they have to partner local firms in China in their offering – stem also from the number of foreign enterprises registering patents and trademarks in China.

By the end of June 2005, China’s cumulative number of registered trademarks had reached 2,370,000, of which 422,000 were registered by foreign enterprises coming from 129 countries and regions.

In the first half of this year, the State Administration for Industry & Commerce dealt with 21,045 cases of trademark transgression, marking an 11% year-on-year increase. ALB

CHINA

HONG kONGPartner exodus from Allen & Overy

seven corporate partners in Allen & Overy’s Hong Kong office have quit the firm to join Latham & Watkins. The

group includes the firm’s two top honchos in its China and Hong Kong group: Asia corporate chief Michael Liu and China group head Kenneth Chan. The other partners are Jane Ng, Simon Berry, Stanley Chow, William Woo and Cathy Yeung.

Liu and Chan pulled in some big-ticket deals for Allen & Overy’s corporate practice; they had a hand in getting the firm to be appointed as the first London-based adviser on the Beijing Olympics in 2002. The firm conducted corporate and finance work for the Beijing Municipal Development and Planning Commission, which advised on the construction of facilities for the recent games.

The rash of departures leaves four partners in the Magic Circle firm’s Hong Kong corporate group. The firm looks like it has had a busy month. Before the exodus, it pushed ahead with its Middle East expansion plan, relocating 20 lawyers to the firm’s offices in Dubai, Abu Dhabi and Riyadh. ALB

Just when you thought the halcyon days of stock borrowing and short selling were over, the China Securities

Regulatory Commission has announced that it will launch margin financing and securities lending on a trial basis. However, the CSRC is taking a very cautious approach to the companies that will be permitted to participate in the trial.

Fang Jian, partner at Linklaters at Shanghai, said that the CSRC will be taking into account matters such as the company’s scale of net assets, compliance track record, net assets risk control indicators, and their readiness for conducting the business. “On this basis, it appears likely that only a small number of ‘A’ ranking securities companies will initially be granted the licences,” he said.

Stringent rules will also apply to investors. “The approved securities companies will be required to apply relatively high qualification requirements to the investors eligible for margin financing and stock borrowing,” said Fang. “Pursuant to the Implementation Rules, an investor must, among other things, have been a client of the relevant securities company for more than half a year in order to be eligible for funds and/or stock borrowing from that securities company.” ALB

China Securities Regulatory Commission trials margin financing

26

NEws >>


kUWAIT

DLA Piper joins vanguard in Kuwait through local tie-up

When DLA Piper announced its ambition to enlarge its presence in Abu Dhabi, Doha, Dubai and Muscat,

Kuwait was not included in the picture. But the demands from the oil-rich country have spurred DLA Piper to enter a joint venture with Al Wagayan, Al Awadhi & Al Saif, one of the largest firms in Kuwait.

The joint venture, DLA Piper Kuwait, will provide legal services to clients in Kuwait and capitalise on the Kuwaiti law firm’s areas of specialisation, which include corporate, commercial, banking & finance, Islamic finance and projects.

“The Kuwaiti market has grown and we have seen the completion of numerous transactions that are becoming ever more complex in nature and transcend Kuwaiti borders. Clients increasingly demand comprehensive legal representation that requires not only local expertise but also expert international resources, which we can now provide under the DLA Piper brand,” said Nader Al Awadhi, senior partner at Al Wagayan, Al Awadhi & Al Saif.

Foreign law firms are only allowed to practise in the jurisdiction with a partner Kuwaiti firm. Kuwait’s legal market is largely domestic, with only a handful of local law firms handling international work. In recent times, the local law firms have made alliances with international firms and other Gulf firms to expand their practice. ALB

updaTe >>

intellectual property

Court revokes ‘Love’ Trade mark

The Singapore High Court in a recent decision of Love & Co. Pte. Ltd. v. The Carat Club Pte. Ltd. [2008] SGHC 158 invalidated the trade mark registration for the mark “LOVE” in Class 14 for diamonds, jewellery and

precious stones, on the ground that the trade mark was registered in breach of Section 7 of the Singapore Trade Marks Act (Cap. 332) (“the Act”). The Court also granted an application to revoke the registration of the trade mark “LOVE” for non-use under Section 22(1) of the Act.

Section 7(1)(b) of the Act precludes a mark devoid of any distinctive character from being registered as a trade mark. The Court decided that the trade mark “LOVE” was wrongly registered because it was devoid of any distinctive character. The Court found that the word in the trade mark registration, “love”, was used prevalently in the jewellery trade by other jewellery traders prior to its registration as a trade mark. The word “love” was used to market, label and mark jewellery. As a result of ubiquitous use, there was an erosion of the ability of any one trader to use the word “love” to distinguish its goods from those of other jewellery traders. The Court considered the graphical representation of the trade mark and held that there was nothing unique to enhance its distinctiveness.

The Court also held that the trade mark “LOVE” was wrongly registered because an intended purpose of jewellery was to express love and affection. Under Section 7(1)(c) of the Act, a mark is not to be registered as a trade mark if it serves in trade to designate the intended purpose of goods. The Court held that a particular good may have various intended purposes which may be of equal importance. The intended purpose of goods was to be answered from the perspective of an ordinary and discerning purchaser and the relevant consideration was what the purchaser generally intended to use the goods for. The Court was of the view that as one of the intended purposes of jewellery was to express love and affection, the trade mark “LOVE” had been registered in breach of Section 7(1)(c) of the Act.

It was argued that the trade mark had acquired a distinctive character as a result of its use in relation to the jewellery trade. The Court rejected this argument because there was no evidence of genuine use of the trade mark.

John Lim, Associate Intellectual Property and Technology Group Alban Tay Mahtani & de Silva LLP Phone +65 6428 9883 Email: [email protected]

John lim

NEws >>


MIDDLE EASTLatham & Watkins advises on Indian telco buy-up

Despite its relatively

recent entry into the Middle East, Latham & Watkins has bagged another multi-million-dollar deal, this time representing Etisalat, the Middle East’s largest telecom services provider in its purchase of a 45% stake in India operator Swan Telecom. This deal is another signature of the firm’s quiet but effective style in the Middle East. It had only set up its Dubai, Abu Dhabi, Doha and Qatar offices this year.

Etisalat, headquartered in the UAE, is one of the largest telecommunications operators in the Arab world. Its 45% stake in Swan telecom was acquired through a cash pay-out of US$900m for new share issues in the India telco, which has just received its licence to provide a full spectrum of telecom services covering a population of over 900 million across India.

The Latham & Watkins team was led by London partner Michael Bond and Singapore partner Mark Nelson. They were assisted by the firm’s team in Dubai. India firm AZB Partners advised Etisalat in India, while Swan Telecom was represented by Wadia Ghandy and Co. ALB

MIDDLE EAST

Curtis sets up Dubai officeCurtis, Mallet Prevost, Colt &

Mosle has set up its new office in Dubai, housed in the Dubai International Financial Centre (DIFC). Peter Stewart, corporate partner of the firm’s private equity practice, is the managing partner for the Dubai office, and Charles Buderi, head of the firm’s London operations, will be dividing his time between London and the emirate.

Its Dubai opening is part of the firm’s relatively unconventional expansion strategy that includes opening new offices in Kazakhstan and Istanbul. While most firms have chosen Dubai or Abu Dhabi as their first Central Asia/Middle East base, Curtis Mallet has done the reverse.

It is understood that the Dubai office is focusing on M&A, energy & commodities, sovereign wealth funds and dispute resolution in the DIFC, and has other practice areas. The firm’s decision to be situated in the DIFC may well be strategically founded on the huge growth potential of dispute resolution in the Middle East. Last year, the firm’s London partners won the first judgment handed down by the Judicial Authority of the DIFC Courts on behalf of its client Daman Real Estate Capital Partners Ltd, a publicly listed company in the United Arab Emirates. ALB

MIDDLE EAST

Akin Gump resurfaces in Abu Dhabi

Akin Gump Strauss Hauer & Feld has launched an office in Abu Dhabi, 10 months after it closed down its

Dubai office when its only two partners there, Gavin Watson and Chris Sioufi, were raided by Dewey & LeBoeuf.

It started operations in Dubai in 2005 and was the first US firm to receive a licence from the Dubai Financial Services Authority to provide legal services to financial institutions operating in the Dubai International Financial Centre.

The firm’s new Abu Dhabi office will be headed by corporate partner Natasha Kohne who has relocated from New York. She will be joined by six lawyers including corporate partners Lee Kolodny and Elisabeth Cappuyns. Three associates from New York and London will complete the line-up, with the firm hoping to grow the office to 20 lawyers over the next three to four years.

Clifford Chance, Freshfields Bruckhaus Deringer, DLA Piper, Ashurst, Norton Rose and Eversheds, and US firms Hogan & Hartson and Latham & Watkins are among firms that have received Abu Dhabi licences over the last year. ALB

28

NEws >>


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30

NEws | appointments >>


APPOINTMENTS

LaTeraL hires ►Name Leaving Going to Practice Location

Karl Tabbakh McCarthy Tétrault DLA Piper Corporate Abu Dhabi

Angelyn Lim Dechert Herbert Smith Finance,PE Hong Kong

Nick Seddon Heller Ehrman Eversheds Corporate Hong Kong

Elaine Chen JSM Clifford Chance Commercial Hong Kong

Jack Su Lovells JSM Energy & resources Hong Kong

Everton Robertson

Maples & Calder Walkers PE,capitalmarkets Hong Kong

Jennifer Lee Clifford Chance Walkers Corporate Hong Kong

Michael Padarin Minter Ellison Walkers Corporate Hong Kong

Matthew Gates K&LGates Bird & Bird Corporate Hong Kong

Mohamed Shariff Mohamed Ismail & Co Skrine Islamic finance Malaysia

Nicolas Richard PricewaterhouseCoopers Conyers Corporate Mauritius

Sameer Tegally Ireland Blyth Conyers Corporate Mauritius

Shefali Goradia NishithDesaiAssociates BMR & Associates Tax Mumbai

Murali Neelakantan

Ashurst Khaitan & Co India, commercial Mumbai

Kalpana Unandat Ashurst Khaitan & Co India, commercial Mumbai

Dawn Zhang Faegre & Benson Greenberg Traurig Corporate Shanghai

Fabiola Maria Suwanto

PerkinsCoie Bryan Cave Offshore advisory Shanghai

Timothy Elsworth HWL Ebsworth Stephenson Harwood Marine, shipping lit Singapore

Biswajit Chaterjee

Allen & Overy DLA Piper Capital markets Singapore

Reiko Sakimura UBS Warbug Clifford Chance Capital markets Tokyo

Keiichi Tadaki SupremePublic ProsecutorsOffice

Mori Hamada & Matsumoto

Litigation Tokyo

HWL Ebsworth Stephenson Harwood

Elsworth leaves EbsworthAdmiralty specialist Timothy Elsworth has moved from HWL Ebsworth in Sydney to jointheSingaporeofficeofStephenson Harwood.

The former deck officer will jointhefirm’smaritimepracticegroup and advise on all aspects of admiralty law, insurance and offshore litigation. Workingforshipowners,P&Iclubs,commoditiestraders and financial institutions, Elsworth has been involved in many of most highly publicised marine casualties of the last few years, including the‘Betelgeuse’BantryBaydisaster,thesinkingofthe Kowloon Bridge off the coast of Ireland and the groundingofthe‘BungaTerataiSatu’ontheGreatBarrierReef.

For Elsworth, the appointment came at a good time. “I yearned to return to Asia having done Asian

business for well over 20 years and having lived in HongKongfor11,”hesaid.

“I was particularly attracted to SH because it involves working with former partners and colleagues fromSRTwhomIhaddevelopedgoodpersonalrelationships with and knew well, and are now members of the merged firm.”

Thelen Pillsbury

Pillsbury raids Thelen’s China practice PillsburybecamethelatestfirmtoexpanditsChinapracticewhenitacquiredThelen’sentireChinapractice group of approximately 20 attorneys, including Shanghai-based partners Thomas Shoesmith and Meg Utterback.

“From day one [since the Shanghai office was opened] we knew that we would need a much larger presence to achieve long-term success inChina,”saidPillsburyvicechairSteveHuttler, whooverseesthefirm’sinternationaloffices. “When this opportunity presented itself, we found it an ideal solution, particularly when we recognisedthattheteam’suniquebusinessmodeland capabilities would translate well into other international markets.”

ThomasShoesmith,theformerheadofThelen’sShanghaioffice,willbeheadingPillsbury’snewShanghaioffice,whilecurrentPillsburyShanghaimanaging partner Joseph Chan will remain lead firm representative and local section leader of the corporate&securitiespractice.Pillsbury’schair,JimRishwain,expectsthejoiningofthenewChinagrouptobringmanynewclientstoPillsbury.

Pillsbury’sShanghaiofficewasopenedayearago,whileThelensetupitsShanghaiofficeinlate2006.It is unclear whether the raid is a sign that Thelen is going down the same track as Heller, but Thelen has reportedly been unable to merge with another firm and has been suffering from a slew of partner defections in the US.

It has been confirmed by many international firmsinChinathatamidtheglobalmarkets’

turmoil and credit crunch, corporate activity has beenslowerthan12–18monthsago.However,some,suchasPillsburyandEversheds,areseeingthatthebestuseofthequietertimeistoconsolidatetheir China practices through lateral hires, relocationsoracquisitions.

Stephenson Harwood Dechert

Dechert goes out on a limbPreviouslyfromStephensonHarwood,privateequityandhedge funds specialist Angelyn LimhasjoinedDechertasapartner in its Hong Kong office. Lim, whose appointment will bring the number of fee earners in the firm’sHongKongofficeto10,waspreviously at Herbert Smith then Stephenson Harwood & Lo.

“Angelyn’sexperienceinglobalsecuritiesandassetmanagement adds a strong dimension to our services inAsiaforinvestmentfunds,”saysPeterAstleford,whoco-chairsDechert’sfinancialservicespractice.

Lim has played a large role in many of the region’smostsignificantfinancialtransactions,

Timothy Elsworth

As for his plans? “My appointment here is long term and I expect to be

based in Singapore for the rest of my career, although I will give support to our other regional offices. SH has a very vibrant and enthusiastic attitude which I am confident will help develop not only our shipping casualtypracticebutallaspectsofthefirm’sbusiness.Iam looking forward to settling into Singapore and being involved with its shipping community.”

Angelyn lim

in-house Conyers

Conyers rolls out new practice, adds partnersOffshorefirmConyersDill&Pearmanhasfurthereditsspecialty by opening a practice in Mauritius, securing two former corporate sector lawyers to the team.

NicolasRichardandSameerTegallywillbebasedatits Ebene locality. The two corporate and commercial specialists come from in-house positions, with Tegally comingfromthePricewaterhouseCooperslegaldivisionandRichardfromIrelandBlyth,whowasitslegal affairs manager.

The new practice will focus particularly on

acting for a Japanese asset management group in theestablishmentofaUS$1.5bnumbrellahedgefund and the largest local independent financial intermediary in Hong Kong in the establishment of a retail fund distribution platform.

Last month, ALB reported that the firm had appointedformerShanghaiGeneralMotorsGC Henry Wang as managing partner of its newly opened Beijingoffice.

NEws | appointments >>


Nishith Desai BMR & Associates

Tax expert moves from legal to corporate Hopping from legal to corporate advisory is corporate tax expertShefaliGoradia,whojoinedfinancialservicesfirmBMR&AssociatesinMumbai,followinga14-yearstintastheinternational taxation practice headatNishithDesaiAssociates.

Goradiahasadvisedonanumberoflocalandinternational deals including cross-border M&As, corporate reorganisations and investment structures.

“WhatattractedmetoBMRisthatit’safast-growing organisation and offers a conducive environment, challenging work and intellectual stimulation,”saidGoradia.

Although having moved from a senior managementposition,Goradiasays:“I’mapartofamuchlargerorganisationatBMR.Icontinuetopractice international tax which I have been doing forthelast16yearsofmycareer.”

shefali Goradia

Faegre & Benson Greenberg Traurig

Greenberg Traurig boosting new officeGreenbergTraurigconfirmeditscommitmenttotheAsianjurisdictionbyboostingitsnumbersintherecently opened office in Shanghai.

Dawn Zhang, a corporate & securities partner previouslywithFaegre&Benson,hasjoinedGreenbergTraurig’sShanghaiofficeasapartnerandshareholder.She has extensive experience advising clients on China-relatedcross-borderM&A,restructuring,jointventures,venture capital and general corporate matters.

She has been involved in many high-level deals, and as the primary lawyer in China assisted a leadingOriginalEquipmentManufacturing(OEM)multinationalcorporationtoacquireatargetcompany’snotebookPCOEMbusinessforUS$200m.

Zhangjoinsnineotherpartnersintheoffice.Herappointmentaddsfurtherstrengthtothefirm’spractice,saidmanagingshareholderPeterANeumann.Headdedthat there will be more appointments to come.

Heller Ehrman Eversheds

Eversheds snaps up Nick Seddon for Asia growth Anotherstoryofhowonefirm’spain can be translated into another’sgainhastakenplaceinAsia’sdynamiclegalmarket.

Eversheds has picked up bankrupt firmHellerEhrman’sAsiaregionalmanagingshareholderNickSeddonto lead its expansion in Asia, opening offices in Hong Kong and, later, in Singapore.

Ashurst Khaitan & Co

Lawyer jumps again to new firmCorporate transactions lawyer MuraliNeelakantanhasmovedtoKhaitan&Co’sMumbaiofficeafterspendingjustoverayearinAshurst, where he was head of theIndiaGroup.

“While it is not common to findaheadofagroupinamajorinternational law firm to have had a stint of about ayear,”Neelakantanadmitted,“theopportunitytojoinKhaitan&Co.whentheIndianlegalmarketisstill very vibrant was difficult to ignore.”

NeelakantanisqualifiedinIndiaandEngland&Wales, and has worked on cross-border transactions with London firms Simmons & Simmons and Arnold &Porter,andcountspastclientsintheIndiangovernment and business sector, and Japanese corporations,PEandfinancialhouses.

NeelakantanhasbroughtassociateKalpanaUnandatwithhim.Thetwohaveknowneachothersince1995when they were associates in the same firm in Mumbai.

“She has almost unparalleled experience in a decade ofbeingakeymemberoftheIndiaGroupatAshurstand working on most of the Indian deals that Ashurst didduringthattime,”saidNeelakantanofUnandat.

JSM Clifford Chance

Commercial litigation partner reunites with old colleague After working together for a decade in JSM, Elaine Chen reunites with renownedlitigatorBrianGilchristatCliffordChance.Gilchristjumpedtothat firm in May this year.

“SheandGilchristhaveworkedtogetherforover10years,andhaveprovedthattheyareaformidableteam,”saidMartinRogers,CliffordChance’sheadoflitigationanddisputeresolution

various Clifford Chance

Clifford Chance secures Asia link It has been a busy period for the Magic Circle firm in Asia. After finalising the appointment of PeterCharltonasheadofitsAsianoperations,it also secured the services of another capital marketspartner,RahulGuptanfromtheIndiafirmAmarchand & Mangaldas & Suresh A. Shroff & Co, for its Singapore office.

Charlton, who was unopposed in his election, will replace Jim Baird who was forced to resign hispostaftertakingill.AnelectionforCharlton’sformer office of global corporate chief will begin shortly and, while the firm remains coy on who will be nominated, various sources suggest that M&A partner and former London corporate head Matthew Layton is the early front runner.

