Elaine Lo, senior partner and Asia chair of Mayer Brown JSM, and recipient of the managing partner of the year award at the Macallan ALB Hong Kong law awards in September, speaks to Kanishk Verghese about the firm’s recent alliance with Jingtian & Gongcheng, the opportunities that lie ahead in 2016, and the firm’s growth strategy and key priorities in an increasingly competitive legal market.

ALB: How would you describe Mayer Brown’s Asia strategy during your stint as Asia Chair?

Lo: Our firm’s global strategy is to serve our clients’ needs in the important markets where they operate. This strategy entails providing high-quality services to our clients by building and maintaining very close relationships with them, understanding their business needs, challenges and drivers, and strengthening our core practices to meet those needs. This same strategy is pursued in Asia because our Asian offices are an integral part of the global firm. We believe that our strengths lie in the way we can leverage our geographic network and international experience to assist clients with their very complex, multijurisdictional transactions. We are a global law firm with 1,500 lawyers based across 22 offices worldwide, including seven Asian offices in China, Hong Kong, Singapore, Thailand and Vietnam. We are also uniquely positioned to help our clients resolve their most challenging cross-border disputes, as well as any regulatory and compliance issues they face.

ALB: Are there any key practice areas that the firm’s Asian offices are focussing on in 2015?

Lo: In Asia, we are focusing on M&A, private equity, capital markets, real estate, project finance, international trade, regulatory and compliance, investigations work and arbitration. We see these areas as opportunities for us. There are specific industries in which we will continue to build our knowledge and capabilities. These include the power sector in emerging markets, the TMT, oil & gas and mining industries which are the focus of our Beijing office, and the chemicals industry, which is one of the focus areas of our Shanghai office.

ALB: What is your outlook for 2016?

Lo: We see opportunities for growth in the core areas mentioned earlier well into 2016 and beyond. As for other opportunities, there is the exciting ‘One Belt One Road’ (OBOR) economic initiative spearheaded by China in 2014, which aims to realise economic cooperation through the interconnection between more than 60 countries – with a population of 4.4 billion – across the three continents of Asia, Europe and Africa. An Asian Development Bank (ADB) study found that $8 trillion is required for infrastructure investment in the Asia-Pacific region. At the moment, there is no way the ADB, International Finance Corporation and other multilateral financial institutions can meet this kind of demand for infrastructure investment in Asia. China is putting $40 billion into the Silk Road Fund, and has committed to inject $50 billion into the Asia Infrastructure Investment Bank, but even this amount of funding will not be sufficient to meet the demands. Consequently, a lot of these projects will require private sector investment and capital from global and regional commercial banks. In fact, the Chinese government has already opened up major infrastructure projects in the energy, utilities and transport sectors to private investment. When the OBOR initiative gets underway, it will create demand and opportunities for lawyers in the Asia-Pacific region for many years, well beyond 2016.

Another development is the reform of China’s state-owned enterprises (SOEs). In April this year, it was reported that the Chinese government wanted to deepen the reform of the SOE sector by reducing the number of centrally administered SOEs by half. It was also reported that these SOEs are parents to approximately 227 listed companies. The reduction will be carried out mainly through mergers and acquisitions. Restructuring and reorganisations to consolidate these SOEs will create a lot of demand for legal services, especially in Hong Kong and China as many of the SOEs or their parents are listed on the Hong Kong Stock Exchange.

I also see lots of opportunities for lawyers in the capital markets space because fundraising is required to finance some of these mergers and acquisitions, as well as to finance the infrastructure projects along the OBOR economic region.

ALB: Mayer Brown JSM recently entered into an association with PRC firm Jingtian & Gongcheng. How does the alliance fit into the firm’s plans for Asia?

