In the latest issue of Forum magazine, we see how Asian law firms still are coping with the pandemic and its devastating impact on the legal industry there
Many months into the pandemic, law firms in Asia are still looking for ways to cope with COVID-19 and its impact. While some firms are rolling out various initiatives to ensure smooth working and keep morale up, there is the realization that things will never be the same.
Starting from the first quarter of 2020, almost every jurisdiction in the Asian region has experienced a complete or partial lockdown for at least some period of time. With offices shut and people stuck at home for long stretches of time, there has been an unsurprisingly negative impact on businesses, and as a result, on legal work as well. Deals have been held up as parties have been unable to accomplish any number of tasks they once took for granted, such as doing due diligence or even showing up in the same place to negotiate and sign documents. Add to that the phenomenon of companies slashing external legal spend, and law firm leaders have had a lot on their plate to deal with.
While many of these challenges, brought about by the COVID-19 pandemic and ensuing economic crisis, need a long-term strategic rethink, Asian law firms have for the most part been engaged in the initial months in fighting the most immediate fires — keeping staff safe, ensuring business continuity and generally exuding a sense of normalcy. With lockdowns prevalent across the region, however, firms were forced to move quickly to remote working and make sure they had the technology to back it up.
“Across the region, we made a successful transition to full remote working in response to coronavirus and maintained high levels of productivity,” says Peter Scott, managing partner for Europe, the Middle East and Asia at Norton Rose Fulbright. “We continue to prioritize the health and safety of our people and our clients. In some jurisdictions, we have started a gradual and phased return to working in our offices, in line with government recommendations.”
David Cho, Asia co-managing partner and head of the Hong Kong office at Dechert, says his firm too had robust business-continuity plans already in place, having conducted extensive crisis-planning exercises in recent years. “This meant we were able to respond quickly to the pandemic, implementing an early work-from-home arrangement for our people and ensuring we had the necessary processes and structures in place to best support our clients and the situations they may face,” notes Cho.
Asian law firms have for the most part been engaged in the initial months in fighting the most immediate fires — keeping staff safe, ensuring business continuity and generally exuding a sense of normalcy.
He adds that Dechert is currently engaging with its people extensively on matters such as the reopening of offices at the global, regional and local levels, and offering flexibility in choosing a work arrangement that best suits each employee’s circumstance. “We have embedded gratitude as a practice into our culture so that people feel recognized and appreciated,” explains Cho, adding that the firm gave its business professionals an extra day of annual leave, called a “Day to Thrive.”
Legal work impacted
There is no doubt that the pandemic has been a blow to corporate legal work; from M&A to corporate work to litigation, legal demand has dropped 6% in the second quarter of this year alone, according to Thomson Reuters Peer Monitor. Further, that demand drop has hit across numerous industries, such as retail and travel, which makes it difficult for many companies to conduct their normal business and raise new capital.
But it hasn’t been all gloom of late. Psyche Tai, head of the Hong Kong office at Norton Rose Fulbright, says that the firm’s activity levels have remained “resilient,” with the Chinese corporate team in Hong Kong taking on five IPOs recently and currently working on 13 in total. “We are also seeing more demand for restructuring advice and over time, we expect to see distressed acquisitions in the M&A space,” notes Tai. “Our regulatory investigations team in Asia has been busy over the last year in particular and we anticipate that to continue. We also expect to see increased fraud and related litigation as well as disputes related to force majeure and business interruption.”
Dechert’s Cho says while undoubtedly COVID-19 and subsequent lockdowns have greatly impacted the global economy, there are a number of other factors such as the recent U.S. presidential election, Brexit, China’s increasing economic development and global influence, growing protectionism by governments, and a general sense of international political uncertainty, that also have presented a range of challenges for businesses. “We have seen an uptick in litigation, particularly in pandemic-related litigation, including cases against universities, nursing homes, manufacturers and transportation companies,” he says. “We expect additional cases to be filed against life sciences companies and others as the plaintiffs’ bar expands its focus to other industries.”
Similarly, in the international arbitration sector, parties are regularly invoking force majeure clauses, while other parties are seeking to terminate or significantly alter their contractual arrangements, Cho notes. “In securities litigation and enforcement, plaintiffs’ firms continue to file securities litigation cases arising from COVID-19, and we expect this trend to continue,” he says, adding that numerous claims have been filed asserting violations of the US anti-fraud regulations “arising from alleged false statements or omissions relating to known risks arising from the pandemic, as well as overstatements regarding a company’s ability to thrive in this environment.”
New ways of supporting clients
In this “new normal,” law firms have been finding that they need to go the extra mile to service clients. “We are drawing upon the knowledge acquired advising clients through previous market upheavals, and we are also providing support in new ways,” says Norton Rose’s Tai. “For example, in Hong Kong, we recently hosted a series of virtual legal clinics about legal and regulatory issues for fintech start-ups including corporate, restructuring, commercial arrangements and financial services.”
With lockdowns prevalent across the region, Asian law firms were forced to move quickly to remote working and make sure they had the technology to back it up.
Jasmine Kaur, director of business development, marketing and communications for the Asia Pacific region at Baker McKenzie, says that businesses are being tested like never before, with multinational companies often facing a lockdown in one market while relaunching operations in another, all while keeping employee safety paramount. “The impact of the pandemic has also significantly varied by sector for companies, leading to sharp declines and business disruptions for some sectors and an increase in demand and new growth opportunities for others,” she says. In response, Baker McKenzie has launched its Resilience, Recovery & Renewal (3R) framework, a three-phased client approach that deals with managing immediate implications (resilience); stabilizing clients’ business operations (recovery); and transforming their business models and strategies to face the post-pandemic world (renewal).
Kaur says Baker McKenzie is regularly conducting virtual hearings, closing multi-jurisdictional deals, and engaging in complex client discussions and advice across multiple time zones, over its videoconference systems and via its legal tech platforms. “While it’s too early to know what parts of this remote work we will adopt as regular practices in the longer term, it is important that the technology infrastructure and processes are in place to facilitate our work and client service, regardless of our location,” says Kaur.