NowthefirmhasacquiredtheservicesofcapitalmarketsexpertReikoSakimura,whohasjoineditsTokyoofficeaspartner.Sakimurajoinsthefirmafter stints at UBS Warburg, where she was both adirectorandanexecutivedirector,inthebank’sTokyo investment banking division and Linklaters, where she had been a partner since 2005.

Reiko’sappointmentbringsthetotalnumberoflateral hires made by the firm in Asia to six – more thanallofthefirm’sMagicCirclecounterparts.

“Reikohasanenviabletrackrecordindebtandequitycapitalmarketproducts,particularlyinpublicconvertiblebonds,”saidPeterKilner,Tokyoofficemanaging partner and head of capital markets for the firm in Japan.

“She has worked with most of the domestic and international issuers in the Tokyo market, and we are delighted that she will be bringing that experience to our team at Clifford Chance.”

Seddon’sexperienceinmanagingbusinessesforgrowth, particularly when he was at the helm of DLAPiperinAsia,makeshimanidealcandidatetobuild a presence for the firm in Hong Kong.

“Hong Kong provides a crucial gateway into China – and its liberal economic climate attracts business from across the globe,” said Bryan Hughes, chief executive designateofEversheds.“It’sthemostpopularAsianlocationforcompaniestobasetheirAsia-Pacificorinternationalheadquarters–areasoninitselfforestablishing a strong presence in this important market.”

Seddon’sdecisiontojoinEvershedswasmadeas the troubled West Coast giant moved closer to dissolution following its failed merger talks with Baker&McKenzieandMayerBrown.

Just a few weeks ago, Joseph Cha and Ying Li, formerpartnersinHeller’sBeijingoffice,joinedProskauerRosetohelpthefirmbuildapracticeinHongKongandBeijing.

nick seddon

Murali neelakantan

Elaine Chen

Mohamed Ismail & Co Skrine

Shariah compliant finance to take off at Skrine In an effort to kick off its Shariah compliant finance practice, Malaysian law firm Skrine has announced thatMohamedIsmailShariffwilljointhefirm.

Ismail’sownpractice,MohamedIsmail&Co,willbe absorbed by Skrine as part of the deal, bringing thetotalnumberoflawyersatthefirmtonearly90.

To date, Skrine has only had a modest involvement in Shariah compliant finance, but this is set to change with the arrival of Ismail and his team.

“To be able to compete with other international firms, and with Malaysia becoming an Islamic banking hub,thereisaneedforsizeandqualityofservices,”Ismail told TheMalaysianReserve recently.

“That must be backed with a big set up, where other necessary services are available. This is to meet the present trend.”

investmentfunds,PE,JV,financeandsecurities,andwillhavesupportfromlawyersinthefirm’sDubaiand Singapore offices.

for Asia. “… they will enable us to develop Clifford Chance’sHongKongcorporateandtaxlitigationpractice.”

ChenisqualifiedinEngland&WalesandHongKong.

32

NEws | regional update >>


Reg

ional

updat

es

Each month, ALB draws on its panel of country editors to bring readers up to date with regula-tory developments across the region

CHINAPaul Weiss

PHILIPPINESSyCip Salazar Hernandez & Gatmaitan

MALAYSIATay & Partners

INDIASingh & Associates

SINGAPORELoo & Partners

The local regulations attempt to address many issues important to the establishment of PE funds, such as timing for the capital contribution and tax treatments of the partners. For example, the Circular does not specify a time limit for the minimum equity funding of Rmb 100 million be injected. Thus, in accordance with the Partnership Enterprise Law, the partners of a Shanghai PE fund organized as a limited partnership may agree in the partnership agreement the time period and conditions the GP may draw on the commitments of the LPs. On taxation, the Tianjin authorities allow the GPs and LPs the flexibility to choose the local tax bureau at which they will pay income tax on income derived from the PE fund. However, such policy is not necessarily accepted by other localities.

While local authorities, such as Shanghai and Tianjin, encourage domestic investors in onshore private equity funds, it is not the same for foreign investors. Regulations governing partnerships with foreign general or limited partners were drafted in 2007 but have not yet been adopted. Thus foreign investment in PE funds is still limited by regulations of venture capital investments in high tech industries.

Written by Hans-Günther Herrmann, counsel Xu Yang, paralegalPaul, Weiss, Rifkind, Wharton & Garrison

Hong Kong Club Building, 12th Floor 3A Chater Road, Central Hong Kong Email: [email protected] Ph: (852) 2846-0331

Since the promulgation of the Partnership Enterprise Law, which came into effect in June 2007, local Chinese governments have taken important steps to facilitate the establishment of private equity funds pursuant to such Law.

As early as November 2007, the Administration of Industry and Commerce (“AIC”) in Tianjin issued the Opinions on Registration of Private Equity Investment Funds and Private Equity Investment Fund Management Enterprises (the “Opinions”) allowing both domestic and foreign investors to establish private equity (“PE”) funds in the form of limited liability company and company limited by shares. Domestic investors can also establish limited partnerships to make PE investments. Tianjin authorities seem to treat foreign invested enterprises as “domestic” investors in their establishment of PE partnerships.

On August 11, 2008, the Shanghai AIC jointly with the Financial Services Office, and the State and Local Tax Bureaux issued the Circular on Matters with respect to Registration of Equity Investment Enterprises (the “Circular”). The Circular regulates the establishment of “equity investment enterprises” and “equity investment management enterprises”. It explicitly allows equity investment enterprises to be established as limited partnerships and clarifies the income tax treatment of individuals who are general partners or limited partners. It authorizes these enterprises to have “equity investment” and “equity investment management”, respectively, as their registered business scope, without making their establishment subject to any industry-specific approval or oversight. Unlike existing venture capital regulations, there is no requirement to invest in high tech industries.

CHINA

Local Initiatives Facilitate Rmb Private Equity Funds

PHILIPPINES

New revenue regulations on transfer pricing are in the works as an effort

Philippines adopts OECD Transfer Pricing Guidelines

as interim measure



methods relating to transfer pricing will feature more meaningfully in Philippine tax law.

Written by Mary Kristerie A. Baleva

SyCip Salazar Hernandez & Gatmaitan SSHG Law Centre 105 Paseo de Roxas, Makati City 1226 Philippines Phone: (632) 817-98-11 loc. 326 Fax: (632) 817-3896 Email: [email protected] Website: www.syciplaw.com

to remedy the sharp decrease in the collection of taxes on transactions between associated or interrelated enterprises. Pending the release of these regulations, the Philippine Bureau of Internal Revenue (“BIR”) adopted the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations issued by the Organisation for Economic Co-operation and Development (“OECD Transfer Pricing Guidelines”), in order to preclude any issue that may arise in the interim.

The OECD Transfer Pricing Guidelines emphasize the significance of the arm’s length principle, as defined in Article 9 of the OECD Model Tax Convention on Income and on Capital. Recognizing that profit levels of transactions between associated or interrelated enterprises may be affected by special conditions that apply to their intra-group relations, the arm’s length principle seeks to adjust profits by eliminating these special conditions and treating the transaction as if it were undertaken by independent enterprises in an open market.

The concept of arm’s length transactions is not new to Philippine taxing authorities. Section 50 of the National Internal Revenue Code of the Philippines gives the Commissioner of Internal Revenue the authority to allocate income and expenses between or among associated or interrelated enterprises, if a related taxpayer has not reported its true taxable income. Moreover, as early as 1998, the BIR had issued, among others, audit guidelines and procedures in the examination of interrelated groups of companies, which makes substantial references to the OECD Transfer Pricing Guidelines. However, the considerable decrease in collections despite the exponential increase in transactions between associated or interrelated enterprises on account of cross-border commerce in a global economy has prompted the BIR to craft a more efficient and comprehensive means of determining and enforcing tax consequences on intra-group profits.

The adoption of the OECD Transfer Pricing Guidelines at this nascent stage in the development of the revenue regulations is a welcome indication that internationally-accepted principles and

Islamic finance conservatism is the

“New Black”

MALAYSIA

Until recently, interest in Islamic finance among non-traditional countries has been limited partly due to a lack of awareness, and the perception that it is confined to Muslim countries. However, the recent global credit crisis, sparked by the U.S. subprime market collapse, has diverted attention to Islamic finance as an alternative source of financing.

The global credit crisis has propelled Islamic finance into the limelight in 2 ways.

First, with conventional banks nursing losses of at least US$400 billion, Islamic banks remain mostly unaffected with their liquidity intact. Islamic banks and investors (especially those from the Middle East and GCC countries) are flushed with petrodollars that are seeking investment returns, preferably in Syariah-compliant Islamic investments. In the new dawn of credit squeezes and crunches, the ample liquidity of Islamic funds is an oasis to fund seekers.

Secondly, the fear of complicated credit instruments involved in the credit crisis (such as the infamous subprime papers and collateralized debt obligations) has driven many investors to turn to less exotic forms of instruments. Islamic finance is conservative; Islamic

instruments must be backed by tangible assets and the trading of debt by itself is prohibited.

Ethical investors may also find Islamic finance appealing as it promotes ethical and socially responsible investments and prohibits investments into sectors such as alcohol, tobacco, weapons and gambling.

Malaysia has a 30 year track record in Islamic finance. It has implemented many policy initiatives to stimulate growth in Islamic finance. The culmination of the initiatives is the Malaysia International Islamic Financial Centre (MIFC), a collaborative effort by the financial and market regulators together with industry participants from the banking, insurance and capital market sectors in Malaysia. These efforts have propelled Malaysia to become one of the leading global players in Islamic finance. The MIFC is also aimed at cementing Malaysia’s market-leader position in Islamic finance in the face of growing competition from established regional financial markets such as Hong Kong and Singapore.

Islamic finance has the potential to grow and develop rapidly as a viable alternative form of financing. And Malaysia, with its established framework, initiatives and innovative products, is poised to capitalise on this potential as a leading global Islamic finance centre.

Written by Ronald Tan

Tay & Partners 6th Floor, Plaza See Hoy Chan Jalan Raja Chulan 50200 Kuala Lumpur, Malaysia Tel: +603 - 2050 1888 DID : +603-2050 1969 Fax: +603 - 2031 8618 Email: [email protected]

34



2. Apprising its shareholders and the general publicFrom 1 January 2009, within 45 days after the end of each of the three quarters and 60 days after the end of the financial year, each Catalist-NS company must announce (and update, where appropriate) via SGXNET the information contain in its first report submitted to SGX.

3. Major Corporate ActionsFrom 1 January 2009, each Catalist-NS company must appoint a continuing sponsor and comply with the Catalist Rules when undertaking major corporate actions, including, any fund raising from its shareholders or the investing public, undertaking any major acquisitions and disposals of assets, entering into any interested person transaction that will require its shareholders’ approval, and entering into any scheme of arrangement.

The transition measures may not yield “quick” results. As most Catalist-NS companies are by definition companies with a low market capitalisation, it would be unlikely that such companies will readily appoint a continuing sponsor before the deadline in view of the high annual costs involved in the appointment of a continuing sponsor, who generally charges within a range of SGD 100,000 and SGD 200,000.

Please visit SGX website (www.sgx.com) for more details.

Written by Ms Eng Hui Ting and Ms Joyce Jia

Corporate Finance Executive Ph: (65) 6322-2237 Fax: (65) 6534-0833 E-mail: [email protected]

and

Ms Joyce JiaForeign Counsel,Legal Associate (Corporate Practice)Ph: (65) 6322-2230Fax: (65) 6534-0833E-mail: [email protected]

Loo & Partners LLP 88 Amoy Street, Level Three Singapore 069907

Foreign Currency Exchangeable Bonds .

The Government of India, Ministry of finance, department of Economic Affairs vide Notification G.S.R 89(E) notified in the month of February, 2008 a new scheme known as Issue of Foreign Currency Exchangeable Bonds Scheme, 2008 (the Scheme), now on 23rd September 2008 it has been decided by the Government to operationalise the same.

Under the scheme, a new type of bonds have been introduced known as Foreign Currency Exchangeable Bonds (herein after referred to as ‘the bonds or FCEB’), the bond is expressed in Foreign Currency, the principal and interest in respect of which is payable in foreign currency, issued by an issuing company and subscribed to by a person who is a resident outside India in foreign currency and exchangeable into equity share of another company, to be called the offered company, in any manner, either wholly, or partly or on the basis of any equity related warrants attached to debt instrument.

The major difference between Foreign Currency Convertible Bonds (FCCB) and FCEB is that FCCB can be converted to the equity of the issuing firm. In the case of FCEB, bonds can be converted into equity of a group company. As a result, payment of interest on FCEB would be subject to payment of withholding tax.

The scheme allows the FCEB, to be issued by companies forming part of conglomerates to unlock some of their investments in group companies and raise the funds required. It is a pre requisite that the issuing company should be part of the promoter group of the offered company and shall hold the equity share/s being offered at the time of issuance of the said Bonds.

The offered company should be a listed company which is engaged in a

After the launch of Catalist on 26 November 2007 (interested readers can read out more about this sponsor-supervised listing platform, which was designed to act as the Region’s fund raising platform for young and fast-growing companies, by referring to an earlier article (ALB issue 8.1) published in this column) to date, only a handful of Catalist companies had taken steps to appoint a continuing sponsor, whose primary responsibilities comprise the rendering of advice to the Catalist companies on rule compliance.

To address the issue and although the deadline for the appointment of a continuing sponsor for each catalyst company will fall on 5 February 2010 (the “deadline”), the Singapore Exchange Limited (SGX) on 1 September 2008 announced measures to “encourage” as many Catalist Non-Sponsored (“Catalist-NS”) companies to appoint continuing sponsors before the deadline. SGX hoped that these measures would promote a smooth transition process.

The transition measures, which came into effect on 1 September 2008, include as follows:1. quarterly progress reports on transition plansEach Catalist-NS company must submit a quarterly progress report to SGX of its transition plans containing, inter alia, a timetable for its search for suitable continuing sponsors, its alternative plans to appointing a continuing sponsor (if any), for instance, undergoing a reverse takeover, effecting a merger & acquisition, or upgrading to the Mainboard. The first report from each Catalist-NS company must be submitted to SGX by 1 November 2008.

Transition measures for catalist non-sponsored

Companies

SINGAPORE INDIA

Singh & Associates



sector eligible to receive Foreign Direct Investment and eligible to issue or avail of FCCB or External Commercial Borrowings (ECB). An Indian Company, which is not eligible to raise funds from the Indian Securities Market, including a company which has been restrained from accessing the securities market by the Securities and Exchange Board of India (SEBI) shall not be eligible to issue FCEB.

The eligible subscribers are the entities complying with the Foreign Direct Investment Policy and adhering to the sectoral caps at the time of issue of FCEB can subscribe to FCEB, prior approval of Foreign Investment Promotion Board, is required in some cases. Entities which are prohibited to buy sell or deal in securities by SEBI are not eligible to subscribe to these Bonds.

The proceeds of FCEB scheme can be invested by the issuing company in the promoter group companies. They can also utilize by investing overseas by way of direct investment including Joint Ventures or Wholly Owned Subsidiaries abroad.

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Promoter Group Companies receiving investment out of FCEB proceeds may utilize the amount in accordance with end uses prescribed under the ECB policy.

The bonds can be denominated in any freely convertible currency. Issuance of FCEB shall require prior approval of the Reserve Bank of India under the Approval Route for raising ECB. The Reporting arrangement for FCEB shall be as per the extant ECB policy.

The issuing company is not allowed to transfer, mortgage or offer as collateral or trade in the offered shares under Foreign Currency Exchange Bond from the date of issuance of the bonds till the date of exchange or redemption. Further, the Issuing Company shall keep the offered share under the scheme free from all encumbrances from the date of issuance of the said bonds till the date of exchange or redemption.

The minimum maturity of the FCEB shall be five years for purpose of redemption. The exchange option can be exercised at any time.

Foreign Currency Exchangeable bonds would come in handy for companies to help fund overseas acquisition by one of their group companies.

Written By Mr. Manoj K Singh, Managing Partner, and Ms. Daizy Chawla.

For more information, please contact:- Singh & Associates, Advocates and Solicitors N-30, Malviya Nagar, New Delhi-110017 Ph: 91-11-26680927, 26687993, 26680331 Fax: 91-11-26682883 Website: www.singhassociates.in Email: [email protected]

36

FEaTURE | Hong Kong Law Awards coverage >>



Hong Kong Law AwardsAnd the winners are...LAW FIRMS OF THE yEAR

CATEGORy WINNER

Banking Law Firm of the year Clifford Chance

Boutique/Specialist Law Firm of the year Charltons

RBS Coutts Bank Ltd Award Chambers of the year

Des Voeux Chambers

Criminal Law Firm of the year Haldanes

Real Estate Law Firm of the year Deacons

Merrill Legal Solutions Award Construction Law Firm of the year

MallesonsStephenJaques

Insurance Law Firm of the year Deacons

Shipping Law Firm of the year Clyde & Co

IT/Telecommunications Law Firm of the year Paul,Weiss

Merrill Legal Solutions Award Dispute Resolution Law Firm of the year

Herbert Smith

Grant Thornton Award Insolvency & Restructuring Law Firm of the year

Allen & Overy

Employment Law Firm of the year JSM

Bally Award Intellectual Property Law Firm of the year

Baker&McKenzie

City University of Hong Kong Award Investment Funds Law Firm of the year

Clifford Chance

Shu Lun Pan Horwath Hong Kong CPA Limited Award Matrimonial Law Firm of the year

HamptonWinter&Glynn

Taylor Root Award Offshore Law Firm of the year

Walkers

AzureTrustees Ltd Award Tax & Trusts Law Firm of the year

Baker&McKenzie

Managing Partner of the year Elaine Lo, JSM

Taiwan Deal Firm of the year Lee and Li

Korea Deal Firm of the year Kim & Chang

PRC Firm, Hong Kong Office of the year

King & Wood

Hong Kong Law Firm of the year JSM

DEALS OF THE yEARCATEGORy WINNERDebt Market Deal of the year China Development Bank bond issueHays Legal Award Equity Market Deal of the year

Alibaba.comHongKongIPO

M&A Deal of the year MTR-KCRCmergerProject Finance Deal of the year City of Dreams financing

IN-HOUSE TEAMS OF THE yEARCATEGORy WINNERReal Estate In-House Team of the year HutchisonWhampoaPropertiesPinsent Masons Award Construction In-House Team of the year

MTRCorp

Insurance In-House Team of the year

Prudential

Holman Fenwick Willan Award Shipping In-House Team of the year

COSCOPacific

Paul, Weiss Award IT/Telecommunications In-House Team of the year

PCCW

Paul, Weiss Award Media & Entertainment In-House Team of the year

TOMGroup

Taylor Root Award Banking & Financial Services In-House Team of the year

Deutsche Bank

Lewis Sanders Legal Recruitment Award Investment Bank In-House Team of the year

GoldmanSachs

Hong Kong In-House Lawyer of the year GillianMeller,MTRCorpHong Kong In-House Team of the year Deutsche Bank

JUDGING PANEL LAW AWARD & DEAL AWARD CATEGORIESNAME TITLE COMPANyKenneth Ng Head of Legal & Compliance HSBC LimitedPatrick J. Moran HeadofGlobalMarkets&Investment

BankingCounsel,Asia-PacificRegionMerrillLynch(Asia-Pacific)Limited

Paul Abfalter GeneralCounsel,LegalAffairs CSL LimitedPeter Siembab Director&Counsel,AsiaPacific CitiMichelle Hung GeneralCounsel&CompanySecretary COSCOPacificRichard Kwok RegionalGeneralCounsel AXAAsiaPacific

Holdings LimitedTimothy Steinert GeneralCounsel AlibabaGroup

JUDGING PANEL IN-HOUSE AWARD CATEGORIESNAME TITLE FIRMAshley Alder Vice Chair of Banking Finance and

SecuritiesCommittee,IPBAHerbert Smith

Philip Nunn Vice Chair of International ConstructionProjectsCommittee,IPBA

Fried Frank Harris Shriver & Jacobson

Vivien Chan BBS, JP PastPresident,IPBA Vivien Chan & Coyong-Jae Chang PastViceChairofCross-Border

InvestmentCommittee,IPBALee & Ko



Hong Kong Law AwardsaLB LaW aWards series ►

The ALB Hong Kong Law Awards 2008 is the sixth in a series of award ceremonies hostedbyALBaroundtheAsia-Pacificregionthatseektorewardthelargest,mostinnovativeandcomplexlegalworkcarriedoutbylawyersduring2007/08.

