The pandemic might be (almost) over, but the sense of unease remains strong in Asia’s legal industry. While life might have returned to normal, and supply chains appear back on track, the region is continuing to experience uncertainty over slowing global economic momentum, tightening monetary policy affecting credit growth, and lingering concerns about inflation. China’s seemingly irreversible economic decline is also hanging heavy.

As M&A transactions dry up and capital markets remain patchy across the region, law firms have responded in a variety of ways. Some have taken the prudent road and looked to scale back their presence, including well-known international firms in Greater China. Others realise it could pay off to be bold at a time like this. As a result, we have seen the landscapes of key legal markets in Asia begin to shift in clear directions, with the momentum expected to accelerate in 2024.

INDIA: BRAVE NEW WORLD

The Indian legal market started in 2023 as a closed, slow-paced market where India’s leading law firms governed rates and salaries. Cut to December, and India’s legal stalwarts must contend with foreign law firms being allowed to enter the market, a slew of small firms and boutiques that have disrupted market rates, growing alternative legal service providers, an ever-increasing client demand for specialised and sophisticated legal services and a fight to secure the country’s best talent.

Across the board, leaders at India’s large and small firms agree that the biggest change this year was the increase in sophistication of in-house counsel and client demands, leading to an increase in specialised hires at big firms, and the emergence of boutique law firms to cater to this growing need at a competitive price.

“Companies are bolstering their in-house legal teams, signifying a shift towards more strategic, proactive legal management. This evolution reflects a blend of legal foresight and risk management, integrating legal solutions with business strategy,” says Daksh Trivedi, a corporate partner at one of India’s top law firms, AZB & Partners. This is also leading to the development of the market for alternative legal service providers, says Rohit Jain, managing partner of Singhania & Co. “Clients are becoming increasingly sophisticated and demanding, seeking value-added services beyond traditional legal advice. They expect their lawyers to be proactive, responsive, and cost-conscious. This is leading to the rise of alternative legal service providers (ALSPs) and the unbundling of legal services, offering clients more flexibility and choice,” says Jain.

Indeed, this need for more specialisation is particularly strong among lawyers working with India’s super-charged $350 billion startup industry, which has continued to grow despite a seed funding winter.

 Trivedi says that founders and promoters are now seeing the need to engage legal counsel at a very early stage, making legal counsel a larger part of the strategy process.

“In 2023, India’s exciting startup ecosystem has underscored the critical role of legal counsel. Founders are increasingly recognising the need for legal expertise not just in compliance, but as a strategic pillar for business decisions, intellectual property management, and funding negotiations. This trend towards early legal engagement is now a cornerstone for the robust and sustainable growth of startups,” says Trivedi.

With in-house teams now offering more high-paying jobs, and clients making more specialised demands, the legal profession is also facing a shortage of talent, with a demand for skilled and experienced lawyers exceeding the supply, says Jain.

“This is driving a focus on talent development and retention, with law firms and organisations investing in training programs, mentorship initiatives, and creating more flexible work arrangements to attract and retain top talent,” adds Jain.

Firms are also adopting a more U.S.-like approach to law firm management, hiring more management executives to augment their client experiences. India’s top firm by headcount, Khaitan & Co is leading the way, becoming the first to launch a practice management vertical this year, with the addition of a team led by chief practice officer Padmini Rathore.

In the last year, the increase in demand for legal services has also driven more lawyers from top law firms to set up their own boutiques catering to a niche clientele. Lawyers have left roles at Shardul Amarch-and Mangaldas, Cyril Amarchand Mangaldas, Khaitan & Co, Economic Laws Practice, Remfry & Sagar and Kochhar & Co, among others, to set up their own boutiques across various practices, including specialised disputes, company mismanagement, indirect tax, technology and intellectual property.

The key pitch these new-age firms bring is providing the high-quality legal services of a Tier 1 firm at a highly competitive price point.

Aditya Narayan, who left Argus Partners in 2019 to launch disputes-boutique Saakshya Law, says that firms like his disrupt the market for legal representation in disputes as they offer not only dispute management and drafting services, but also argue matters in court. This saves costs for clients, who would otherwise have to hire arguing counsel over and above their law firm mandates.

Lastly, while India did open its market to international law firms, and many did show interest in opening in the country, not much has changed since. International law firms are happy to run their India practices out of regional offices in Singapore and Dubai rather than invest in opening in India, given that the legal market is still only partially open to them.

But Indian law firms have moved abroad – particularly to the Middle East - and more foreign law firms are involving themselves in Indian matters, looking to tap into the growth of cross-border M&A in the country, says Singhania’s Jain.

“India’s growing economic clout and position as an attractive investment destination are increasing the demand for cross-border legal services. Indian law firms are expanding their international reach, while foreign law firms are seeking to establish a presence in India. This is leading to increased collaboration and knowledge exchange between Indian and international legal communities,” Jain adds.