Lo: We are very excited about our association with Jingtian & Gongcheng in Hong Kong. Jingtian & Gongcheng is a premium law firm in mainland China with a top-ranked reputation in the capital markets and M&A practices. They represent some of the biggest Chinese state-owned companies and privately-owned enterprises. Through this formal relationship, we can present our capabilities to Jingtian & Gongcheng’s clients in a much more structured manner, and deliver a far more seamless service to their clients in Hong Kong and other parts of Asia, as well as in Europe and the Americas. This is an exciting development not just for Jingtian & Gongcheng’s clients, but also for our global and regional clients. Many of our clients are multinational corporations that have been very active in China for many years. Through this alliance, we hope to deliver to our own clients an enhanced service and greater capabilities in mainland China.

ALB: Are there any plans for an eventual merger with Jingtian & Gongcheng?

Lo: We are currently concentrating our energy and resources on making the most of this alliance. First of all, we need to study each other’s client needs, and then identify areas where we can collaborate and implement strategic plans to meet those needs. That is a top priority for us right now.

We are constantly reviewing our strategy for growth and expansion, but whatever we do has to be relevant to our clients. We have to evaluate the needs of our clients before we consider any further growth or expansion.

ALB: The ASEAN Economic Community, which is expected to take effect by the end of the year, presents new opportunities. How important is Southeast Asia in Mayer Brown’s plans for 2016 and beyond?

Lo: Southeast Asia is very important. We set up our Singapore office four years ago, and we have been using that office as a base to serve our clients across the Southeast Asian region. Our project finance team is based in Singapore and handles power, oil & gas, renewable energy and infrastructure projects in the ASEAN countries and South Asia region. We also have an international trade group based in our Singapore office. They are a pan-Asian team that advises on customs and trade issues, bilateral investment agreements and transfer pricing issues. These are practices we are committed to build because of the growing demand for these services in the ASEAN region. Our strategy is to continue to grow the scale of our Singapore office to make it the firm’s legal hub for Southeast Asia.

ALB: You’ve been in the legal profession for more than 30 years. How have you seen the Asian legal market develop during this time?

Lo: The legal profession in Asia has certainly changed a lot during my career. Firstly, I recall that in the 1980s, clients were very comfortable paying law firms fees computed based on the number of hours worked. Fee estimates were rarely required. Nowadays, alternative fee arrangements are increasingly becoming the norm, and we now routinely quote capped fees and fixed fees to provide greater certainty to the client. When a client is planning an acquisition, no matter how big or small that deal is, they would always want to know the amount of legal fees they would need to pay. In order to provide this kind of certainty to the client, we must be able to quote a realistic and accurate fee based on the agreed scope of work and an agreed set of assumptions.

Secondly, since the 1990s, big law firms have been institutionalising their relationships with important clients, following the lead of the ‘Big Four’ accountancy firms. This is a strategy to reduce the risk of loss or damage to the relationship with a key client caused by the departure or retirement of a partner. So, instead of relying on a single partner to serve a client, a lot of big firms – ourselves included – have established client teams that try to introduce the client to groups of partners, and to serve the client in many practice areas, not just one.

Thirdly, clients are constantly demanding more value, and often for lower fees. This is a trend that no law firm can ignore. We constantly provide secondments to our clients’ in-house legal departments and business units to help them on specific projects or when they need more resources.

Lastly, there is a growing trend for local firms in Asia – especially in Hong Kong and Singapore – to internationalise by combining or merging with a big UK or U.S. law firm. A similar trend to expand internationally can be perceived in mainland China too. Many Chinese law firms have been opening overseas branch offices over the past five years. A number of these branch offices have been opened in Hong Kong with the ultimate goal to eventually obtain a licence to practise Hong Kong law.

We have also seen how the U.S. firms established their Hong Kong law capabilities during the past ten years in Hong Kong by hiring lawyers from the UK firms, and the same is likely to happen with the arrival of the big Chinese law firms. There are many new entrants to the market in Hong Kong and Singapore, and there are some local firms that want to be part of an international law firm. The competition is intense in the financial centres of Hong Kong and Singapore, as well as in Beijing and Shanghai. I foresee more consolidation in the legal sector in the years ahead.