ALB Law Awards for the China region were held in Shanghai on 24 April, for the AustralasianregioninSydneyon22May,forJapaninTokyoon29May,andfortheSE Asia region in Singapore on 20 June.

MULTIPLE WINNERSFIRM WINNING CATEGORyAllen & Overy GrantThorntonAwardInsolvency&RestructuringLaw

Firm of the YearM&ADealoftheYear–MTR-KCRCmerger

Baker & McKenzie

BallyAwardIntellectualPropertyLawFirmoftheYearTax & Trusts Law Firm of the Year

Clifford Chance

Banking Law Firm of the YearCity University of Hong Kong Award Investment Funds Law Firm of the Year

Deacons Insurance Law Firm of the YearRealEstateLawFirmoftheYear

Freshfields Bruckhaus Deringer

HaysLegalAwardEquityMarketDealoftheYear– Alibaba.comHongKongIPOM&ADealoftheYear–MTR-KCRCmerger

Haiwen & Partners

Debt Market Deal of the Year – China Development Bank Hong Kong bond issueHaysLegalAwardEquityMarketDealoftheYear– Alibaba.comHongKongIPO

JSM Employment Law Firm of the YearManagingPartneroftheYearHong Kong Law Firm of the Year

Slaughter and May


Sullivan & Cromwell


COMPANy WINNING CATEGORyDeutsche Bank TaylorRootAwardBanking&FinancialServicesIn-House

Team of the YearLewisSandersLegalRecruitmentAwardInvestmentBank In-House Team of the YearHaysLegalAwardEquityMarketDealoftheYear– Alibaba.comHongKongIPOProjectFinanceDealoftheYear–CityofDreamsfinancing

Goldman Sachs


MTR Corp PinsentMasonsAwardConstructionIn-HouseTeamoftheYearIn-House Lawyer of the Year

assessmenT of deaLs ►Short-listed transactions must have reached financial close during the financial yearof1April2007to31March2008tobeeligibleforconsideration.Whilemanytransactionswillinvolvemultiplelegaljurisdictions,eachdealwillbeallocatedtoaspecificALBevent–governedbywherethemajorityofthelegalwork was completed.

TheALBeditorialandmanagementteamdefinefourcriteriaforjudgingtheoverall excellence of any given deal. These are as follows:Size:thefinancialvalueofthedealandthequantityoflegalworkinvolvedComplexity:thedegreetowhichadvancedlegalandfinancialtechniquesandstructures have been applied to the dealBreadth: thedegreetowhichthedealspannedjurisdictions,practiceareas,parties and industriesInnovation: the degree to which the deal involved ground breaking, original legal techniquesandstructures

38



AzureTrustees LtdIn2002,DeborahfoundedAzureTaxGroup.DuetoclientdemandshelaterfoundedAzureTrusteesLtd 易道信託有限公司,aRegisteredTrusteeCompanybased in Hong Kong.

Exclusively dedicated to high-level tax planning and wealth protection,AzureTaxGroupspearheadsatransparent,strategicand ethical approach to tax and trust advice.

AzureTaxGroupprovidestaxadvisoryservicesforindividualsand businesses. Services available range from international tax advisory through to global wealth protection strategies, with special expertise in Hong Kong, China, the UK, the US and Australian taxation matters.

Deborah Annells, Managing Director, AzureTrustees LtdDeborah is a well-known commentator and writer on international corporate and personal tax and trust structuring issues and contributes to several international taxation publications.

Her views are sought by the media andsheisregularlyquoted.

For many years she has contributed to theCCHInternationalTaxPlanningManual.

Ms Annells has also authored two publications on Hong Kong tax planning.

Merrill Legal SolutionsMerrill Legal Solutions is the largest provider of court reporting and litigation support services in the world. Established in Asiasince1994,wecoverHighCourtcases,arbitrations,andUS depositions including some of the most high profile cases in the region.

Our services include: court reporting including real-time, document management, litigation support, scanning, copying, printing, evidence reconstruction, transcription, document hosting, court consulting, digital audio recording, interpretation/translation, e-bundles, videography, e-discovery and forensics.

Charlotte Pache – Managing Director, Asia, Merrill Legal SolutionsCharlottePachehasalegalbackgroundand worked in legal publishing for many years as an editor and manager beforejoiningMerrillLegalSolutions’Londonofficein2000.Charlottejoinedthe Asia office as Managing Director in January 2003. She regularly carries out professional training to law firms, barristers and others, in Hong Kong and elsewhere, on the use of technology in dispute resolution.

–rankedintheworld’stop10largestgroupsofindependentprofessional accounting organisations – giving clients access to a broad range of industry-specific expertise worldwide. With more than 20 years of business experience in Hong Kong, the firm offers a wide range of professional accounting services to local and international clients. Our core areas of business are audit & assurance, business consulting, taxation, risk advisory, litigation support and matrimonial dispute advisory services. We also provide other outsourcing services to clients.

Patrick LI Pak Ki, Director – Audit & Assurance, Shu Lun Pan HorwathPatrickistheAudit&AssuranceDirectoratShuLunPanHorwath.Hestarted his career with one of the “Big Four” accounting firms and has over 20 years of experience in the accounting profession. He is a practising member of the Hong Kong Institute of Certified PublicAccountants,anassociatemember of the Institute of Chartered Accountants in England and Wales, and a fellow member of the Association of Chartered Certified Accountants, UK.

andtaxservices.InHongKongandmainlandChina,GrantThorntonhasofficesinHongKong,Beijing,Shanghai,GuangzhouandShenzhen,employingover1,300people.GrantThorntonisamemberofGrantThorntonInternationalLtd–anorganisationofmemberfirmsoperatingin112countries,employingover22,600peoplein519offices.

Alan Tang, Partner and Head of Specialist AdvisoryAlanhasover25years’in-depthhands-on experience in various Specialist Advisory engagements in a wide spectrum of industries and service lines, including corporate advisory, restructuring and insolvency, mergersandacquisitions,duediligence, valuation, investigation, debt recovery, fund tracing, litigation support, expert witness, and forensic accounting assignments involving operations in HongKong,thePRCandvarioustaxhavenjurisdictions.

Alan is the author of Insolvency in China and Hong Kong – A Practitioner’sPerspective, published by Sweet & Maxwell Asia in 2005(circa.1,200pages).

sponsors

Grant ThorntonGrantThorntonisoneofHongKong’sleadingaccountancy firms, providing financial advice to privately held businesses and public interest entities. We have a long track record of helping businesses to expand and explore business opportunities locally and internationally. Services include assurance, business risk, corporate finance, forensic & investigation, restructuring

School of Law, City University of Hong KongThe School of Law of the City University of Hong Kong aspires to be an internationally renowned centre for research and teaching oflawintheAsia-Pacificregion.TheSchool’smissionistoprovide students with an excellent education, to contribute to theadvancementofknowledgeandtoimprovepeople’squalityof life. The School is international in character with a team of distinguished staff from various parts of the world, and has close links with the legal professions and law schools in Asia, Europe and NorthAmerica.TheSchoolpromotesaglobalperspectiveonlegaleducation. Students have ample opportunities to participate in exchange activities and develop a global view.

Professor Wang Guiguo, Dean of School of Law, City University of Hong Kong ProfessorWangGuiguoisDeanoftheSchoolofLawandProfessor(Chair)of Chinese and Comparative Law, City University of Hong Kong. He also serves as Chairman of the Hong Kong WTO ResearchInstitute.ProfessorWangis a renowned scholar in WTO law, international economic law, and Chinese and comparative law, andisthefirstChineserecipientoftheUnitedNationsInstituteforTrainingandResearchFellowship.ProfessorWanghaspublishedwidelyinbothEnglishandChineselanguagejournalsandpresses.HehasalsobeeninvitedbytheUnitedNationsandthe Hague Academy of International Law to give lectures.

Hays Legal Hays Legal is a specialist division of Hays – an international specialist recruiterwithover8,900employeesin390officeslocatedacross27countriesincludingHongKong,Singapore,Japan,China,Australia,NewZealand,theUnitedKingdomandContinentalEurope.HaysLegalhasover20years’specialistexpertise in delivering bespoke recruitment solutions to employer clientsseekingqualifiedlawyersandotherlegalprofessionalsforcommercial and law firm roles.

Katie Hogue, Managing Consultant, Hays Legal HK OfficeKatie Hogue manages the Hays Legal Hong Kong office overseeing both in-house and law firm recruitment for the Hong Kong and China markets. Originally fromNewZealand,KatiehasworkedforHayssince2006.ANewZealandqualifiedsolicitor, Katie has had significant domestic and international recruitment experiencewithaparticularstrengthinAsia-Pacificlawfirmwork.

Holman Fenwick WillanHolman Fenwick Willan is a global law firm advising on all aspects of international commerce. From the inception of the business idea, through to advising on risk management, business strategy and financing, we cover the whole life-cycle of business. We are leading specialists in shipping, commodities, trade, ports & terminals, energy, logistics, aviation and insurance & reinsurance. This year,thefirmcelebratesits125thanniversaryandthe30thanniversary of the Hong Kong office.

Paul Hatzer, Partner and Head of the Holman Fenwick Willan Hong Kong officePaulspecialisesinshipping,internationaltrade and commodities. He practised in London and Australia before moving to thefirm’sHongKongofficein1991.Paulis repeatedly recognised as one of the leading lawyers in his field in Chambers Globaldirectory.

Shu Lun Pan Horwath Hong Kong CPA LimitedShuLunPanHorwathHongKongCPALimitedisamemberfirmofHorwathInternational

Lewis Sanders Legal RecruitmentLewis Sanders provides a professional, tailor-made legal recruitment service to clients across Asia. Using our extensive market knowledge and expertise,weplacelawyersatalllevelsfromjuniorassociatestoequitypartnersandgeneralcounsels,aswellaslawfirmmanagement professionals. We operate out of Hong Kong and undertake local, regional and international recruitment assignments. Through our extensive network of contacts across Asia, combined with our alliances with established legal recruitment consultancies in Australia, Europe and the Middle East,weareabletosourcequalitycandidatesfrommultiplejurisdictionsandofferourclientsinternationalcoverage.

Lindsey Sanders, Managing Director, Lewis Sanders Legal RecruitmentLindsey is a founding partner of Lewis SandersLegalRecruitment.Shehasworked in legal recruitment for over 12years,eightinHongKong,placinglawyers at all levels with international law firms, investment banks and multinational companies across Asia.



Taylor RootTaylorRoothasbeenestablished in Hong Kong since1998andweareproudlycelebratingour10-yearanniversarythisyear.Weareconsidered one of the leading legal and compliance recruitment consultanciesintheAsia-Pacificregion.Ourexperiencedconsultants all have a legal or financial background and are experts in assisting our clients to identify the best possible talent with creative solutions. We have a consistent and successful track record of acting for international law firms, multinationals, investment banks and financial services firms.

Our international network includes offices in London, Edinburgh, Leeds, Birmingham, Sydney, Melbourne, Hong Kong and Dubai.

Liam Richardson, Consultant, In-House Team, Taylor RootLiam graduated from the University of Leicester with a law degree before completinghisLPCattheCollegeofLaw,Londonin2004;hejoinedTaylorRoot'sLondonofficeinthesameyear.Liam has specialised in the recruitment of lawyers into in-house positions inthefinancialservices,MNC’sandinvestmentbankssincejoiningTaylorRoot,andherelocatedtoourHongKongofficeinJanuary2006.Hecurrentlyfocuseson the recruitment of lawyers of all levels into multinational corporations and investment banks across the Asia region, and has experience of handling senior level searches, including thoseforfirstAsianlegalcounselandGeneralCounsel. Michael Luckett, Manager, Private Practice Team, Taylor RootMike graduated from UMIST and qualifiedasalawyerwithAshurstin London before moving into legal recruitmentinJune2004.HejoinedTaylorRoot’sLondonofficeinJune2005beforemovingtothefirm’sHongKongofficeinJanuary2006.He heads up the private practice team in Hong Kong and assists the leading international UK and US Law Firms in Asia with their recruitmentneedsatalllevelsincludingPartnersandteamsof lawyers.

Beaton Consulting Independent Research PartnerBeaton Consulting is a leading firm of management consultants committed to providing the inspiration and support for the improved performance of professional service organisations.

BeatonConsulting’sexpertiseisappliedinthreeinterrelatedpractice areas:•Market-ledstrategy–Helpingclientsachieveclarityand

consensusonwherethey’regoingandhowthey’regoingtoget there

•Leadershipandchange–Assistingorganisationscompetethrough their people

•Researchandbenchmarks–Providingempiricalevidencetoguide decision-making on firm development and growthOur consulting style emphasises co-production of outcomes,

conceptual rigour, creativity, customised solutions and capability development of others.

Paul, WeissPaul,Weiss,Rifkind,Wharton&Garrisonisaninternationallawfirmwithover500lawyersworldwide.Paul,Weisshasoneoftheworld'sleadingCommunicationsandTechnologyPracticesandconsistentlywinsAsia'stop“IT/TelecommunicationsLawFirmoftheYear”awardinrecognitionofourM&A,privateequityandregulatoryeffortsin the telecommunications and IT sectors. Our knowledge of the regulatorylandscapeinGreaterChinaisrecognisedbyourpeersas being the best and second to none. The firm represents a wide variety of providers and users of communication goods and services, as well as other entities with interests in communications and technology businesses and regulatory decision-making.

Jack Lange, Partner, Corporate Department, Paul, WeissJack Lange is a partner in the Corporate Department,basedinthefirm'sHongKong office. Mr Lange has been active inthefieldsofmergersandacquisitionsandprivateequityinAsia.Heregularlyrepresentsmajorprivateequityfundsin connection with investments and corporaterestructuringsintheAsianregion.Hehasassistedmajorfinancialandstrategicinvestors,includingNewscorp,HutchisonWhampoaLtd.,GoldmanSachs,TheCarlyleGroup,OlympusCapital,AIGInvestmentCorporationandMorganStanley,inhigh-profile M & A transactions in mainland China, Hong Kong, Taiwan, Korea, India and elsewhere in Asia.

Pinsent Masons PinsentMasonsisafull-serviceglobal commercial law firm with around1,000lawyersworldwide,rankinginthetop100ofgloballawfirms. We have been active in Asia for 25 years and our practices inConstruction,Corporate,IP,Projects,Technology&TelecomsoperateoutofourofficesinHongKong,Shanghai,Beijing,Dubai,theUKandthroughanassociationinSingaporewithMPillay.Ourlocalknowledgeandinvolvementinsomeoftheregion’smosthigh-profileandimportantprojectsunderscoresourcommitmenttoassistingclientstoprofitfromtheAsia-PacificCentury.

Vincent Connor, Managing Partner, Asia Pacific, Pinsent MasonsVincentisManagingPartnerofourAsiaPacificbusiness,andisbasedinHong Kong.

As lead adviser on a range of top profile matters, Vincent is highly regarded for his strategic advice to clients during majorprojects,forhelpingclientstoavoid disputes and, where necessary, in representing clients in mediation, arbitration and litigation.

RBS Coutts Bank LtdRBSCouttsistheinternationalprivatebankingarmofTheRoyalBankofScotlandGroup(RBS).ThesizeandstrengthofRBSGroup,togetherwithCouttscenturies’ofexperienceandoursoundinvestmentphilosophy,thatmakeRBSCouttsoneoftheleadersintheinternationalprivate banking.

RBSCouttsoffersentrepreneurs,seniorcorporateexecutivesand professionals including lawyers and accountants the expertise of a prestigious and exclusive private bank. Based on our long historyofdevelopingin-depthunderstandingoftheuniqueneedsof individuals, we offer sophisticated one-to-one wealth management services including investment management, advisory, trust and fiduciary services.

Anita Wong, senior Vice PresidentRBs Coutts Bank ltdHong Kong BranchAnitaWongisaSeniorVicePresident

asuccessful18yearswithBritishAmericanTobaccoandRJReynoldsTobacco,andeightyearsinthebeer,wines&spiritsindustrywithmajorplayerssuchasCarlsbergandFoster’s.Williamcarrieswithhimawealthofexperienceinthemanagement of consumer goods, in particular in the running of China JV, and has a good operating knowledge in both the China and Hong Kong businesses.

The MacallanThe Macallan Highland Single Malt ScotchWhiskyisoneoftheworld’smostawarded and admired Single Malts. Widely acclaimed as Best Malt in the World by WhiskyMagazine, it remains the Single Malt against whichallothersmustbejudged.Thispeerlessreputationhasbeen built on the commitment of The Macallan Masters of Spirits and Wood, those craftmen at the heart of The Macallan for almost two centuries. Their obsessive pursuit of perfection has ensuredtheconsistentqualitythathascharacterised The Macallan since it was legallylicensedin1842.

William Chan, General Manager, Maxxium Hong Kong Ltd.William Chan is a seasoned executive who has been running international companiesfor25yearsinFMCGindustryinGreaterChina.Heled

Sunseeker – Yacht Sponsor

atRBSCouttsBankLtd,HongKongBranch.AnitajoinedRBSCouttsin1996andhermainareaoffocusisHongKong,whereshe is responsible for a dedicated team of bankers managing the profitability and client satisfaction of entrusted portfolios from a group of high net worth individuals. Anita is keen on tennis and loves to travel. She is also an art lover. Her interests range from rock to pop music, film to drama, and opera to dancing.

