Lawyers in Asia\u2019s key hubs of Hong Kong and Singapore have shown their ability to adapt and continue serving clients during difficult times. In the 12 months ahead, the pressure will be on law firms to rise to the new year\u2019s challenges. <\/p>\n\n\n\n
In 2019, when law firm leaders spoke to Asian Legal Business<\/em> about the year ahead, they warned that there would be increased pressure on firms to adapt, prioritise tech, and meet client expectations. Heading into the new year, the climate was undeniably challenging \u2014 but not exactly surprising. <\/p>\n\n\n\n Then came the COVID-19 pandemic. Hitting Mainland China first and slowly spreading throughout the globe, it left businesses reeling, and exposed the gap between those who could use technology to swiftly adapt, and those who couldn\u2019t. <\/p>\n\n\n\n Rapidly, working from home became the norm, and the sounds of children\u2019s voices in the background on Zoom or Teams calls grew increasingly commonplace. While the past few months have been difficult, they have been liberating for some, and a learning curve for others. <\/p>\n\n\n\n But the pandemic hasn\u2019t just hit work culture. For many firms, it\u2019s been a test of every facet of how they operate. <\/p>\n\n\n\n Thinking back to some months ago, Stephen\u202fKitts, Hong Kong-based Managing Partner for Eversheds Sutherland in Asia, told ALB<\/em> that the firm began analysing options to address the potential impact of the pandemic in early March. <\/p>\n\n\n\n The firm responded quickly \u201ctaking direct action at a global level\u201d in order to address the potential impact he says noting \u201ccommunication and support for our clients and people were, and remain, the key priorities.\u201d <\/p>\n\n\n\n \u201cEquity partner remuneration has been reduced by an average of 25%, driven by the partners\u2019 desire to lead the firm\u2019s response and be the first to feel the impact of any financial measures needed to protect the business and the jobs of our people,\u201d Stephen said, further noting that working from home and flexible working arrangements were quickly rolled out in Hong Kong, and have been finetuned along the way. <\/p>\n\n\n\n \u201cAs part of the move to our new offices, everyone in the office was issued with new laptops and was able to continue working from home. Support for our clients was not interrupted for even one hour,\u201d he said. <\/p>\n\n\n\n As lawyers across the globe navigate working from home and firms cut costs and calculate impact, law firm leaders have continued to focus on meeting client needs. <\/p>\n\n\n\n Increasingly firms have been getting creative in order to stay competitive during the COVID-19 pandemic. <\/p>\n\n\n\n Rossana Chu, Managing Partner of Hong Kong\u2019s LC Lawyers, told Asian Legal Business that firms have considered different ways of pricing services, while also offering reductions in some cases. <\/p>\n\n\n\n \u201cFor legal work where the workload can be estimated, many law firms are much more ready during the COVID-19 pandemic period to perform the work with a capped or fixed fee instead of the traditional way of charging by hours (whether by normal or blended hourly rates) because clients would like to see certainty in the legal fee bills,\u201d she said. <\/p>\n\n\n\n For work where the workload or complexity cannot be easily estimated, \u201cfee estimates or soft caps are becoming more common and clients also want fee breakdowns for different stages so that they can compare law firms for work of different nature for the same matter,\u201d said Rossana, adding that \u201cgenerally, fee levels are lower compared with the pre-pandemic period\u201d. <\/p>\n\n\n\n But she offered a forewarning. \u201cCompeting on price is never the enduring or the cleverest strategy. I believe that the pandemic makes it necessary for law firms to consider how to come outside their comfort zone of delivering merely the very traditional legal services in the very traditional manner,\u201d said Rossana. <\/p>\n\n\n\n Eric Chin, Principal at Alpha Creates, a consulting firm catering to the legal industry, tells Asian Legal Business<\/em> that he has observed a mixture of retention measures being deployed over the past year. <\/p>\n\n\n\n \u201cThomson Reuters Peer Monitor\u2019s most recent law firm financial benchmarking data revealed partner billings outnumbered lawyer billings for the first time in years\u201d, while other firms have provided COVID-19 related advice to strategic clients on pro bono basis, explained Eric. <\/p>\n\n\n\n Some firms, like Tilleke & Gibbins have initiated \u201ca client listening exercise to inform how they can guide their clients through the pandemic,\u201d he notes adding that others have developed COVID-19 guides and resource hubs for companies. <\/p>\n\n\n\n \u201cFirms have also created automated self-assessment and self-help tools with LegalTech providers,\u201d Eric added. <\/p>\n\n\n\n \u201cOn the other side of the equation, there are clients who have also turned to their panel firms to extend invoicing terms, apply discounts and withhold yearly rate increases.”