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Maintaining good health in Hong Kong’s legal industry
With about 10,000 practising solicitors and barristers operating in Hong Kong today, the city continues to be the international law capital of Asia. As such, when it comes to the future prospects of its legal industry, much is riding on maintaining status quo.
As of the end of June 2019, there were 924 local solicitor firms and 87 foreign law firms in Hong Kong, including more than half of the global 100 law firms. Furthermore, some 39 foreign-registered law firms, including the ones from Mainland China, had formed associations with local firms. The Big Four accounting firms, too, have expanded their legal service offerings in Hong Kong.
The cooperation between local and foreign lawyers and law firms indicates that the industry as a whole has largely moved beyond The Law Society of Hong Kong’s proposal to restrict foreign lawyers in Hong Kong. Said proposal stipulated that lawyers from outside Hong Kong could give advice only in cases involving jurisdictions they are registered in rather than cases that involve overseas elements, as is current practice. Hong Kong law firms would have had to employ two local lawyers for one foreign lawyer, up from a ratio of one to one.
Financial segment shores up demand
Being a leading international financial centre, a growing demand for legal services related to finance, such as IPOs, will ensure continued demand. A plethora of IPOs in Mainland China has been providing a massive boost to capital market lawyers in Hong Kong this year.
“The new Hong Kong Stock Exchange’s listing standards for innovative companies have led to a range of new opportunities for law firms, investment banks, accounting firms, and other service providers in the Hong Kong market,” said Steve Winegar, International General Counsel of Ping An Group, in speaking with Asian Legal Business.
“The Hong Kong market continues to be unique for the same reasons it has been unique for many years: proximity to Mainland China, free currency convertibility, multilingual business environment, financial systems infrastructure and regulatory integrity. The Hong Kong Stock Exchange is also large enough to support the listings of world-class companies,” he added.
With that said, Hong Kong’s leader Carrie Lam announced in October 2019 that the territory had entered a technical recession, defined as two consecutive months of negative growth. This comes on top of the overall market slow down over Q2 and Q3.
In spite of the economic downturn in the foreseeable future, a large number of financial services clients, particularly those on the buy side, are still committed to take on senior legal hires for their growing business in Hong Kong. Across on the sell side, there are healthy activities coming from local and PRC players. Some of these hires could be replacement roles, though this is still a healthy trend as, in poorer market conditions, even replacement headcount could be revoked if the business is performing extremely poorly. There is a constant demand for talent with funds and asset management experience, corporate M&A and private equity experience, as well as recent financing/general banking experience. Many well-established banks are interested to take on retail banking or wealth management lawyers, usually at mid-level seniority. There has been a slowdown in demand for litigators across financial services, though a number of key regulators in Hong Kong are actively seeking outstanding litigators to join the public sector.
Across the insurance legal market, most of the international players are actively recruiting talent with a mixed commercial and transactional background across all levels of seniority. Furthermore, many are maintaining their interest in digitisation, as well as monitoring the influx of Chinese insurers’, which has been furthered by the discussions of ‘Insurance Connect’ initiative across the Greater Bay Area.
Legal tech continues growth
Elsewhere in Hong Kong’s legal tech scene, the situation has been reported as having “an impressive and rapidly mushrooming community of legal hackers”. Decoding Law and Zegal are two legal tech organisations that have stood out in recent years. Decoding Law created a browser extension that simplifies legalese, while Zegal provides useful legal document management and drafting tools.
“The strength of the British legal system, and common law more generally, in industry verticals such as finance, has given an added advantage to hubs such as Singapore and Hong Kong,” said Akber Datoo, Managing Partner of D2 Legal Technology, a fintech and legal data consultancy with offices in London and New York, in a recent news report.
“Legal tech is viewed as a way of unlocking the potential of Greater China’s legal services market,” said Datoo, pointing out Hong Kong’s advantage being positioned at the doorstep of Mainland China.
Across commercial sectors, there is still a high demand for technology lawyers new technology solutions continue to expand. Mainland enterprises are also becoming more conservative in terms of recruitment. Openings are mostly replacement rather than newly created. This is mainly due to a combination of tightened central government policies on overseas investments, not to mention the US-China trade war.
With more than 40 years of experience and 140 offices globally, PageGroup has one of the most comprehensive networks of employers and candidates in the legal industry. This article is part of our Market Movers series, which attempts to highlight various industry segments across specific markets.
• Growth of innovation & technology
• A legal industry in good health
• The future of retail
• FMCG stays resilient
• Financial services innovation
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