40



BOUTIqUE/SPECIALIST LAW FIRM OF THE YEAR

WinnER

CharltonsfinAlisTs•LEA&WHITE •REBECCA&LO

Why: • Knownforits

corporate finance, China law and IP/ITpractices

• AdvisedChina’slargest manufacturer of wind gear transmission equipment,ChinaHigh Speed Transmission EquipmentGroup, on its HK$2,442m share offering on the Main Board

• Anothersignificantdeal is the Tibet LuxuryTrainProject

CRIMINAL LAW FIRM OF THE YEAR

WinnER

haldanesfinAlisT•BOASECOHEN &COLLINS

Why: • Best-knowncriminal

firminHongKong;has specialised in criminal law for approximately 30 years

• Large criminal department that includes six partners

• Involvedinmanyhigh-profile cases, setting new legal precedents and developing a strong reputation in the field

RBS COUTTS BANk LTD AWARD CHAMBERS OF THE YEAR

WinnER

des Voeux Chambers finAlisTs•GILTCHAMBERS •PARKSIDECHAMBERS •PRINCESCHAMBERS •TEMPLECHAMBERS

Why:• Oneofthelargest

and most prominent chambers in Hong Kong, Des Voeux houses some of themarket’sleading barristers

• TeresaChengSC remains a popular choice for construction and infrastructure cases

BANkING LAW FIRM OF THE YEAR

WinnER

Clifford ChanCefinAlisTs•ALLEN&OVERY•BAKER&MCKENZIE•DEACONS •FRESHFIELDSBRUCKHAUSDERINGER•LINKLATERS •LOVELLS

Why: • Promoted11lawyersacross

Asia to the rank of senior associate, and recruited two newlawyersintothefirm’sfinance team in Hong Kong

• ClienteleincludesUBS,JPMorgan,DeutscheBank

• AdvisedChinaDevelopmentBank on financing for Aluminium Corporation of China’sacquisitionof12%ofRioTinto–oneofthebiggestoverseas investments to date

firm awards

l-R: Paul Abfalter (Csl); Geoffrey Booth (Haldanes)l-R: Peter siembab (Citi); Julia Charlton (Charltons)

l-R: Colin Jasper (Beaton Consulting); Connie Heng (Clifford Chance)

l-R: Anita Wong (RBs Coutts Bank ltd); John scott (Des Voeux Chambers)



MERRILL LEGAL SOLUTIONS AWARD CONSTRUCTION LAW FIRM OF THE YEAR

WinnER

mallesons stephen JaquesfinAlisTs•BAKER&MCKENZIE•DEACONS•LOVELLS•MINTERELLISON•PINSENTMASONS

Why: • Winnerofthisawardin2007,this

Australian-basedfirmhasenjoyedanother successful year

• Over70lawyersonthegroundinHongKong;constructionteamboastsequallystrongfrontandbackendcapabilities;ledbysenior partners David Bateson andPaulStarr

• Advisedawiderangeofcontractors, consultants and suppliers in various casino and hotelprojectsinMacau;playedpivotal role in winning Taiwan HighSpeedRailprojectdispute

REAL ESTATE LAW FIRM OF THE YEAR

WinnER

deaConsfinAlisTs•BAKER&MCKENZIE•JSM•PAUL,HASTINGS,JANOFSKY&WALKER •WOO,KWAN,LEE&LO

Why: • Propertypracticehasaheadcount

of60andisoneofthelargestsuchpractices in Hong Kong

• TeamheadLillianChianghaswide experience of property-related transactions

• Actingonthetendersale/private sale with lease-back arrangement in respect of two adjacentpropertiesinMountKellettRoad,KellettGrove,ataconsiderationofHK$1.65bninHong Kong

l-R: Phillip McDonald (Deacons); Paul Abfalter (Csl)

l-R: Jennifer lee-shoy (Mallesons); Charlotte Pache (Merrill legal solutions)

42



INSURANCE LAW FIRM OF THE YEAR

WinnER

deaConsfinAlisTs•BAKER&MCKENZIE •CLIFFORDCHANCE•DLAPIPER •HERBERTSMITH•KENNEDYS •RICHARDSBUTLER

Why: • Substantialgroupof30

lawyers experienced in a wide range of insurance-related matters and problems, with Michael Turnbull, a key player

• Representsmanygeneralinsurers and approximately half of the 40 or so active long-term(life)insurersinHong Kong

• Blue-chipclientsincludeEssar,MingAn,MotorInsurers’Bureau,Royal&SunAlliance

SHIPPING LAW FIRM OF THE YEAR

WinnER

Clyde & CofinAlisTs•DLAPIPER•HOLMANFENWICKWILLAN•INCE&CO

Why: • Actsacrosstheshipping

industry for shipowners, yards, operators, managers, charterers, financiers,P&Iclubs,insurers and underwriters

• Involvedinmajorlitigation in the region, such as the collision of two passenger ferries off Macau and a collision in the South Korea

• Asiashippingteamcomprises group of leading marine specialists, including two master mariners who lend technical edge to shipping advice

IT/TELECOMMUNICATIONS LAW FIRM OF THE YEAR

WinnER

paul, WeissfinAlisTs•ALLEN&OVERY•ARCULLIFONG&NG,INASSOCIATIONWITHGILBERT+TOBIN•BAKER&MCKENZIE•BIRD&BIRD•CLIFFORDCHANCE•FRESHFIELDSBRUCKHAUSDERINGER

Why: • Awinnerinthiscategory

for the past two years, the firm’sAsiaCommunicationsand Technology practice group is commandeered by the one of the most notable names in the industry – Jeanette Chan

• JackLanealsocomeshighlyrecommended

• AssistedMicrosoftinits multi-million dollar investment program in China on various Microsoft initiativesandonMicrosoft’sfirst antitrust filing in China

MERRILL LEGAL SOLUTIONS AWARD DISPUTE RESOLUTION LAW FIRM OF THE YEAR

WinnER

herbert smithfinAlisTs•CLIFFORDCHANCE•DEACONS•JSM•LINKLATERS•MINTERELLISON •RICHARDSBUTLER

Why: • HighlyregardedMark

Johnson heads up Herbert Smith’sAsiadisputeresolution practice, with a particular focus on the financial services sector

• Workrangesfromcommercial claims and corporate disputes to regionalprojectandinfrastructure work

• DefendedaprominentHong Kong and Macau businessman in a minority shareholders’petitionbrought by his sister pursuanttosec168Aofthe Companies Ordinance

l-R: Michelle Hung (COsCO Pacific); Phillip McDonald (Deacons)

l-R: Peter siembab (Citi); Corinna yu (Paul, Weiss)

l-R: Michelle Hung (COsCO Pacific);Michael Kelly (Clyde & Co)

l-R: Ashley Alder (Herbert smith); Charlotte Pache (Merrill legal solutions)



GRANT THORNTON AWARD INSOLvENCY & RESTRUCTURING LAW FIRM OF THE YEAR

WinnER

allen & oVeryfinAlisTs•CLIFFORDCHANCE•DEACONS •JSM•TANNERDEWITT•WHITE & CASE

Why: • LedbyHeadofAsianBusiness

RestructuringteamDavidKidd,whose work exclusively relates to underperforming companies or assets

• Specialisesincomplexcross-border matters and high-value litigation

• Advisedonhighprofileandchallenging transaction of brand builderEganaGoldpfeilHoldingsLtd – the largest restructuring in the Hong Kong market to date

EMPLOYMENT LAW FIRM OF THE YEAR

WinnER

JsmfinAlisTs•ALLEN&OVERY•BAKER&MCKENZIE•DEACONS •LINKLATERS•MINTERELLISON•SIMMONS&SIMMONS

Why: • Afinalistatlastyear’s

awards, JSM offers both contentious and non-contentious services in the burgeoning area of law

• HeadedbytheexperiencedDuncan Abate, the practice group has acted for HSBC in its successful enforcement of post-termination obligations against a former senior employee of the Bank

l-R: Katherine Taylor (Allen & Overy); Alison Wong (Grant Thornton) l-R: Peter siembab (Citi); Hong Tran (JsM)

44



CITY UNIvERSITY OF HONG kONG AWARD INvESTMENT FUNDS LAW FIRM OF THE YEAR

WinnER

Clifford ChanCefinAlisTs•DEACONS•LINKLATERS•SIDLEY&AUSTIN•SIMMONS&SIMMONS •SKADDEN,ARPS,SLATE,MEAGHER&FLOM•WHITE&CASE

Why: • AdvisedINGBaringsinitsjointventurewithChinaMerchantsinChina’sfirst

approved foreign-invested fund management company• HiredJonesDay’sprojectfinancespecialistBruceSchulbergwhohasspent15

yearsinAsia,focusingoninfrastructureprojectsandcross-borderinvestments

BALLY AWARD INTELLECTUAL PROPERTY LAW FIRM OF THE YEAR

WinnER

baker & mCkenzie finAlisTs•BIRD&BIRD•DEACONS•JONESDAY•LOVELLS•SOKEUNGYIP&SIN •WILKINSON&GRIST

Why: • ItsIPpracticeinHongKongandChinaisnotableforitsbreadthanddepth,and

hasbeenextendedthroughtheadditionofsixexperiencedIPlawyers• Representingtheownersofmanyoftheworld’sbest-knowntrademarksand

brand names• AdvisingNokiaonvariousinjunctionsinChinafordesigninfringementsisoneof

the highlights

SHU LUN PAN HORWATH HONG kONG CPA LIMITED AWARD

MATRIMONIAL LAW FIRM OF THE YEAR

WinnER

hampton Winter & GlynnfinAlisTs•BOASECOHEN&COLLINS•HALDANES•STEVENSONWONG&CO

Why: • Hasateamofthreepartnersandfiveotherfamily

law specialists• Servesbothhighnetworthclientsandlegalaid

clients in all aspects of family work• SharonSerandDavidGlynnhighlyrecognised

l-R: Winnie Co (Bally Asia Pacific); Joseph simone (Baker & McKenzie)l-R: Professor M J A Cooray (City University of Hong Kong); Connie Heng (Clifford Chance)

l-R: sharon ser, David Glynn, Winnie Chow (Hampton Winter & Glynn)

AzURETRUSTEES LTD AWARD TAx & TRUSTS LAW FIRM OF THE YEAR

WinnER

baker & mCkenziefinAlisTs•BRYANCAVE•DLAPIPER•JSM

Why: • Baker&McKenzie’s30-plus

lawyer real estate practice is thedominantforceinREITwork in Hong Kong

• Ofthe12multi-billion-dollar property transactions recorded in the market last year,Baker&McKenzieacted on five of these high value transactions

• RepresentedXinyuanRealEstateonitsUS$282mIPOinNewYork–firstChinaproperty developer to be listed in US

TAYLOR ROOT AWARD OFFSHORE LAW FIRM OF THE YEAR

WinnER

WalkersfinAlisTs•APPLEBY•CONYERS•HARNEYWESTWOOD&RIEGELS•MAPLESANDCALDER

Why: • HughO’Loughlinheads

the Hong Kong office and has overseen growth in many areas

• Specialisesinassetfinance, capital markets and structured finance

• PresenceintheCayman, British Virgin Islands, London, Dubai, Tokyo and Hong Kong assures seamless service for clients l-R: Everton Robertson (Walkers), Michael luckett

(Taylor Root); Hugh O'loughlin (Walkers)

l-R: Deborah Annells (AzureTrustees ltd); Pierre Chan (Baker & McKenzie)

46



kOREA DEAL FIRM OF THE YEAR

WinnER

kim & ChanGfinAlisTs•BAEKIM&LEE•LEE&KO•SHIN&KIM

Why: • OneofthekeydevelopmentsforthefirmthathascharacterisedtheM&A

market in the period has been the assumption of responsibilities as lead deal counsel for M&A transactions taking place both in Korea and overseas

• WhereasthetypicalroleforotherKoreanlawfirmshascontinuedbeingtoactin the limited capacity of “local counsel” in cross-border transactions, Kim & Chang has assumed the role of lead counsel in several transactions, including representing LS Cable, a Korean cable and wire company in its tender offer to acquireaUSlistedcompany,workingwithlocalUScounsel

• AnotherpioneeringtransactionwastheacquisitionbyDoosanInfracore oftheBobcatandotherbusinessdivisionsofIngersollRand,whichisthelargestM&AdealeverbyaKoreancompany,involving72entitiesin27differentjurisdictions

MANAGING PARTNER OF THE YEAR

WinnER

elaine lo, JsmfinAlisTs•ASHLEYALDER,HERBERTSMITH•ROBERTTHOMSON,JONESDAY•MARC HARVEY,LINKLATERS

Why: • Instrumentalinleading

thefirm’sstrategicassociation with Mayer Brown to become one oftheworld’stop10largest law firms by revenue, which is in linewithJSM’sstrategyto become an “elite international law firm”

• Hasrecognisedtheneed to expand the firm’scapabilitieswhile extending its geographical coverage to address the ever-changing global marketplace,with1,800lawyers with offices in 21keybusinesscentresthroughout the world

• JSMisappointedtothe global legal panels ofsomeoftheworld’slargest corporations

PRC FIRM, HONG kONG OFFICE OF THE YEAR

WinnER

kinG & WoodfinAlisTs•CHEN&CO•DUAN&DUAN•JUNHE

Why: • King&Wood,thefirstPRCfirmtoexpandinto

HongKong,hasenjoyedanothersuccessfulyear,working closely with its Hong Kong associate firm Arculli,Fong&Ngonanumberofimportantcross-borderdealsrequiringhighlevelsoflegalsupportin both Hong Kong and the mainland

l-R: irene Chan (The Standard); Elaine lo (JsM)

l-R: Timothy steinert (Alibaba Group); Jeremy Wong (King & Wood)

l-R: ALB representative; young-Jay Ro (Kim & Chang)



HONG kONG LAW FIRM OF THE YEAR

WinnER

JsmfinAlisTs•DEACONS•BAKER&MCKENZIE•WOO,KWAN,LEE&LO

Why: • Winnerofthiscategorysincetheinceptionof

theawardsexceptfor2006,JSMhasbeeninvolved in a number of high-profile and complex restructuring matters

• AdvisingFerrierHodgsonasliquidatorsofHongKong-listedMoulinGlobalEyecareHoldingsLimited,reputed to have been the third-largest eyewear manufacturer in the world, with debts in excess of HK$2.8bn

• AnotherkeytransactionalworkincludedadvisingliquidatorsofAkaiHoldingsGroup,ledbyCosBorrelliof BorrelliWalsh Ltd, in their investigations into the largestcorporatecollapseinHongKong’shistory,involvingdebtsofoverUS$1.5bn

Elaine lo (centre) & team (JsM)

48



in-house awardsREAL ESTATE

IN-HOUSE TEAM OF THE YEARWinnER

hutChison Whampoa propertiesfinAlisTs•HONGKONGLAND •SUNHUNG KAIPROPERTIES

Why: • Thein-houselegal

department at Hutchison Whampoa Propertieswasestablished in the early 1990sandhasnowgrown to a team of 35 legal counsel across threejurisdictionswithWangQiangyi(forPRC)andSusanChan(forHongKongandoverseas)actingasheadoflegal

• Theteamprovideslegalsupportandadviceonallareasofthedivision’soperations, including property development, property investment and funding, and property management

PINSENT MASONS AWARD CONSTRUCTION IN-HOUSE TEAM OF THE YEAR

WinnER

mtr CorpfinAlisTs•CLPHOLDINGS•GAMMONCONSTRUCTION•HOUSINGAUTHORITY

Why: • Ledbylegaldirector&secretaryLeonardBryanTurk,deputylegaldirectorDavid

FlemingandrisingstarGillianMeller• Thein-houseteamatMTRCorpprovidesadviceinrelationtoallaspectsofthe

KowloonSouthernLinkproject• AdvisingtheCorporationonitsnegotiationswithGovernmentinrelationtothe

design and construction of six new railway lines in Hong Kong

THE MACALLAN AWARD INSURANCE IN-HOUSE TEAM OF THE YEAR

WinnER

prudentialfinAlisTs•AIU•AXA

Why: • HeadoflegalWendyMokleadsa

large legal team that focuses on non-contentious matters

• Legalteamcoordinatedthesuccessful launch of the W.I.S.E. CSI300ChinaTracker(StockCode:2827)byJuly2007,anindex-tracking exchange traded fund which seeks to track the performance of CSI 300 Index, the benchmark index of the first Chinese Financial FuturesandanimportantbenchmarkindexoftheChina’sAsharemarket.ThefundisgainingpopularityandthefundsizenowreachesaboutHK$5bn

• Prudential’sChinajointventure,CITICPrudential,hasgreatlyexpandeditsgeographical presence in China

l-R: William Chan (The Macallan);Wendy Mok (Prudential)

l-R: Wang qiang yi, susan Chan (Hutchison Whampoa Properties); Ashley Alder (Herbert smith)

l-R: Vincent Connor (Pinsent Masons); David fleming (MTR Corp)

TAIWAN DEAL FIRM OF THE YEAR

WinnER

tsar & tsaifinAlisTs•BAKER&MCKENZIE•LEEANDLI •RUSSINANDVECCHI

Why: • Wellrecognisedforproviding

practical advice and innovative solutions in M&A deals

• ThehighlightofitsM&Apractice was its representing of HSBC in a successful public bidding of the good bank assets of the Chinese Bank, a distressed local bank, which The Financial RestructuringFundandCentralDepositInsuranceCompanysoldtoHSBCthrough the mode of general assignment and assumption

• AlsoactedonMBKPartners’acquisitionofcertaincabletelevisionsystemoperatorsownedbytheChinaNetworkSystems(CNS)GroupandfinancingthereofaswellasLongreachGroup’sinvestmentinEntieBankandacquiringmajorityshareholdinginEnTieCommercialBank(EnTieBank)

l-R: ALB representative; Matt liu (Tsar & Tsai)



HOLMAN FENWICk WILLAN AWARD SHIPPING IN-HOUSE TEAM OF THE YEAR

WinnER

CosCo paCifiCfinAlisTs•COSCOPACIFIC•HUTCHISONPORTHOLDINGSLIMITED•NOBLEGROUP

Why: • Thelargestshipownerintown,COSCO

Pacifichousessevenstaff,andisledbygeneral counsel and company secretary Michelle Hung

• Disposed20%shareholdinginterestinChongHingBankLimitedtoCOSCO(HK)for an aggregated cash consideration of HK$2,088m

• FormedajointventurecompanybyCOSCOPorts(XiamenHaicang)Limited,awhollyownedsubsidiaryofCOSCOPacificandXiamenHaicangInvestmentGeneralCo.forconstructing,managing and operating a container terminal (berthsno.14to17)locatedatXiamenHaicang,thePeople’sRepublicofChina

l-R: Henry Dunlop (Holman fenwick Willian); Michelle Hung (COsCO Pacific)

PAUL, WEISS AWARD MEDIA & ENTERTAINMENT IN-HOUSE TEAM OF THE YEAR

WinnER

tom GroupfinAlisTs•DISNEYTELEVISION •PCCW

Why: • Thelegalteam

comprises over 30 legal professionals in GreaterChinawithhighcompetency in many areas including corporate risk management and mergers&acquisitions,and manages thousands of contracts per year in an efficient and cost-effective manner

• TheprinciplestheGroupheldstronglytohaswonTOMthepreferredlocalpartner for many international corporations entering the China market

• HassuccessfullyformedinternationalallianceswithmajorplayerssuchasEbayfromUS,SkypefromLuxembourg,JoostfromTheNetherlands,StardollfromSweden

l-R: Karen lau (TOM Group); David lee (Paul, Weiss)

50



TAYLOR ROOT AWARD BANkING & FINANCIAL SERvICES

IN-HOUSE TEAM OF THE YEAR WinnER

deutsChe bankfinAlisTs•HSBC•MORGANSTANLEY•ROYALBANKOFSCOTLAND•STANDARD CHARTEREDBANK

Why: • The31-lawyerin-houseteamisledbyJoeLongoandhasbeenincrediblybusy• NotabletransactionsincludeVedantaResourcesplcUS$500m8.75%Bonds

due2014andUS$750m9.50%Bondsdue2018.This144AHighYieldbondwasthefirstcorporatebondfromIndiasinceNovember2007,andlargestcorporate deal in Asia in 2008