<\/p>– Eric Chin, Principal, Alpha Creates<\/cite><\/blockquote>\n\n\n\n From his perspective, firms that have \u201cproactively engaged clients through the measures outlined above are benefiting from that strategic investment in their client relationships.\u201d <\/p>\n\n\n\n \u201cThe ongoing evolving environment means clients are looking for sound information, hard data and impartial advice as well as a considered approach to help them navigate a cooling economy. A strategic and controlled approach to one-off discounts and\/or write-offs can be effective ways to meet clients\u2019 needs while reinforcing the law firm\u2019s strategic role as well as positioning firms very well for when the economy recovers,\u201d Eric said. <\/p>\n\n\n\n Whether these various approaches will stick around in the New Year remains to be seen. Rosanna Chu is hopeful that demand for legal services will increase as economic activities revive after the pandemic. <\/p>\n\n\n\n \u201cWhen the economic activities revive after the pandemic, demand for legal services will hopefully increase,\u201d she said. <\/p>\n\n\n\n \u201cLaw firms will have more work to do and may give priority to three types of clients. The first type is the clients which are willing to pay more. The second is the clients which give steady work to the law firms throughout all times. The third is the clients who give a large piece of work which may not be very lucrative but has a positive impact on the law firm\u2019s reputation. The first type of clients will drive up the legal fee levels, while the second and third types may not,\u201d Rosanna added. <\/p>\n\n\n\n If you liked this, try reading:<\/strong> Advancing LGBTQ Equality in Asia: Legal Community Advocacy<\/a><\/p>\n\n\n\n For law firms, these testing times have provided opportunities to support their clients in new ways, while navigating unpredictable developments. <\/p>\n\n\n\n Stephen\u202fKitts revealed to ALB that COVID presented \u201csignificant challenges\u201d for the firm\u2019s clients in 2020. <\/p>\n\n\n\n \u201cWe took the opportunity to demonstrate to these clients that we put them at the centre of everything we do. Our Asia relationship partners and teams were in regular contact, daily contact in some cases, especially with Asia-based clients in the hardest hit sectors, such as travel, hotels and leisure.\u201d <\/p>– Stephen\u202fKitts, Managing Partner, Eversheds Sutherland in Asia<\/cite><\/blockquote>\n\n\n\n \u201cThe strength of our relationships with clients meant that many were contacting us for ad hoc<\/em> advice on situations that were completely unpredictable, often changing from one day to the next. In some cases, we were so heavily engaged that our lawyers were simply treated as an extension of their in-house teams,\u201d Stephen added. <\/p>\n\n\n\n The takeaway from the pandemic has been that \u201ctrust lie at the heart of every successful business relationship,\u201d he noted. <\/p>\n\n\n\n Steven Sieker, Managing Partner of Baker McKenzie’s Hong Kong and mainland China offices, reflected on how the firm supported clients over the difficult year. This required the team to keep their finger on the pulse, and adjust their response based on market developments, he said. <\/p>\n\n\n\n \u201cWe recognise that companies are emerging from the pandemic crisis at different paces, with some sectors facing sharp declines and business disruptions while others see an increase in demand and new growth opportunities. As businesses reorganize their operations for the new normal, we saw this as an opportunity to have renewed conversations with our clients about what the new normal would look like to them,\u201d Steven said. <\/p>\n\n\n\n The mindset for clients has changed, says Steven noting: \u201cClients are also looking to rationalise their legal spending, and law firms will need to be able to demonstrate their value.\u201d <\/p>\n\n\n\n The pandemic has also added sharply to the turmoil in Hong Kong SAR, which saw protests last year, and in 2020 witnessed the enactment of the controversial National Security Law. With the legislature, press and courts currently under increasing pressure, businesses reportedly appear to be rethinking their strategy when it comes to the (so far) semi-autonomous Chinese city. <\/p>\n\n\n\n It hasn\u2019t had a particularly negative impact on foreign law firms though. Tony Williams, Principal at Jomati Consultants, says that while competition remains fierce in Hong Kong, major international firms \u201cappear to be faring very well despite the pandemic.\u201d <\/p>\n\n\n\n \u201cThe legal sector has been remarkably resilient, and lawyers have been able to work reasonably effectively from home. As a result, depending on the practice mix of the firm, they could achieve results similar to or a little off last year. There will be a range of performance and the date of a firm\u2019s year-end could result in different outcomes. Some firms will not wish to waste a crisis, so I expect some restructuring of firms and the closing or downsizing of some offices. We have already been seeing signs of this in relation to the China and Hong Kong offices of some international firms,\u201d said Tony. <\/p>\n\n\n\nLaw firm retention tactics <\/h2>\n\n\n\n
Clients in focus <\/h2>\n\n\n\n
What\u2019s next for Hong Kong? <\/h2>\n\n\n\n