As a gateway to Southeast Asia, Singapore has attracted large numbers of legal and non-legal businesses, and this has led to heightened competition across sectors. This development, when combined with a region-wide economic downturn that has a direct impact on the city-state, is hurting transactional workflow in most of the sectors such as capital markets, where IPOs have all but dried up. As a result, law firms find themselves having to be far more savvy and client-focused to thrive in this tough market.
Driven by trade, Singapore is plugged into the world’s economy and has effectively positioned itself as a regional hub for business, finance and legal services. Over the last few years, the city-state has made great strides in attracting global companies. General Motors, for example, moved its international headquarters from Shanghai to Singapore in 2014, while a lot of enterprises in investment banking, technology and healthcare have also found it beneficial to make their regional home in the city-state. On top of that, the launch of the Association of Southeast Asian Nations (ASEAN) Economic Community this year has opened the door for even more regional business opportunities in a range of sectors.
This new connectivity has stepped up competition in the legal market. In response, law firms in Singapore are already adjusting their development strategies and expanding the range of services they offer to gain the upper hand.
“With Singapore’s rise as both an economic and legal hub for the region, we have seen a substantial increase in foreign firms launching here in recent years,” says Stephanie Keen, Singapore managing partner at Hogan Lovells Lee & Lee. “The legal market is going through a period of rapid concentration and innovation is now becoming a major differentiator among competing firms.”
And this year will be no different, she adds. “Given market conditions, 2016 promises to be a year of challenge and opportunity for ASEAN. While the drive for innovation will continue to support growth, the region remains vulnerable to macroeconomic pressures and the increasing burden of regulation imposed domestically and elsewhere,” says Keen.
Nick Seddon, a partner at Beaton Capital who gives strategy advice to firms in the legal sector, has a similar view.
“It is a remarkably tough market in Singapore. The struggling firms are mostly likely the ones that have gone in big time and tried to be full-service but do not have a satisfactory answer when it comes to dealing with local Singapore law issues even when they want to offer that service,” says Seddon.