• CurrentlyrankedNo.1year-to-dateinIPOsinAsiaandNo.2overthelast12monthsinG3DebtissuanceinAsia;andinlast18monthshasdoneover17private financing deals with a value of approximately US$3bn

LEWIS SANDERS LEGAL RECRUITMENT AWARD INvESTMENT BANk IN-HOUSE TEAM OF THE YEAR

WinnER

Goldman saChs finAlisTs•DEUTSCHEBANK•JPMORGANCHASE•MERRILLLYNCH•MORGANSTANLEY•UBS

Why: • GSLegalisasizable

department of 33 attorneys covering work throughout the region and working closely with its counterparts in Japan andAustralia–GoldmanSachsandGoldmanSachsJBWere, respectively

• PlayedasignificantpartinGoldmanSachs’acquisition ofa100%stakeinan Indian company registered withtheReserveBank of India as a non-banking financial company

• Advisedonawiderangeoflandmarkequityandequity-linked transactions listed on various stock exchanges, including: Soho China Limited (US$1.9bn),Alibaba.ComLimited(US$1.7bn)and Want Want China Holdings Limited(US$1bn) l-R: lindsey sanders (lewis sanders legal

Recruitment); Gareth Bater (Goldman sachs)

l-R: simon Man (Deutsche Bank); liam Richardson (Taylor Root)

PAUL, WEISS AWARD IT/TELECOMMUNICATIONS IN-HOUSE TEAM OF THE YEAR

WinnER

pCCWfinAlisTs•CSL•HUTCHISONGLOBALTELECOM•SMARTONE

Why: • Theteamof24lawyersandtwoparalegals–locatedinHongKong,mainland

China,SingaporeandtheUS–ledbygeneralcounselPhilanaPoon• Involvedinthecurrentproposedsaleofupto45%ofPCCW’snewlyformed

subsidiaryHKTGroupHoldingsLimited• Thelaunchofvariousbundledservicessuchas:NetvigatorEverywhere,nowon

Mobile,MOOVonMobileandHSDPAonMobile

l-R: Philana Poon (PCCW); Corinna yu (Paul, Weiss)



PCCW

52



deals of the yearDEBT MARkET

DEAL OF THE YEARWinnER

China deVelopment bank honG konG bond issuefirms: CliffordChance;Haiwen&Partners;SidleyAustinBanks:BankofChina;HSBCaccountants:PwC

finAlisTs•CITICRESOURCESHIGHYIELDDEBTOFFERING•COUNTRYGARDENCONVERTIBLEBONDOFFERINGANDSYNTHETICSHARERE-PURCHASE•NEO-CHINABONDOFFERING•SINOPECCONVERTIBLEBONDOFFERING•SUNTECHPOWERCONVERTIBLENOTESOFFERING

Why: • FirstRMBbondissuein

Hong Kong• ValueofRMB5bn,splitinto

institutional and retail bond issue• Involvedbothmainlandand

Hong Kong regulators• Legalworkunderpinned“exciting

milestone” in development of China’sbondmarkets

HAYS LEGAL AWARD EqUITY MARkET DEAL OF THE YEAR

WinnER

alibaba.Com honG konG ipofirms: ConyersDill&Pearman;Fangda;FreshfieldsBruckhausDeringer; Haiwen&Partners;MaplesandCalder;SimpsonThacher&Bartlett; Skadden,Arps,Slate,Meagher;SlaughterandMay;Sullivan&CromwellBanks:DeutscheBank;GoldmanSachs;MorganStanleyaccountants:PwC

finAlisTs•CHINAHIGHSPEEDTRANSMISSIONEQUIPMENTGROUPHONGKONGIPO•CHINARAILWAYGROUPH-SHARELISTING•SOHOCHINAHONGKONGIPO•WANTWANTCHINAHONGKONGIPO

Why: • LatesttechnologysectorIPOinHongKongeverandsecondlargestglobally• DrewmoresubscriptionsindollartermsthananyotherHongKongIPO• US$1.7bnsuccessfullistingofPRCB2Be-commercecompany• Largest-everequityofferingfrominternetsectorinAsiaex-Japan

HONG kONG IN-HOUSE LAWYER OF THE YEAR

WinnER

Gillian meller, mtr CorpfinAlisTs•BHARATSUNDAVADRA,NOBLEGROUP•BRETTGRAHAM,MORGANSTANLEY•ELLAWONG,STARHK•KARENLI,CITICCAPITAL•PHILANAPOON,PCCW•SANDYYUNG,SUNHUNGKAIPROPERTIES•TIMSTEINERT,ALIBABA

Why: • Overthelast12months,

GillianMellerplayedakeyrole in the negotiation and documentationofMTRCorp’smerger with the Kowloon-Canton RailwayCorporation

• Alsodirectlyresponsiblefortheprovision of legal advice to the bid teamontheCorporation’sfirstsuccessful European franchise bid (LondonOverground)

• AdvisingMTRCorponitsnegotiationswithGovernmentinrelationtothedesign and construction of six new railway lines in Hong Kong

HONG kONG IN-HOUSE TEAM OF THE YEAR

WinnER

deutsChe bankfinAlisTs•COSCOPACIFIC•GOLDMANSACHS•HUTCHISONWHAMPOAPROPERTIES•MTRCORP•PCCW•PRUDENTIAL•TOMGROUP

Why: • The31-lawyerin-houseteamisledbyJoeLongoandhasbeenincrediblybusy• NotabletransactionsincludeVedantaResourcesplcUS$500m8.75%Bondsdue

2014andUS$750m9.50%Bondsdue2018.This144AHighYieldbondwasthefirstcorporatebondfromIndiasinceNov07,largestcorporatedealinAsiain2008

• CurrentlyrankedNo.1year-to-dateinIPOsinAsiaandNo.2overthelast12monthsinG3DebtissuanceinAsia;andinlast18monthshasdoneover17private financing deals with a value of approximately US$3bn

l-R: Charlotte Hogue (Hays legal); leiming Chen, Dan fertig (simpson Thacher & Bartlett); Jaclyn Jhin (Morgan stanley); nghia luu (Deutsche Bank); John Trehey (Maples and Calder); David lamb (Conyers Dill & Pearman); Tim steinert (Alibaba.com); Gareth Bater (Goldman sachs)

l-R: nghia luu, simon Man (Deutsche Bank); iris Ma (ALB)

l-R: yong Jae Chang (lee & Ko); Gillian Meller (MTR Corp)

l-R: Richard Kwok (AXA Asia Pacific Holdings); Gaven Cheong (sidley Austin)



MAXXIM

54



PROJECT FINANCE DEAL OF THE YEAR

WinnER

City of dreams finanCinGfirms: CliffordChance;RichardsButlerBanks:ANZ;BankofAmerica;Barclays;Citi;DeutscheBank

finAlisTs•DAEWOOCENTREBUILDINGFINANCING•FUJIANPETROCHEMICALEXPANSIONPROJECT•KEPCO•SHANXIACQUISITION

Why: • AtUS$1.75bn,largestpureAsiansyndicatedfinancedealevercompleted• Innovative,multi-tieredcapitalstructure,reworkedtocopewithcreditcrunchinUS• IncludedNASDAQlisting,IPO,CBandfollow-onofferingsforthegroupholdingcompany• Quicklyresized,restructuredandredocumented,andsoldintoregionalmarket

M&A DEAL OF THE YEAR

WinnER

mtr-kCrC merGerfirms: Allen&Overy;FreshfieldsBruckhausDeringer;Linklaters;MilbankTweed;SlaughterandMay;Sullivan&Cromwell;White&CaseBanks:GoldmanSachs;MerrillLynch

finAlisTs•CARLYLEINVESTMENTINTACHONGBANK•DOOSANINFRACOREACQUISITIONOFBOBCAT•ICBCACQUISITIONOFSENGHENGBANK•TCCACQUISITIONOFCHIAHSINCEMENT

Why: • Involvedacquisitionof

rail assets and property package, lease of networks, assumption of cross-border leasing transactions

• Complicatedtransactionstructure ensured merged entity achieved Hong Kong government policy initiatives

• Compliancewithextantlegal, regulatory and contractual obligations invariousjurisdictions

l-R: simon Man (Deutsche Bank); Richard Kwok (AXA Asia Pacific Holdings); John O’Toole; Martine Vanasse (Bank of America); Peter siembab (Citi); Connie Heng (Clifford Chance)

l-R: Chris lin (simpson Thacher & Bartlett); lin shi (Merrill lynch); frank Chen; Richard lin; leiming Chen (simpson Thacher & Bartlett); Aaron Goach (Merrill lynch); Erica fung (simpson Thacher & Bartlett); Jaclyn Jhin (Morgan stanley); David lee; Blake Dunlap; Dan fertig; Jim Gao (simpson Thacher & Bartlett)


Profile Law Alliance

Choosing the right practice area

Sometimes in life, we can make decisions quickly, lightly or for bad reasons without giving proper consideration to the long term effects

that our choices may have. For example, thinking back to school days, how many 13 year olds properly appreciated that they were effectively ruling out certain careers for themselves when dropping particular subjects.

And so it is with choosing the area in which you want to practice law, at the conclusion of one’s training. Experience tells me that a significant proportion of young lawyers do not give the matter the amount of thought that it properly merits. In making the decision, they often give an inappropriate amount of weight to what should be largely extraneous factors. For example, some simply take whatever job is offered to them in the firm in which they have trained, irrespective of practice area, ignoring the fact that to move into a new area subsequently is likely to be very hard. Others choose to take a job with a particular partner for reasons of personality, ignoring the fact that in all likelihood their working relationship will only last for a small proportion of their working life.

As with any choice, one can only make a proper decision when in full possession of the facts. A typical traineeship provides an excellent opportunity to experience working in different areas of the law, giving new qualifiers a good idea of the kind of work that appeals to them. However, that should not be the only consideration.

As a recruiter based in Asia, I receive countless CV’s from lawyers from all over the World who are looking to find employment in another jurisdiction. Irrespective of their academic results and quality of experience, a significant proportion of them have little, if any, chance of making the move they crave. Put simply, there is no demand for their specialization in the jurisdiction to which they want to move.

The somewhat wider point is that trainees

need to give serious thought to what goals they have career-wise and how their choice of specialism will impact them. These days, there are a vast number of distinguishable practice areas, a number that has grown significantly as the degree of specialism in legal practice has increased. Too many to discuss here, but by way of example we can look at a few key areas.

Corporate lawyers generally have a wide variety of career choices. Corporate practice travels well to most key international jurisdictions, while it also provides significant opportunities to move in-house. It also sometimes opens doors to prestigious business roles with prominent companies. Few law firms do not maintain a corporate department and thus corporate specialists can work for a wide variety of practices. Moreover, with it being such a key area of practice, partnership prospects and earning potential are both exceptionally good.

Finance specialists also tend to have enviable prospects when it comes to finding interesting roles overseas. Moreover, moving in-house, typically with banks, is rarely difficult and again this can occasionally lead to opportunities on the business side. Finance specialists also have good options in private practice, although genuinely specialist work tends only to be carried out by very big commercial firms. Nevertheless, one’s chances of advancement are good, and salaries high.

Litigators can certainly find roles overseas, but it is far from straightforward and in many jurisdictions virtually impossible. In others only those with arbitration and ADR experience will have genuine prospects. In one’s home jurisdiction, litigation provides an individual with the chance to work in a wide variety of firms, but in-house options are usually hard to find. Contentious lawyers can certainly earn well, although on average they will tend to be a little way behind their corporate department contemporaries. Nevertheless partnership prospects tend to be good.

Qualifiers who choose to go directly in-

house can find it hard subsequently to find a way into a private practice role. Equally a move overseas will not be easy. However, prospects of eventually moving to a business role are good. In an in-house environment, it is uncommon to find the kind of salary increases year on year that private practice lawyers expect in recognition of their increased level of qualification. Accordingly, career in-house lawyers often earn significantly less than those in private practice.

At the end of the day, we all have different goals career-wise. When choosing a practice area, it is an excellent idea to make sure you identify your own ambitions with a view to ensuring that your choice will not preclude or limit their achievement.

k

Conor Greene

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spECIal REpORT | Middle East >>



middle east 08

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HEARD in THE GUlf

“You’ve got to think some [of the influx of firms to the region] is over-expansion.

But there’s no historical basis for this market”Gary Kotara, Vinson & Elkins, Dubai

“in the 1990s, the far east was the place to be if you wanted to be an international

lawyer. now the place to be is the middle east, without a doubt”Chris Jobson, Eversheds, Doha

“[Because of the credit crunch] deals will slow and projects will be financed less

by debt and more by funds and pe. But hopefully there’s light at the end of the tunnel that isn’t a train”Neale Downes, Trowers & Hamlins, Bahrain

middle east 08H

and-out visitor maps available in the expanding airports of the Gulf region have a key explaining which symbol

means hotel and which means shopping mall and so on: not unusual. What is unusual, however, is that sometimes the key has two separate colour schemes – one for real hotels and malls, and another for hotels and malls under construction. And well they might. For as the visitor emerges, blinking, into the diabolical heat and blinding sun, he finds that as many points of reference are building sites as are buildings.

And that visitor cannot rely on any conventional notion of a coastline – as an immovable constant placing parameters on human settlement – to aid his navigation round the Gulf’s new urban centres. Here, coastlines change faster than the tides that now wash impotently against hundreds of kilometres of reclamation walls. Dubai has its famed Palm developments spreading their fronds into the azure waters; Abu Dhabi has its financial and residential Saadiyat Island; Bahrain has relinquished its fine corniche in favour of the ultra-sleek Bahrain Bay development; and Doha has its multi-use, multi-billion-dollar Pearl complex.

Cutting to the chase, the Gulf is going off. Another five years of oil & gas revenues – this time boosted by record high prices – have created a lake of liquidity in a region that has the need, the wherewithal, the ambition and the sheer will to make things happen. Law firms have for some time been feasting on big-ticket oil & gas, project finance, infrastructure and banking & finance work. But never to the current degree, and never across so many centres of activity. The numbers speak for themselves. ALB counts at least 18. And among the new arrivals, few predict anything less than further rapid growth – even doubling of lawyer numbers – over the next two years. Demand is still strong in the ‘traditional’ practice areas – projects, energy – but it is being supplemented in many other areas: outbound M&A, telecoms/media/technology, and especially Shariah compliant finance are among the areas mentioned by firms as rising to prominence.

Key to understanding the practices of firms operating in the region (even those with only a Dubai presence), and the reason they are growing so fast, is recognising they are here to serve the whole of the Gulf and way beyond. The spectacular construction might be taking place mostly along the Gulf coast, but the petrochemical plants, the water projects and the infrastructure deals are taking place anywhere from Sudan to Siberia, and lawyers based in the livable new cities of the Gulf are working on the lot.

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aBu dhaBi ►Population 850,000(est.)

Oil production 2,000,000 bbl/day

Closing the gap on Dubai as strongest law firms in •the region open second or third offices hereFar greater oil wealth than Dubai and seat of •UAEfederalgovernment;hasambitionstorival Dubai as financial centre, among other diversification strategiesTipped for faster, less rushed and less painful •growth going forward both for economy as whole and for legal market

Bahrain ►Population 718,306(July2008est.)

Oil production 184,300bbl/day(2007est.)

WasGulfregion’sfinancialcentrefrom1970s•untilDubai’sascendancyBahrain Financial Harbour, Bahrain Bay and other •majorprojectstoinjectrenewedvigourintothecountry’sbidtobetheregionalbusinesscentreSeveral new office openings by international firms •reflects healthy transactional activity

duBai ►Population 2,262,000(est.)

Oil production 240,000 bbl/day

Gulfregion’slargestlegalmarketbyfar–hometo•(too?)manyinternationalfirmsDubai International Financial Center has stolen a •marchoncompetitorsashubofmajorfinancingactivity over last few yearsLast decade of meteoric growth has left an •infrastructure-poor city whose traffic-weary lawyers now face extortionate rents for both offices and housing

The arrival of new firms in the Gulf and the expansion of existing ones is no secret. Nevertheless, the numbers of

firms, offices and lawyers tabulated on pages 59 and 64 prove the amplitude of the expansion of the profession here. The question now becomes whether the headlong rush from London and the US has produced an over-lawyered market – in Dubai at least.

“There’s a sense that if you flock here there’ll be work,” says Sean Korney of energy specialists Baker Botts in Dubai. “That’s not true, and nor can you get it by aggressive price discounting.” Korney is one of many lawyers who stress the importance, and time-consuming nature,

of establishing relationships with local client organisations in the Gulf, and says the big, well-established firms (one thinks of Norton Rose, Clyde & Co, Trowers, and Korney’s old firm Denton Wilde Sapte) will have to capitalise on existing relationships to avoid having their market share eroded by the newer faces in town. “The quality’s going up,”

he says. “In the past there were instances where you would have got work just because you were here, but that’s not going to be the case going forward.” Meanwhile, the new entrants will have to strategise carefully, he warns. “Those that are interested in the [Gulf] only because there’s no growth elsewhere won’t survive… You have to find a

Gold-paved streets and tough times back home: Recipe for market overcrowding?

“Those that are interested in the [Gulf] only because there’s no growth elsewhere won’t survive… You have to find a winning strategy here”

SeAn Korney, BAKer BottS



doha ►Population 824,789(Qatar–July2008est.)

Oil production 797,500bbl/day(2007est.)

Becomingtheworld’sbiggestLNGexporterin •less than a decade has been catalyst for rapid economic expansionQatar Financial Center staking claim for regional •financial supremacy on platform of having integrated financial best-practice regulatorAt least five international firms have set up in last •18months

winning strategy here.” (In the case of his own firm, Baker Botts, that means “selling what you’re good at” [energy] and “building out from that” [diversifying into areas such as environmental work and real estate].)

The grip of the long-established players on sizeable chunks of the market seems, for the time being, quite firm. Denton Wilde Sapte, for whom the Middle East is home to around 140 fee earners out of a global total of perhaps 800, has been growing its infrastructure and energy-focused practice in Dubai since 1969 and enjoys a strong reputation and long track record in the region. In the last 18 months the firm has doubled its lawyer numbers by opening four new offices, making seven for the region. “Having

James Dallas, Denton Wilde

sapte

LoCaL firms ►Law firm Total fee

earnersTotal

partnersOffices in

ME onlyAl Tamimi & Company 160 23 5Hadef Al Dhahiri & Associates 61 11 2The Levant Lawyers 50 13 4Afridi & Angell 44 9 3Galadari&Associates 40 2 1Emirates Advocates 38 2 1Al Basaidy Manoor Jamal & Co 36 2 1Caspi & Co. 35 11 1AlSarraf&AlRuwayeh Bahrain - In association with Elham Ali Hassan & Associates Kuwait - In association with Stephenson Harwood

25 7 2

Al-Sarraf&Al-Ruwayeh 22 8 1AL-JADAAN&PARTNERSLAWFIRM 20 0 1Al-Wagayan & Al-Awadhi & Al-Saif 18 4 1QaysH.Zu'biAttorneys&LegalConsultants 16 5 1HayaRashedAlKhalifa 15 1 1Emirates International Law Firm 14 2 1Ince Al Jallaf & Co* 11 3 1Shalakany Law Office 8 2 1Khasawneh & Associates 7 3 1BinMahfouzInternationalLawFirm 3 3 1NB:Thistabledoesnotpurporttobeexhaustive;figuressuppliedbyfirmsthemselves;andcurrenttoOctober2008*Joint venture between local and international firm

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partners, Lovells opened for business with five partners and capability in finance and corporate work. The need to service, among others, major firm client Standard Chartered in the Middle East was an impetus for the move, which produced a busy and profitable office very quickly. “Some of our international clients were setting up panels on an international basis, and we didn’t want to miss out on those panels by lacking a Middle East operation,” says partner Shibeer Ahmed, who takes a sober view of the current market. “The amount of transactional work is going down and the amount of competition is going up. You’ve got a lot of US firms flocking towards the sovereign wealth funds… Those are the guys you’ve got to have a long relationship with, so many of those firms may take a long time to build up their practices,” he says. (His own firm has plans to create dispute resolution and real estate practices in the near future.)

