Business of Law Firms​

Charles Russell Speechlys to open up Singapore office​

By Jake Rickman​

What do you need to know this week?

Welcome to the 18th article in TCLA’s the Business of Law Firm series.

As reported by The Lawyer, UK-headquartered firm Charles Russell Speechlys will open an office in Singapore.

This comes off the back of the firm’s re-launch of its Hong Kong office in 2020 as a registered local law firm, three years before which its Hong Kong presence began as a registered foreign law firm.

Per The Lawyer, this is the fourth entry into the Singapore market in October alone, following:
  • Mayer Brown’s formal law joint venture with local firm PK Wong & Nair;
  • Goodwin Procter’s pivot away from Hong Kong to Singapore; and
  • the launch of Perez-Llorca’s Singapore office — the first Spanish firm to do so.
Why is this important for your interviews?

A classic interview question is, “Where should we open up our next office?” A good answer will do the following:

(a) set out the business case for the business case generally, i.e., with reference to the macroeconomic and growth prospects for the location;

(b) argue why it is compelling for the law firm in particular; and

(c) consider the risks and disadvantages of doing so.

The good thing about this question is that it is both frequently asked and something you can specifically prepare for. But it is key that you tailor your answer to the law firm in question. Interviewers can spot generic answers quite quickly!

Worked Example

The story gives us a chance to do a worked example for this common interview question.

(a) The general business case

From a general perspective, Singapore is, along with Hong Kong, considered the one of two financial centres of the APAC region. Also like Hong Kong, its legal system is based on English common law, which therefore makes it quite conducive for English and American law firms to expand their offices.

But unlike Hong Kong, Singapore is widely perceived as more politically stable. This is in part due to the incursion of the mainland government (PRC) into Hong Kong’s administration. The ongoing legal reforms are broadly viewed by the West as illiberal, the consequence of which is evidence of capital and talent flight out of the territory.

Additionally, Hong Kong’s COVID-19 measures remain more stringent than Singapore’s. Practically, this makes it more difficult to do business and also increases local market uncertainty.

(b) The specific business case

The above partly explains why high-net-worth individuals (HNWs) in the region (to say nothing of the world more generally) are increasingly treating Singapore as the regional HNW capital. This explains why financial advisers, banks, and private client practice groups are bulking up their Singapore presence. For instance, Citibank launched its HNW practice in 2021 to cater to this market.

Given Charles Russell Speechlys’ pre-eminence as a private client law firm, the move to Singapore is an obvious one.

It is certainly not the first to do so. According to Law.com, McDermott Will & Emery, known for its private client and tax practice, launched its Singapore office last year. And the year prior, Mishcon de Reya opened its first international office in Singapore with a specific focus on the private client market.

(c) Risks and disadvantages

As far as risks and disadvantages, broadly two general observations hold true for most new international offices:

First, opening a new international office is expensive. The expense commonly cuts into profits during the first few years as the global office contends with regulatory compliance, talent acquisition, and upfront capital expenditure.

In the case of Singapore, it is considered a jurisdictionally complex legal market due to particularly onerous regulatory obligations the government places on law firms. This translates to additional expenses.

Second, most global law firms rely to some extent on networks of “relationship law firms” that help advise on client matters where the law firm in question does not operate an office of its own. This provides a given law firm with two principal benefits: (i) there is a degree of flexibility in choosing which local law firm to partner with; and (ii) fostering relationships with local firms translates to more client referrals, as most relationship firms operate on a “scratch each other’s backs” basis.

Absent any specific arrangement, by opening up an office in a market where the firm previously had local relationships, the law firm loses the two benefits outlined above. In other words, the law firm needs to perform a cost-benefit analysis to determine with reasonable confidence the chance that the new office will be a net asset compared to any existing arrangements.