Herbert Smith, meanwhile, also opened as recently as March 2007 in Dubai and June 2008 in Abu Dhabi. Following a

roots in the region is critical,” says chairman James Dallas, adding that his firm’s long list of offices is another big marketing and executional advantage. Colleague Neil Nicholson confirms, however, that the firm is being undercut by new firms on some deals. “There is low-balling – you’ve just got to confront it,” he says. “For our existing clients it’s not a threat, but when it comes to new clients you’re going to lose some deals.”

The similarly large-in-numbers Trowers & Hamlins (offices in Dubai, Abu Dhabi, Bahrain, Cairo and Muscat) has been in the region for as long as 40 years and has approximately a quarter of its lawyers worldwide – about 150 – in the Middle East. With more of a historical focus on commercial property, real estate and construction, the firm has recently diversified into corporate and finance work. “We’re regarded as stalwarts or pioneers of the Middle East,”

says Bahrain-based partner Neale Downes. “In the UK we’d be compared to Addleshaw Goddard or Pinsent Masons, but here we’re considered on the same level as the Magic or Silver Circle firms and the whiteshoe New York firms. We work on the biggest deals, but we tend to act for the sponsors or developers whereas the banks prefer a name like Clifford Chance.” Downes, too, has seen a lot of aggressive pricing by firms desperate to win work. “I’ve heard about preposterously low fees being quoted, where firms must be losing money. It’s getting tougher. The question is whether if the gravy train stops rolling, are these firms going to tough it out or run back to wherever they are from,” he says.

Some very large and very international firms have until recently been conspicuous by their absence in the Gulf. Lovells, for example, arrived only in May 2007, albeit with a headstart in the form of a ready-made team of three partners from DWS. Supplementing them with two London

neil nicholson, Denton Wilde

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“There is low-balling – you’ve just got to confront it. For our existing clients it’s not a threat, but when it comes to new clients you’re going to lose some deals”

neil niCholSon, denton Wilde SApte

62



qatar: like Dubai 10 years ago?

restricted legal market with just a couple of significant (and licensed) foreign firms – Simmons & Simmons and Patton Boggs – and a couple of noticeably strong local firms – Gebran Majdalany and Hassan A Alkhater –

A few years ago, when Dubai already had dozens of firms and Sheik Zayed Road was looking like it already had

its full complement of skyscrapers, neighbouring Qatar was still a heavily

deliberate strategy to bulk up and have a credible practice, the firm has gone from five to 40 lawyers, which, according to partner Craig Shepherd, is “better than expected”. He expects the Abu Dhabi office to grow faster than the Dubai office from here on in, and reports plenty of work, even at partner rates that are “very respectable” with regard to other offices.

From ALB’s discussions with lawyers around the region it seems clear that fee competition is commonplace. Equally clear is that work is not exactly hard to come by, other than in the areas most closely affected by the credit crisis. Some newer firms will find survival, or at least growth, difficult. Some older firms may lose market share. Most, though, are confident they will find their niche and prosper as long as nothing (eg property) goes too seriously wrong in the region.

The duBai CorporaTe CounseL Group: one of a kind in The GuLf ►While there has been plenty of media attention devoted to the influx of private practice lawyers into the Middle East region, there has been comparatively little coverage about the movements of in-house counsel, despite it being as common.

While moving to a new part of the world is daunting at the best of times, culture shock can be lessened if you are insulated by the management structures of mega firms, but a little alienating if you are an in-house lawyer making the Arabian adventure.

CuetheDubaiCorporateCounselGroup(DCCG),theonlyin-housecounselassociationinthe Middle East. In addition to assisting members settle into the challenges of practising law in arapidlychangingenvironment,theDCCGundertakesawiderangeofotheractivitiesonbehalfof its members with the goal of sharing best practices, promoting continuing legal education and offeringnetworkingopportunities,inadditiontotakingcareofmembers’continuinglegaleducationneeds.

Althoughonlyhavingopeneditsdoorslessthanoneyearago,theDCCGhasexperienceddynamicgrowthandnowboastsover60members,adatabaseof240+in-housecounsel,andenjoyspartnershipswitheightofthelargestlawfirmsintheregion.DCCGpartnerfirmsinclude:AlTamimi&Co;DLAPiper;Eversheds;Freshfields;Fullbright&Jaworski;King&Spalding;Latham&Watkins;Vinson&Elkins.

Justin Connor, acting chairman,

DCCG

Craig shepherd, Herbert smith

TheriGhTsLaWYers: ►The onLY BouTique firm in duBai?

Withaclaimasthe“onlyboutiqueTMTfirmintheMiddle East”, therightslawyers might be perceived as a type of modern-day pioneer into a niche market in the Middle East.

Nowintoitssixthyearofoperation,therightslawyersisoneoftheregion’sleadingintellectual property and technology firms and is well positioned as the premier media & entertainment practice in the area. The firm also boasts a long and loyal list of high-profile clients and a star team with experience in exclusive practice areas ranging from advertising & marketing to anti-counterfeiting&IPenforcement,trademark,andmusic and entertainment to name a few.

It is this specialisation combined with the relative rarity of such a firm in the Middle East region that associate Lara Haidar believes is the firm’sgreatestassetandcompetitivestrength.

“ThesuccessofboutiquelawfirmsisseenintheWest. It may be a while before this is understood and replicated in this region as most firms still like to profess to being able to offer any service to any client. But for us, it is the logical step,” she says.

therightslawyers’website

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and a distinctly low-rise city skyline. Then the LNG really started flowing, the government needed to invest the proceeds, an investment agency was set up (the Qatar Investment Authority), the investment banks arrived, and the scene was set for the legal market to take off.

Now at least five more foreign firms

(Eversheds, Denton Wilde Sapte, Swiss firm LALIVE, Clyde & Co, Salans, the Middle East-aggressive DLA Piper, and Latham & Watkins) have set up in downtown Doha, which is even more pocked with construction sites, and even shorter on office space, than the region’s other fast-growing cities. Indeed, office space seems to be a major

inTernaTionaL firms ►Law firm Total fee

earnersTotal

partnersOffices in

ME onlyDenton Wilde Sapte 147 24 6Clyde & Co 143 20 3Trowers & Hamlins 126 17 5DLAPiperMiddleEast 121 33 5Clifford Chance** 108 13 3Allen & Overy 98 18 3Simmons & Simmons 59 12 3Herbert Smith 59 7 2NortonRose 44 11 3Freshfields Bruckhaus Deringer 43 5 4Linklaters 38 8 1ReedSmith 35 9 2Baker&McKenzie 28 7 2King & Spalding 28 7 3Lovells(MiddleEast) 27 5 1TAYLORWESSING(MiddleEast) 23 4 2AshurstLLP 22 6 2White & Case*** 22 6 2Baker Botts 21 1 2Latham & Watkins 21 6 3Rouse&Co.International 20 1 1Vinson & Elkins 20 7 2Fulbright & Jaworski 20 7 2Dewey Leboeuf 19 7 2PinsentMasons 18 20 4Holman Fenwick Willan 16 5 1PattonBoggs 16 7 4Chadbourne&Parke 14 4 1Ince Al Jallaf & Co* 11 3 1GibsonDunn 10 3 1Loyens&LoeffN.V. 9 3 1Holland & Knight 7 2 1CharlesRussell 6 1 1WalkersGlobal 6 2 1AkinGumpStraussHauer&Feld 5 3 1Zaid Ibrahim & Co 4 2 1Bryan Cave - Mashora Advocates and Legal 4 4 1Donald H. Bunker and Associates 4 1 1Bracewell&Giuliani(Dubai) 3 2 1GideLoyretteNouel 3 2 1NB: This table does not purport to be exhaustive; figures supplied by firms themselves; and current to October 2008*Joint venture between local and international firm **Clifford Chance has a co-operation agreement with Al-Jadaan & Partners Law Firm in Riyadh, with 8 lawyers currently on secondment***In the Riyadh office, White & Case operates in association with the Law Office of Mohammed A. Al-Sheikh

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overaLL Top 5 firms ►Law firm Total fee earners Total partners Offices in ME onlyAl Tamimi & Company 160 23 5Denton Wilde Sapte 147 24 6Clyde & Co 143 20 3Trowers & Hamlins 126 17 5DLAPiperMiddleEast 121 33 5

LoCaL Top 5 firms ►Law firm Total fee earners Total partners Offices in ME onlyAl Tamimi & Company 160 23 5Hadef Al Dhahiri & Associates 61 11 2The Levant Lawyers 50 13 4Afridi & Angell 44 9 3Galadari&Associates 40 2 1

inTernaTionaL Top 5 firms ►Law firm Total fee earners Total partners Offices in ME onlyDenton Wilde Sapte 147 24 6Clyde & Co 143 20 3Trowers & Hamlins 126 17 5DLAPiperMiddleEast 121 33 5Clifford Chance** 108 13 3NB: This table does not purport to be exhaustive; figures supplied by firms themselves; and current to October 2008**Clifford Chance has a co-operation agreement with Al-Jadaan & Partners Law Firm in Riyadh, with 8 lawyers currently on secondment

constraint on firm growth here. “We’d double in size overnight if we could find more office space,” says Eversheds’ office chief Chris Jobson.

According to Jobson, the influx of lawyers raised the bar for the local profession, and the local firms, now competing with foreigners backed by hundreds of colleagues and giant international networks, quickly lost prominence. Meanwhile, the standard of legal work soared.

Qatar is currently far less saturated with firms than Dubai, and undercutting is less a feature of the market here: the constraints to growth are on the supply rather than the demand side. Office space

is at a premium, and young lawyers are less inclined to live in Doha than in ‘glitzy’ Dubai.

The key to the future of the legal market in Qatar though, according to Jobson, is how well the Qatar Financial Center fares in the race for regional financial dominance. Unlike the dual systems such as that of Dubai (one market regulated along local lines, and one (the DIFC) according to international best practice), the Qatar Central Bank and the Qatar Financial Center are adopting an ‘integrated financial regulator’ approach. This strategy, says Jobson, will be fundamental to where the Qatar market ends up. ALB

WonGparTnership & Zaid iBrahim: ►The onLY easT asian firms To hiT The Ground in The middLe easT

DespitethehypesurroundingtheGulfregionatthe moment and the financial lures it presents for law firms across the globe, only two East Asian law firms,WongPartnershipandZaidIbrahim&Co,have established operations there.

InMaythisyear,WongPartnershipopenedasecond office in Abu Dhabi, after having opened a DohaofficeinMay2007.“Thefirmrecognisesthetremendous growth in the Middle East region,” says PaulSandosham,headofWongPartnership’sMiddleEast practice. Sandosham noted that increasing oil prices and the desire of the UAE to compete on the global stage are likely to drive future growth. “WongPartnershipneedstobeonthegroundto strengthen our ability to assist clients from Singapore, Malaysia, China and India as they grow their businesses in the Middle East,” he says.

WonGparTnership: ►middLe easT sTaTs aT a GLanCe

Partners 7

Middle East offices 2(Doha,AbuDhabi)

It is a similar story for the lawyers over at Zaid Ibrahim & Co. The firm recently opened itsfirstofficeintheGulf–inDubai–andthusbecame the first East Asian law firm to receive a licence to operate in the Dubai International Financial Centre. Speaking as to the reasons behind the move, the firm noted that a coalescence of factors including increased Asian business in the region, the liberalisation of the financial, insurance and property sectors and the Malaysia Islamic Financial Centre initiative, was the rationale behind the move – in addition, of course, to the boom in Shariah compliant financial products.

Zaid iBrahim & Co: ►middLe easT sTaTs aT a GLanCe

Partners 2

Fee earners 4

Middle East offices 1(Dubai)

And with the current economic uncertainty that is gripping the region, the area of Shariah compliant finance is expected to grow exponentially in the months ahead as investors seek out risk averse alternatives to traditional financing. On the back of this, the number of east Asian firms with a presence couldgrowten-foldin2009.

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spECIal REpORT | Japan >>



Japan 08



Japan Inc II: Bengoshi & zaibatsu to join forces

While the claim that the fundamentals of the US economy were strong even though it had sunk to its

lowest point since the Great Depression was one of the more memorable gaffes served up by the 2008 presidential race, making similar claims in relation to the Japanese economy maybe somewhat less erroneous. For although all economies throughout the region are going into a slowdown, the statistics for the third quarter of 2008 show the Japanese economy is more robust than others.

In addition to Yen bond offerings hitting their second-highest volume in the last eight years, peaking at a total of ¥15.36trn from just on 630 deals, samurai bond issuances are the highest on record, reaching nearly ¥2trn from 65 deals. Add to this foreign direct investment (FDI) outflow of nearly US$20trn (the second-highest of all G7 nations) over the last 13 weeks alone and it is easy to see why lawyers in Japan are looking forward to the months ahead as the Japanese economy moves out from the shadows of the so-called ‘lost decade’.

“Up until about a year and a half ago, the Japanese economy was still in restructuring mode and it is only in the last two to three years that it has fully emerged from 10 years of recession,” said Stephen Bohrer, a counsel with Nishimura & Asahi and head of the firm’s cross-border transaction group. Bonnie Dixon, a partner at Atsumi

Partners, agrees, noting that the last year in particular has heralded a new era for the Japanese economy and it is the nation’s domestic companies that are showing a renewed appetite for overseas acquisitions, with US companies looming as likely targets.

“The Japanese economy has turned the corner, and many of the lawyers in town are reporting an upturn in business directed at offshore M&A activity, particularly the US,” says Mansanori Sato, a partner at Mori Hamada & Matsumoto. For Sato, and indeed all lawyers ALB spoke to, M&A activity has yet to reach its peak. “Domestic M&A transactions are flourishing, yes, but this is only part of the story. If the events of the last few months are any indication, then the market for domestic M&A could double or more in the medium to long term.”

To buy or not to buy? The increasing appetite of cash-rich Japanese companies for overseas assets has been exemplified by both Nomura Holdings (Japan’s largest trading house) agreement to purchase the European operations of Lehman Brothers and Mitsubishi UFJ Financial Group’s acquisition of a US$8.5bn 20% stake in Morgan Stanley.

Speaking as to why such acquisitions are possible in the current economic climate, Bohrer notes that: “The huge inbound investment in Japan that has been occurring over the last couple of years means that there are a number

of Japanese companies with a lot of cash on their balance sheets. They are realising that now is perhaps a once-in-a-business-cycle opportunity to snap up some companies that otherwise would have been prohibitively expensive.” According to Bohrer, Japanese companies are now in a position where they have tremendous amounts of cash that they are looking to utilise.

And while the US has traditionally been the most-favoured nation for Japanese outbound investment, companies in the samurai nation are showing an increased predisposition to pursue inorganic growth opportunities throughout the region, with BRIC (Brazil, Russia, India, China) countries in particular gaining in popularity with Japanese trading companies. “BRIC nations, especially India and China, are quickly becoming a target for many Japanese companies looking to get in on the bottom floor,” notes Dixon.

Atsushi Oishi, a partner at Mori Hamada & Matsumoto, agrees. “Our Japanese clients are always interested in new and emerging markets. We have received more instructions than usual from companies wishing to explore Chinese and Indian markets with some also looking very interestedly at South East Asia.”

Last month, Japan’s top drug maker Daiichi Sankyo launched a US$5bn bid for Ranbaxy Laboratories, an Indian pharmaceuticals company while NTT DoCoMo, the country’s top mobile phone operator, has made no secret

Ushinawareta junen (the lost decade) is officially over and Japanese companies have emerged cashed up and ready to plunder ailing markets across the globe. But, as ALB reports, while Japan’s band of bengoshi and gaggle of gaiben are looking forward to an upswing in work, micro matters loom large on the horizon

2005 2007 2008

• Anderson Mori – Tomotsune & Kimura• Linklaters – Group from Mitsui Yasuda• Mori Hamada & Matsumoto – Max Law Office

• Bingham McCutchen – Sakai & Mimura • Bingham McCutchen – Tokyo International

Law Office• Nishimura & Partners – Group from Asahi

Law Office

Lovells – Kubota Law & • Patent Office

law firm mergers in Japan from 2005 until the present*

*This list does not purport to be exhaustive

–

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Japan’s LarGesT firms ► *

Firm Total partners & lawyers**

Managing partner

Total lawyers

Total partners

Offices

Nishimura&Asahi 395 Akira Kosugi 318 77 1

Mori Hamada & Matsumoto 323 Multiple 249 73 3

Anderson Mori & Tomotsune 320 Kunihiko Morishita

256 64 2

NagashimaOhno&Tsunematsu 305 KenichiFujinawa 244 61 1

*As at June 2008**Includes bengoshi & gaiben

of its desire to invest in emerging IT infrastructure markets in markets such as Bangladesh.

As the above indicates, the range of Japanese industries active in the current M&A surge has broadened, and this is a trend that will only increase as time goes on, with companies in sectors such as electronics, parts and industrials also likely to get in on the act. A big part of this, according to Bohrer, is the want of Japanese companies to expand their global footprint.

Whereas in the past, especially during the ‘Japan Inc’ boom of the 1980s, there was interest in targets with real estate assets, the current boom will likely see Japanese businesses target companies with integrated global operations.

“A lot of the transactional activity we’re seeing at the moment is a result

of Japanese companies wanting to extend overseas and this about them being able to support their growth going forward. There may be no comparative cost advantage for them going overseas but, strategically, it’s vital for their survival,” he says.

And survival, according to all lawyers that spoke to ALB, means looking beyond the traditionally close dependence that Japanese companies have on the domestic market. A market that is set to contract even further as the population continues to grey, and interest rates remain low and investment yields even more so.

Yet, while many believe further M&A activity to be something of a fait accompli, a number of historical and cultural factors are set to dictate the pace and pattern of cross-border activity in the short to medium term. According to Bohrer, the negative experiences that many of the nation’s latter-day zaibatsu had in the 1990s may guide behaviour this time around.

“At the start of the 1990s, Japanese companies were on a very large overseas buying spree. Many felt, in retrospect, that they had overpaid for those assets and got their fingers burnt, and this is still in the back of management’s mind,” he says. “I don’t expect Japanese will all of a sudden open their chequebooks and pay whatever it takes.”

Sato and Oishi agree, noting that, as tempting as it may be for Japanese companies to buy up on the cheap, the fiscal responsibility traditionally associated with Japanese business will win out. “Japanese companies are very prudent and cost conscious and I really don’t see this changing in the future no matter how alluring things may become,” Sato says.

If matters of fiscal prudence are to govern patterns of overseas

acquisitions, then cultural factors seemingly ingrained in Japanese business will also play a large role. The emphasis placed on seniority, stability and continuity over things such as individual incentives and profits may need to be redressed should the company-led samurai boom eventuate.

Bending the 70:30 ‘rule’Traditionally, the breakdown of work handled by the top domestic law firms in Japan was articulated as a clear 70:30 division: domestic work accounted for 70% of one’s diet while 30% was supplemented by cross-border M&A and transactional type work with foreign law firms (FLFs) attracting the lion’s share of cross-border advisory work, owing largely to their international clientele.

However, statistics (see table on p71) suggest that this pattern is changing, with Japan’s domestic firms eating into the FLF share of the market. According to Bohrer, this is part of a deliberate strategy by Japan’s domestic firms to redress this imbalance.

“There has been a general move among all domestic players to invest more attention into cross-border elements of the market and we are seeing now the fruits of this policy pay off,” he says. He observes that market share of these firms in this area has increased substantially in a short period of time.

Dixon agrees with Bohrer and notes that a confluence of domestic changes has also contributed to this trend. She says that the more hands-on approach of domestic lawyers vis-à-vis regulatory changes in addition to the changing habits of in-house legal teams are also drivers behind the shift.

“M&A transactions are now more liberalised than in the past, so there has been naturally been more



movement in the market,” says Dixon. “Japanese law firms and lawyers are now more proactive in relation to how they liaise with the government. Whereas in the past they may have been more inclined to just suck it down and go along with things, now they are working with the government to push things through and this has certainly benefited the amount of cross-border work on offer for them.

But for Dixon, the most salient reason behind the bending of the 70:30 ‘rule’ has to do with changes in the legal departments of Japanese companies. “Historically, Japanese companies handled the majority of complex cross-border work in-house. But recent legislative changes have meant that there is more of a need to reach out to experienced lawyers.”

According to Dixon: “It’s not only that transactions are increasing, but in-house legal teams who used to do everything by themselves are now reaching out and this generates a lot of work for external lawyers.”

If more cross-border and transactional work is reaching domestic Japanese lawyers through in-house legal teams, then as much, if not more, is coming from international companies, which are becoming cognizant of Japanese domestic law firms being more cost effective than their international counterparts.

“When an international company enters Japan for the first time, they often use a big UK or US firm because they don’t know the complexion of the domestic legal market,” notes Oishi. “But when they become more used to the legal market here, they discover that domestic firms are as good, if not better, than international law firms and can do the same job at half the price.” This has seen, according to Dixon, international companies in Japan “gravitate a lot of their cross-border work to domestic firms”.

And while many of those that ALB spoke to agreed that this would necessarily challenge the ascendancy that FLFs enjoy in this area, Oishi and Sato note that they expect emerging areas of law such as carbon trading and emissions rights to be the terrain on which the real battle between domestic and international firms will be fought. However embryonic these areas of law may be, both believe that the Japanese firms that cement their credentials sooner rather than later stand to become market leaders in the long run.

“Emissions rights is an area of law which is moving along nicely at the moment,” says Sato. “The Japanese government has been pushing to launch legislation and we are well on the way to seeing issues such as these figure very prominently in transactions.”

Top LeGaL advisors – Japanese m&a ►BY voLume (q1–q3 2008)

Rank Firm Name Value (US$m)

No. of deals

1 Nishimura&Asahi 11,770 38

2 Mori Hamada & Matsumoto

19,876 31

3 NagashimaOhno&Tsunematsu

3,759 17

4 Sullivan & Cromwell 20,182 13

5 Morrison & Foerster 3,833 9

6 Jones Day 5,775 8

7 Baker&McKenzie 1,058 8

8 Skadden 13,396 7

9 Freshfields 3,161 7

10 Shearman & Sterling 6,427 6

Source: Mergermarket

Cont p76

Micro mattersThat Japan is expected to weather the effects of the global liquidity crisis better than other countries in the region may be something of a given, as the volume of transactional work has not dried up, and its banks, financial institutions or stock market have not crumbled.

But, as is so often the case, the mere appearance of financial turmoil is more than enough to shake investor confidence and, along with it, client behaviour – and the case is no different in Japan.

72 Asian Legal Business ISSUE 8.11

Foreign Direct Investment vs. National Security: Is Japanese protectionism on the rise after a lengthy period of liberalization?

This year, two high-profile transactions involving foreign investments in a Japanese airport and power company have stirred up controversy and re-

opened a national debate over the limitations on foreign direct investment for national security considerations.

liberalization of Japanese Capital MarketsOver the last several years, the Japanese government has gradually liberalized Japanese capital markets and lifted legal restrictions on foreign investment. A number of former governmental entities or public corporations, such as Nippon Telegraph and Telephone Corporation (NTT), Japan Tobacco Inc. (JT), highway-related corporations and Japan Post Holdings Co., Ltd., have been privatized in turn during the last two decades. Some companies, such as NTT and JT, were publicly listed after privatization. Most of these companies are still regulated by specific laws, that require the government to hold at least one-third of their stock. Moreover, foreign ownership of NTT must remain less than one-third. Similarly, Japan’s Radio Law and Broadcast Law limit foreign investment in broadcasters to less than 20%, and the Civil Aeronautics Act limits it in air carriers to less than one-third.

Otherwise, the government generally controls foreign investment based on the Foreign Exchange and Foreign Trade Act (Forex Act). The Forex Act was amended in 1991 to replace a prior notification requirement with an after-the-fact notification requirement for most inward direct investment. Prior notification is now required only in certain restricted sectors that are classified as being related to “national security,” including weapons, aerospace, nuclear energy, agriculture, fisheries, mining, electric utilities, communication and passenger transportation. Although the Forex Act provides a scrutiny process by the government based on national security concerns for foreign investment in these restricted sectors,

administrative approval has generally been granted without problems in connection with proposed investment projects.

increasing security ConcernsWhile the general trend over the last several years has been one of liberalization, recent events seem to have provoked a reconsideration of the appropriate level of de-regulation of foreign investment. The Radio Law and Broadcast Law had until recently regulated only direct foreign investment, but in 2005 new regulations were introduced with respect to indirect investment through Japanese companies. These regulations were imposed after a Japanese internet service company, livedoor Co., Ltd., acquired a large stake in a radio broadcaster, Nippon Broadcasting System, Inc., with funds raised through the issuance of about 80 billion yen of moving strike convertible bonds to Lehman Brothers.

Japan had not reviewed the inward investment regulations under the Forex Act since the 1991 amendment. However, last year the government amended the Forex Act, saying that the regulations may not be sufficiently in line with the changed security environment surrounding Japan and trends in international investment activity. The government has now expanded the scope of the inward investment regulations to include not only industries directly related to defense, but also industries making general-use products which have a high probability of being diverted to use in weapons of mass-destruction among other things.

Airport ControversyEarly this year, the Japanese Ministry of Land, Infrastructure, Transport and Tourism announced an intention to submit to the Diet a bill that would limit foreign share ownership in the operating companies of Japan’s major airports for national security reasons. The restriction would require foreign ownership to be less than one-third, which created strong

opposition from some cabinet members and lawmakers in Japan.

The Transport Ministry’s move drew a great deal of public attention because of its timing. According to public securities reports filed last year, it was revealed that from July until October last year an Australia-based Macquarie Group fund had acquired a little less than 20% of the shares of Japan Airport Terminal Co. Ltd. (JAT), which owns the terminal buildings of Haneda Airport (Tokyo’s major domestic airport), thereby becoming a top shareholder of JAT. The Transport Ministry, however, insisted that the proposed bill was drafted not because Macquarie had acquired a large shareholding in one of Japan’s main airport companies, and that the Ministry had begun discussion of foreign ownership regulations before that from a national security perspective.

JAT was established in 1953 accepting private-sector funds from the beginning and went public in 1990. While JAT owns and manages Haneda’s terminal buildings, Haneda’s runways and other airport facilities are owned and managed by the Japanese government.

On the other hand, Narita International Airport Corporation (NIAC), an operating company for Narita Airport (Tokyo’s major international airport), was a public corporation in the past and was privatized in 2004. NIAC manages all the airport facilities including Narita’s runways and terminal buildings, and all of its shares are still held by the government. NIAC is scheduled to be publicly listed next year, by selling off government-owned shares in stages.

In this manner, a clear difference can be recognized between the current situation of these two major airport corporations. With regard to JAT, the imposition of new regulations limiting foreign ownership at this stage would seem to be an after-the-fact rule change that would undermine regulatory predictability.

In February, after massive criticism, the


Profile Mori Hamada & Matsumoto

Foreign Direct Investment vs. National Security: Is Japanese protectionism on the rise after a lengthy period of liberalization?

government decided against submitting the foreign ownership restriction bill to the Diet at this time. However, the Transport Ministry did not give up on ultimately enacting legislation in this regard and set up an advisory panel to reconsider the regulations. The regulations which discriminate foreign investment did not gain the experts’ support at the panel and in early October, the Ministry has finally decided to abandon its plan to restrict foreign ownership and commence studies toward regulations that do not discriminate between Japanese and foreign investors.

Battle over TCi’s investment in J-PowerAround the same time of the airport controversy, there was a separate battle occurring with respect to foreign investment in one of the jewels of Japan’s energy sector. The Children’s Investment Master Fund (TCI), a UK-based fund, holds a 9.9% stake in one of Japanese main electric utility companies, Electric Power Development Co. Ltd., known as J-Power, as its largest shareholder.

J-Power was established as a government affiliated company to remedy power shortages in Japan after WWII. In 2004, J-Power went public by selling off all government-owned shares and was fully privatized. J-Power operates 67 power stations and has a construction plan for a nuclear power station in Oma City in Japan. The Oma Power Station is planned to operate using plutonium extracted from spent nuclear fuel, which is a landmark and symbolic plan for Japan’s nuclear policy.

Under the Forex Act, prior notification to the government must be made before a foreign investor acquires 10% or more of the stock of a Japanese listed company that is engaged in restricted industries as described above, including electric utilities. TCI intended to increase its shareholding to 20% and submitted prior notification to the Ministry of Economy, Trade and Industry

(METI) in January this year. After four months of a scrutiny process, METI ordered TCI to discontinue further acquisition of J-Power’s shares based on the Forex Act. METI said that TCI’s acquisition of J-Power’s shares had the possibility to disturb the maintenance of public order, and the decision was reached to avoid any negative impact on the stable supply of electric power or the construction plan for nuclear power plants. In this case, the government conveyed their negative position to such potential acquisition from the very beginning, and never changed their position throughout the scrutiny process.

This is the first time that the Japanese government has ordered to discontinue a proposed inward foreign investment under the Forex Act. Just before the issuance of the order, J-Power was given approval from METI to install the nuclear reactor for the Oma Plant. Although TCI strongly condemned the government decision, it announced in July that it had decided not to pursue an appeal or a judicial process.

Overseas MovementJapan’s recent reconsideration of foreign investment is not unique. The so-called Exon-Florio Act in the US is well known as being a tough foreign investment regulation. Last year President Bush signed legislation amending the interagency process for reviewing foreign acquisitions of US corporate entities, including widening the scope of reviews and investigations with regard to critical infrastructure and foreign government-controlled transactions. Such reform was prompted by controversies in the US that erupted over some recent transactions, including the proposed acquisition of certain US ports by Dubai Ports World, a UAE government-controlled entity, and of Unocal Corp., a US large oil company, by China National Offshore Oil Corporation, a Chinese government-controlled entity. When the Japanese government recently amended inward

investment regulations under the Forex Act for the first time in 16 years, it seems highly likely that they strongly recognized and were influenced by such similar movement in the US.

future OutlookIt is hard to predict what impact the current crisis in world credit markets will have on the debate over foreign investment. Until recently, there was a lot of discussion throughout the world as to whether large sovereign wealth funds constitute a threat to other countries. However, in the current financial environment, those funds may now appear less of a threat and more as a good source of much-needed capital.

Following the J-Power controversy, it is not entirely clear what type of proposed investment could provoke a negative response from the Japanese government. While the government took a hard-line approach to TCI, the government has also been desperate to show the world how indispensable foreign investment is for Japan and how attractive the Japanese market is. Obviously, in order for the government to be successful in making that case, it will be essential for the Japanese regulatory system to be seen as transparent, predictable and impartial.

Author profile Hiroko Yotsumoto Attorney-at-law of Mori Hamada & Matsumoto Corporate, M&A and Government Relations Read law at University of Tokyo and received a master’s degree at Harvard University (Master of Public Policy). She was involved in drafting legislation as a deputy director of the Science and Technology Agency of the Prime Minister’s Office and is an expert member of the Nuclear Safety Commission of Japan. Marunouchi Kitaguchi Building, 1-6-5 Marunouchi Chiyoda-ku, Tokyo 100-8222 Japan Tel: +81 3 5220 1813 Fax: +81 3 5220 1713 Email: [email protected]


More Proxy Fights Expected in Japan

June is both the peak of the rainy season and the season of annual shareholder meetings in Japan. Approximately three-fourths of the Japanese listed

companies hold their annual shareholders meetings in late June. Until recently, annual shareholders meetings of Japanese listed companies had generally not been very active. In part, this may be due to a relatively high cross-shareholding ratio and the general inactivity of Japanese institutional investors up until the late-1990’s. As a result of the collapse of the bubble economy in Japan, however, the cross-shareholding ratio has significantly declined and the shareholding ratio of foreign institutional investors, which are usually more conscious of shareholders’ rights than Japanese ones, has significantly increased over the last 10 years. In addition, the prolonged sluggishness of the Japanese economy has made domestic investors more sensitive to the protection of shareholders’ value and economic returns on stock investments.

One of the remarkable phenomena in recent years reflecting this trend is the increase of proxy fights. Although such contests had been rare in Japan, more shareholders have started proxy fights to challenge managements’ proposals for such matters as election of directors, or even to make their own proposals for such matters as distribution of increased dividends. Generally speaking, the number of so-called “activists,” who act proactively to raise the corporate values of stock companies of which they hold shares, is increasing against the backdrop of the rise of proxy fights. The February 22, 2007 victory of Ichigo Japan Fund A, a lesser-known investment fund with around a 10% shareholding in Tokyo Kohtetsu Co., Ltd., a JASDAQ listed structural

steel beams manufacturer, in a proxy fight over Tokyo Kohtetsu’s management shocked the management of many Japanese listed companies, because a substantial number of individual shareholders unexpectedly delivered their proxy forms to the investment fund to vote against the management’s proposal. As a result of the proxy fight, Tokyo Kohtetsu gave up the contemplated statutory stock exchange (kabushiki-koukan) with Osaka Steel Co., Ltd., a TSE-1 and OSE-1 listed steel manufacturer.

In this article, we will focus on some of the major issues surrounding proxy fights highlighted by several recent cases.

1 Right to obtain a copy of shareholders registry

A shareholder willing to start a proxy fight may wish to obtain the information of shareholders by exercising his/her statutory right to obtain a copy of the shareholders registry. However, the Companies Act allows a company to refuse such requests in certain cases, including cases where a requesting shareholder operates or engages in any business which is, in substance, in competition with the operation of such company. This “competitor exception” was not provided for in the Commercial Code, which had been the main body of the Japanese corporate law until the Companies Act came into effect on May 1, 2006. The lack of any apparent reason for introducing the “competitor exception” into the new Companies Act has, unsurprisingly, stirred a wave of litigations as parties seek a reasonable interpretation of this “competitor exception.”

K.K. daVinci Advisors, whose initial request to obtain a copy of the shareholder registry of TOC Co., Ltd., a TSE-1 listed company, was

refused by TOC prior to the tender offer for TOC shares, filed a preliminary injunction petition against TOC to request the Tokyo District Court to allow it to gain access to the shareholders registry. On June 15, 2007, the court dismissed the petition based on the “competitor exception,” stating that wholly-owned sub-subsidiaries of daVinci Advisors operated a real estate business in Tokyo, the same business as TOC. Subsequently, on May 15, 2008, the Tokyo District Court dismissed another preliminary injunction case in which Harakosan Co., Ltd., which had expressed its intention to launch a hostile tender offer for the shares of Nihon Housing Co., Ltd., a TSE-2 listed company, demanded access to the shareholder registry of Nihon Housing, on the same ground as the TOC case. However, Harakosan won the case on appeal at the Tokyo High Court on June 12, 2008. The appellate court interpreted the “competitor exception” so narrowly that the interpretation might be conflict with the explicit language of the Companies Act. The Nihon Housing case will become the turning precedent which opens up shareholders registries to competitive shareholders in proxy fights and hostile takeovers.

2 Vote in writing and vote by proxyShareholders who do not attend a shareholders’ meeting of a Japanese listed company can vote either in writing or by proxy. Typically, companies include written voting forms in the convocation notice packages sent to shareholders. In written voting forms, shareholders can check the box for each agenda item to express their decisions as “for” or “against.” As for proxies, carte blanche is not allowed; instead, in proxies, shareholders check a box for each agenda item to express their decisions


Profile Nagashima Ohno & Tsunemaysu

in substantially the same manner as written voting forms. These two methods have a lot in common in terms of functions and purposes.

Solicitation for proxies must be conducted in accordance with the proxy solicitation regulations under the Financial Instruments and Exchange Law (formerly, the Securities and Exchange Law), which includes certain procedural requirements. However, solicitation for “for” or “against” votes in writing is not generally regulated and is not subject to the proxy solicitation regulations. Such discrepancy of regulatory regimes causes practical issues. For example, it is sometimes difficult to figure out when a shareholder should start to comply with the procedural requirements under the proxy solicitation regulations if the shareholder first solicits for “against” votes in writing and then starts solicitation for proxies as a series of contests.

3 Offer of economic benefits to shareholders in return for exercise of votes

The Companies Act prohibits a company from providing economic benefits in relation to the exercise of shareholders’ rights. On the other hand, it has been common practice in many Japanese listed companies to give token gifts to attendees of shareholders’ meetings so long as these fall within the ambit of social etiquette. In addition, some companies give token gifts to shareholders who exercise their voting rights in writing to encourage shareholders to return written voting forms irrespective of whether any given shareholder votes for or against the

companies’ proposals. These practices had generally not been considered problematic until recently. However, IDEC Corporation, a shareholder who lost the proxy fight against Moritex Corporation, a TSE-1 listed company, filed suit to rescind the resolution of the shareholders meeting of Moritex on the grounds that Moritex’s provision of prepaid cards to shareholders fell under the category of the prohibited provision of economic benefits. The value of each card was only 500 yen and Moritex provided one to each of its shareholders who exercised their voting rights, regardless of their support for IDEC’s or Moritex’s proposals or method of voting (in attendance in person, by proxy or by writing). The Tokyo District Court rescinded, on December 6, 2007, the resolution of the shareholders meeting of Moritex, holding that one of Moritex’s purposes in providing prepaid cards was the acquisition of affirmative votes for Moritex’s proposal.

4 ConclusionDespite the importance of shareholders meetings from the viewpoint of corporate governance, there still remain many legal issues regarding proxy fights which need to be reviewed or resolved. With more proxy fights to come in Japan, we expect to see more developments in this area in the near future.

By Hiroshi Mitoma, Partner, and Kan Watanabe, Associate Nagashima, Ohno & Tsunematsu, Kioicho Building, 3-12, Kioicho, Chiyoda-ku, Tokyo 102-0094 JAPAN (Phone) +81-3-3288-7000; (Fax) +81-3-5213-7800 (E-mail): [email protected]

Hiroshi Mitoma, Partner

Kan Watanabe, Associate

76



Sato notes that while the ‘real’ effects of the credit turmoil gripping the west are yet to be seen in Japan, investors and clients are already shying away from the more risky products on the market. “As always, investors in financial and capital markets are really attuned to

the tumultuousness of the current economic situation.

Issues such as law firm branding and marketing, profitability and individual partner performance – areas which in Japanese law firms are widely seen as bastions of traditional notions of firm management – are all tipped to undergo a change designed to make Japanese law firms less organisational-centric and more commercially and management oriented.

“There has traditionally been a lot less focus on management of profits per partner, and a lot of emphasis on client retention and care,” says Dixon, who notes that the current economic climate may force firms to focus on maintaining profitability. “You cannot take your clients for granted, yes, but today you never know when one of them will go bust.”

Bohrer agrees, stating that problems which arise from rapid growth being experienced by Japanese domestic firms impose on them the need to be flexible in terms of management styles.

“With Japanese law firms growing quickly, many will find there’s a need to look at dedicated management models, and I know some are looking at modelling theirs on the US, UK or European systems,” he says.

But Bohrer and others say that this does not mean a wholesale adoption or copying of these blueprints.

Rather, as Bohrer notes, there will be a “Japanese solution,” one that realises the realities of practising law in Japan. ALB

From p71

Japan fdi infLoWs and ouTfLoWs ►(Based on deaLs announCed 20 JuLY – 18 oCToBer 2008)

FDI OutflowTarget nation No. of

dealsValue (US$m)

US 15 17,368.9

Netherlands 1 723.3

Australia 3 458.84

Luxembourg 2 259.96

Thailand 7 100.11

Denmark 1 80.32

Mexico 1 55.5

Canada 2 27.35

China 4 23.05

Italy 1 11.45

ToTaL 68 19,142.6

FDI InflowAcquirer nation No. of

dealsValue (US$m)

US 7 367.43

Netherlands 5 107.91

UK 1 89.13

South Korea 1 4.63

Singapore 2 0

Hong Kong 1 0

Poland 1 0

ToTaL 18 569.09Source: Thomson Reuters

what may or may not be existent, really attuned to real or perceived risks and so a lot of financial transactions are being put on hold.”

According to Oishi, one area in which these tendencies are most obvious is in relation to securitisation and structured finance practices across Japan.

“Financial transactions have taken a hit of late,” he says. “If you ask financial lawyers what their workload is like at the moment, most will say that things are much quieter than this time last year.”

Sato notes: “People seem to be scared by asset backed securities; they are not sure if the products they are seeing at the moment – and, more so, the assets underlying them – are good or bad.”

According to Bohrer, the current shift in client behaviour has also heralded a shift in client expectations.

“What we have been seeing is that our clients are looking to us not only to assist them with the standard things – documentation and so on – but also to help them understand local market practices,” Bohrer says. “This is a significant turn and they are looking to us to play overall deal manager, to recommend different advisors, to connect them with other people – for want of a better term, be their right-hand man.”

While these issues run to the core of the client-lawyer relationship, far broader issues of firm management are also likely to come under closer attention in the months ahead, legacies which many believe will outlast

FEaTURE | securitisation >>


Once the guiding principle of arrangers, originators, borrowers and investors throughout the world, the old

banking adage ‘a rolling loan gathers no loss’ has been shattered by the effects of the US sub-prime crisis.

The impact of the crisis on securitisation practices means that the region’s securitisation lawyers are bracing themselves for an immediate downturn in work.

“The US sub-prime crisis has undoubtedly dealt a blow to securitisation markets in Asia” notes Jeffrey H Chen, head of Mayer Brown’s structured finance practice in Asia. “We have seen large cross-border transactions dry up completely, compared to where we were a year ago,” he says, predicting little or no cross-border transactional activity for the last few months of 2008.

However, while cross-border deals may have ground to a halt, those interviewed by ALB agree that the outlook is less grim for the region’s domestic securitisation markets.

“Domestic markets are probably going to remain less affected than the global market,” says Chen, singling out Malaysia and Korea as examples. Malaysia’s national mortgage corporation – Cagaras Berhad – remains highly active in the mortgage-backed securities market. It also entered into a joint venture agreement with its Hong Kong counterpart – the Hong Kong Mortgage Corporation – late last year to pioneer a mortgage

guarantee program for both conventional and Shariah-compliant mortgage loans originated by financial institutions in Malaysia.

A question of evolutionAs to the reasons why the domestic securitisation markets in Asia may not suffer the same fates as the US and European markets, Chen believes the transparency of securitisation in Asia and the fact that most markets in the region are relatively embryonic are key.

Unlike the US and Europe where CDOs, CDOs-squared and SIVs are more prevalent, everything in Asia is relatively transparent. You can trace things right down to the underlying asset.” According to Chen and other lawyers interviewed by ALB, effective regulatory regimes have insulated Asian markets from their own sub-prime crises. However, the fact that these markets are relatively underdeveloped compared with those in the US and Europe is just as important. “Asia, with the notable exception of Japan, is still in the stone-age when it comes to securitisation,” says Chen, explaining that “nothing in Asia is sub-prime – everything is more or less prime. Therefore, we don’t have the same derivative problems in Asia as they do in the US or Europe”.

This lack of development leaves much room for growth, which is something the region’s lawyers are keen to capitalise on. “The Asian markets can really only grow after the crisis is over,” says Chen, noting that the

securitisation markets in China, India and the Middle East demonstrate the greatest propensity for growth.

Last month’s news that UAE-based Sorouh Real Estate had completed the world’s largest Shariah-compliant securitisation to date was significant not only because of the deal’s size but also because it went some way towards allaying fears that some sukuk structures simply used intangibles without passing on sufficient risk to investors. The model pioneered in this transaction is believed to be the roadmap for future deals of this kind.

These lawyers are watching the market (and their revenues) closely. Right now, margins and fees are tight. “The pricing that we had seen on many Asian deals prior to the sub-prime crisis was unrealistically tight,” says Chen. “Many securitisation practitioners may have trouble meeting their targets this year, if for no other reason than the timing of the crisis,” he says. The silver lining is that when the global markets rebound, not only will investors benefit, but lawyers will too. “When this phase of market correction is over, you will find that pricing will be much wider.” And wider pricing will yield wider and more realistic spreads, not to mention exert a lot less fee pressure on lawyers.

In the meantime, for those lawyers with securitisation practices capable of assisting clients with enforcement and litigation, revenues should soar in the months ahead. In either case, says Chen, “it’s a good time to be a lawyer, especially in Asia”. ALB

Finding the securitisation silver lining

FEaTURE | document storage >>


In the office of a busy law firm, Suzie, a paralegal, has been handed the charge of documents in several large cases. “The filing ‘system’ here is crazy,” she

says. “I’m talking about thousands of documents. Can anyone help?!”

Legal personnel may be more than familiar with Suzie’s problem of being inundated with piles of case-related documents. Compared to other industries, the legal sector produces more documents per individual annually than any other, and with long-term issues – environmental pollution and global warming, as well as storage space in an increasingly volatile property market – law firms are emerging as key players in a broader social problem. According to prominent law firms and IT companies, the best way to combat these issues is to go electronic.

store and demandIn the standard Electronic Document Management System (EDMS) available today, documents are scanned through a ‘gateway’ – a printer-like machine which converts the document to soft copy, and transfers the file onto a server. The file is then archived by staff, according to client number or keywords, and can be converted to various file formats. It is

then available for retrieval by both staff and clients, beyond office hours, and then both lawyers and clients are able to access a consolidated view on cases.

Von Chan from EDM software firm Interwoven, says that this consolidated view for all parties is increasingly important for law firms as they strengthen their international presence and need to coordinate systems. “In the last couple of years, we saw an increase in the adoption of DMS which allows legal staff to work effectively, either in or out of the office,” he says. “The larger Asian law firms are establishing regional footprints and with this comes the challenge for lawyers to work in a collaborative manner across geographical boundaries.”

WongPartnership, one of the first Asian firms to adopt EDMS, has found that the collaborative nature has improved the firm’s capabilities. “Users are able to search, find and collaborate amongst themselves their own documents 24 hours a day. The delivery of documents is more reliable as a direct result of the technology design,” says the firm’s technology director, Kevin Koh.

Balancing the cost-revenue see sawThe costs associated with managing hard copy can get very high. In 2005, the cost of producing transaction documents was estimated at around US$120bn.

Chan says that some firms lose track of costs by the sheer immensity of it all. “[It’s been found] that 3% of a firm’s revenue can be spent on printing, and around 90% of companies don’t realise how much they’re spending on printing,” he says. With EDMS, the time that would be spent wading through hard copy to find information is reduced by a matter of a few clicks.

Ted Glendening, practice development manager at Middle Eastern law firm Al Tamimi & Company, says that the

The most valuable commodities in any legal practice are time and money. A firm can save on both by managing its hard copy documents into one centralised electronic program

firm has been reaping the benefits. “The software has definitely improved the way we work,” says Glendening. “Documents are easily searched for by keyword/client name/matter number/document author, and so on. Sharing matter workspaces is just a few mouse-clicks away.”

The savings garnered by the reduction weathers down to not only the firm but also the client, who can be approached with stronger billable hours and higher work efficiency. “Lawyers are able to use their time more efficiently – time saved can be redirected/reinvested in the interest of the client,” says Glendening.

Hard copy to goLaw firms used to hand hundreds of boxes every month to a storage facility resembling a city with high rise towers of paper. That was in 1987. With EDMS proliferating in the legal sector, what is the future of legal technology in Asia?

“If we’re to observe what’s happening in the US and European markets, there’s an exploding market of eDiscovery/eDisclosure tied with litigation preparedness,” says Chan. “That trend is likely to arrive here, and is driving firms and corporations to find vendors and partners that can help them be more litigation ready, as well more responsive [to client needs].”

Some software companies are already researching new document retrieval methods. “From a software perspective, the market has been shifting more and more towards document retrieval, how to make documents easier to share, collaborate on, and find within the organisation,” says Chan. “There’s also been a revival of knowledge management initiatives so key firm information assets can be tagged for others to quickly locate and reuse to build their own work product.” It is something sure to give Suzie a good night’s sleep. ALB

Go electronic or go home: EDMS

FEaTURE | document storage >>


82

FEaTURE | In-house Legal Summit >>


As the keynote address at the Hong Kong ALB In-house Legal Summit aptly pointed out, the role of the corporate

counsel in Asia is in a state of flux. Gone are the days when the crux of an in-house’s role was simply about advising on the law – now they are expected to be all things to all men. On one day they may be policemen or general practitioners, and on another counsellors, mediators or even priests, and on the worst of days, martyrs – scapegoats for all variety of ills which may beset their companies.

Yet at the same time, at no point in history has the role they play assumed such importance. As one in-house counsel told ALB, the days when corporate counsel were quietly ushered away from board and executive meetings is very much ancient history. They now move on the same track as CEOs, VPs, directors and the like – and they have the stock options to

prove it. It is perfect evidence of a trend that the keynote speaker identified as being the increasing ‘corporatisation’ of Asia’s in-house counsel.

And this was the overbearing emphasis of each of the modules presented to delegates at the Hong Kong ALB In-house Legal Summit. In each of the workshops, not only was the old gospel of risk management, allocation and compliance thoroughly covered, but areas such as strategic planning and positioning touching on crucial issues such as how to align their functions so as to serve the broader commercial aims of their employers rather than simply saying ‘no.’

Indeed, the commercial realities acting on in-house lawyers and the heightened need for business acumen this entails was identified by all delegates as one of the most pressing concerns influencing their day to day work – a concern which the lively panel discussion revealed was unique to the in-house role. ALB

On 25 September, 200 senior in-house counsel converged on the Excelsior Hotel in Hong Kong to discuss the most topical issues they face as lawyers. ALB sat in on the informative workshops and the lively and entertaining panel discussion about whether different skill sets are required of in-house and private practice lawyers

ALB In-house Legal Summit: Hong Kong 2008

FEaTURE | In-house Legal Summit >>


IN-HOUSE SUMMIT WORkSHOPS IN-HOUSE SUMMIT SPONSORS

Lead sponsor and official airline Qatar Airways

One of the world’smostinnovative and dynamic airlines, Qatar Airways operatestheworld’sonly dedicated commercial passenger terminals for its First and Business class passengers at Doha International Airport. The new Doha International Airport, duetoopenin2009,will be managed by Qatar Airways, and is expected to be able to handle up to 50 million passengers once fully operational.

Associate sponsorChina Legal Career (CLC)

CLC is part of the Mlegal ConsultingGroup,amajorspecialistlegal recruiting firm based in the United States. CLC has an international network that spans the US, UK and Hong Kong, and specialises in placing legal professionals for corporations and law firms,includingGCs,legaldirectors,counsels,partners and associates. Focusing on the upper echelons of the legal market, CLC counts Wall Street, Magic Circle and Fortune 500 companies as regular clients.

IP Issues in Mergers & Acquisitions ONC LawyersIPassetshavebeenassuming growing importance in M&A transactions of late and with good reason, as more and more companies realise that a well-developed and protected IPportfolioequalsahigher asking price. Yet not all commercial lawyersareequippedwiththe knowledge of the intricaciesofIPlaws.ONClawyers helped demystify someofthecommonlyheldmythsaboutIPwhileoutlining strategies for success.

ludwig ng, senior Partner

Product liability litigation and China’s new anti-monopoly laws Jun He Law OfficesProductliability issues will always be important when doing business in the ‘world’sworkshop’.JunHe Law Offices stepped delegates through the characteristic Chinese product liability cases, some common cognitive mistakes made by counsel, judicialinterpretation,expert testimony and some seminal cases in the area, concluding with the steps manufacturers, businesses and in-house counsel should take to mitigate liability in the case of faulty products. Delegates were stepped through the fine details of administrative liabilities in monopoly actions, the types of monopoly actions prohibited under the new law, the government agencies responsible for official investigation and their purviews, and closed with how the changes affected the role of the corporate lawyer and in-house counsel.

liu HongHuan, Partner

Corporate finance in 2007 amid macroeconomic control Run Ming Law OfficeRunMingLaw Offices analysed the impact that macroeconomic controls were having on the ability of companies operating in and out of China to raise finance to fund expansion and new projectsincludingassetandprojectfinance.Thepresenters discussed what alternative avenues exist for companies includingbondissuances,privateequityinvestments and venture capital funding.

How to avoid litigation: Tips on reviewing commercial contracts ONC LawyersA commercial agreement defines the rights and liabilities of the parties to it. In so far as the drafting process is concerned, potential disputes can be minimised or avoided if the parties are prudent enough to predict what may happen, provide for that contingency and protect himself/herself with a remedy – the so-calledthreePsofdrafting. These areas werecoveredbyONCLawyersinthecontextof materials constituting or forming part of the contract, canons of construction of contracts meaning and interpretation of common or standard contractual provisions, and ambiguity and uncertainty of terms.

sherman yan, partner, head of

litigation

frazer Xia, founder/MD

Paul E Johannes, regional manager

Greater China

liu yi, executive partner

Speakers:LiuYi,GavinWangandRonMa Speaker: Sherman Yan

Speakers:DrTobyMakandLudwigNg Speakers: Liu Chi and Liu HongHuan

legalbusinessonline.comwww.ASIA AUSTRALIA / Nz MIDDLE EAST

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Breaking the glass ceilingWomen in legal circles are upping

the ante on the pay scales. Not only were there a dozen female

names recorded in the 2008 GC Compensation Survey of the 100 highest paid chief legal officers by Corporate Counsel magazine, but the top 10 females also earned in excess of US$1m a year.

Louise Parent of American Express led the charge as the highest-paid female GC, with total cash compensation last year of nearly US$4m including a salary of US$524,591 and a US$3.45m bonus.

Carrie Dwyer of The Charles Schwab Corporation followed closely as the second highest-paid female GC with a US$3.2m compensation

package in her pocket, which included a bonus of US$2,701,715.

The remaining top 10 were: Carol Ann Petren, Cigna Corporation, $2,710,962; Lauri Shanahan, The Gap Inc, US$1,557,116; Kathleen Karelis, L-3 Communications Holdings Inc, US$1,200,000; Ellen Kaden, Campbell Soup Co, US$1,127,377; Suzanne Bettman, RR Donnelley & Sons Co, US$1,092,824; Maura Smith, International Paper Co, US$1,074,425; Fay Chapman, Washington Mutual Inc, US$1,062,000; Mary Gustafsson, Trane Inc, US$1,025,700; Candace Cummings, VF Corporation, US$981,000; and Laura Stein, The Clorox Co, US$925,000.

Linklaters educating linklaters is taking learning to the

next level after unveiling an in-house business school which includes practice diplomas, training for partners and managing associates, and an orientation program for new trainees.

The Linklaters Law & Business School will be headed up by knowledge and learning head Suzanne Fine, and knowledge and learning partner Michael Voisin, who will also sit on the school’s advisory committee.

The teaching faculty itself is made up of 70 worldwide partners and internal business specialists, with the firm also keen to sign up more academics to an advisory committee for the project which already includes Bertrand Moingeon, HEC Business School director general, and Ashish Nanda, professor of practice at Harvard Law School.

GLoBaL m&a Crisis deaLs – The sTorY so far ►Deal value (US$bn)

Target Acquirer

44.4 Merrill Lynch Bank of America

21.9 HBOS Lloyds TSB

15.1 Wachovia Wells Fargo

15.0 UBS(Sub-primeUBSandAlt-APortfolio) BlackRock

14.4 Dresdner Bank Commerzbank

9.0 MorganStanley(21%) MitsubishiUFJFinancialGroup

6.9 FortisBank(Belgium)(49%) StateoftheNetherlands

6.7 Merrill Lynch Lone Star Funds

5.8 FortisBank(Netherlands)(49%) StateoftheNetherlands

5.4 MerrillLynch(stake) KuwaitInvestmentAuthority;KoreaInvestment

5.0 GoldmanSachs(9.25%) Berkshire Hathaway

4.5 Barclays(10%) QatarInvestmentAuthority;ChallengerUniversal

4.4 NorthernRock(LifetimeHomeEquity ReleaseMortgages)

JPMorganChase

3.9 DeutschePostbank(29.75%) DeutscheBank;MorganStanley

3.4 MerrillLynch(stake) Temasek HoldingsSource: Financial Times

Bakers not popular in BeijingA recent report by Beijing-based

legal search recruiter Metcalf & Q has revealed the most attractive and unattractive firms to work for – according to 100 lawyers across 30 firms that were surveyed.

Baker & McKenzie ranked as the least attractive international firm to work for in Beijing, while Clifford Chance weighed in as the most attractive with Freshfields and Simpson Thacher in second and third places, respectively.

Those law firms receiving the most positive feedback were praised for good leadership, pleasant working environments and allowances for staff with children or elderly parents.

Overall, the Magic Circle firms fared well and were seen as attractive places to work, while other firms such as DLA Piper, Jones Day and Skadden Arps Slate Meagher & Flom were not top picks in the local recruitment market.

Weird & wacky laws A quirky Brazilian law saw at least

six Brazilian politicians officially rename themselves ‘Barack Obama’ in the hope of getting an edge on their rivals in October’s local elections, according to a leading newspaper.

The Brazilian law allows candidates to run under the name of their choice.

asian legal business nov 2008

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