HK Local Practices Being Built at US Firms
The growing importance of Hong Kong as not only a gateway to China and Southeast Asia, but also as a regional financial center in its own right, has compelled many foreign firms to add a Hong Kong local practice. For the last two years, Hong Kong has been the world’s leading IPO center (surpassing New York and London) and clients are increasingly seeking one firm to handle both the US and Hong Kong side of the IPO. Even General Motors was reported to have seriously considered a Hong Kong listing along with its planned NYSE/Toronto listings, only to drop the idea in part because of Hong Kong’s more restrictive listing requirements. Hong Kong is already the preferred market for international share offerings by China’s behemoth state-owned enterprises, which previously might have considered listing in Europe or the US.
Not all US firms will see an immediate need to acquire a Hong Kong practice as long as they continue to land major deals because of the participation of their US clients (mainly US-based financial institutions) in Asia-based transactions. Yet, as long as Hong Kong continues to be the world’s IPO leader and Asia continues its financial dominance, there will be pressure on foreign firms to add a Hong Kong arm to their practice.
Furthermore, a US firm adding a Hong Kong practice to an already strong US law practice is a throwing down of the gauntlet, so to speak – a signal to the more-established Magic Circle firms that they are committed to Asia and intend to be “all in” as a major regional player. In response, some British firms in Hong Kong have recently invested heavily in expanding their already strong US practice in Hong Kong, with Allen & Overy being a perfect example.
Increased Practice Complexity
Transactional work will remain many firms’ bread and butter in Asia. As is clear from the associate hiring trends, discussed below, the traditional transactional practices remain where the bulk of the hiring is occurring. But there is a growing belief among international firms that building a more full service offering, including white collar and regulatory compliance, as well as traditional litigation capability in Asia, is crucial to solidifying their long-term presence in the region. In addition to Gibson Dunn’s move to hire Kelly Austin, GE’s regional compliance chief, earlier this summer, Latham & Watkins launched a Hong Kong litigation practice, Skadden Arps last year launched an arbitration practice in Hong Kong, and top Australian firm Mallesons Stephen Jacques recruited a senior Clifford Chance litigation partner to its Hong Kong office. Last year Winston & Strawn also made a major move in the litigation practice, hiring partner David Hall-Jones from Heller Ehrman. Due to the local nature of litigation practices, opportunities for non-Hong Kong qualified litigators in Hong Kong are rare, but the trend is nevertheless a relevant indicator of general law firm strategy.
Hiring, Salaries and Popular Practices
Asian offices of foreign firms have historically been drawn to the region to take advantage of its importance as a regional financial center (especially in the case of Hong Kong) and the increased volume of inbound/outbound M&A/FDI as well as intra-Asia transactions. While certain regions might have a slightly shifted focus – for example, there is more project finance and energy work out of Singapore, more FDI work out of mainland China, and more capital markets work out of Hong Kong – the backbone of an Asia practice for a foreign law firm practicing in Asia is traditionally transactions-focused. One of the best indications of work flow has traditionally been the lateral associate hiring demand and compensation trends in law firms.
Most Desired Skill Sets for Associates
The most sought-after associates in Asia are those with strong capital markets and M&A skills. Commonwealth-qualified associates with capital markets, project finance, fund formation, acquisition finance, general corporate, real estate and even litigation skill sets can readily find open positions in Asia, whereas US-qualified associates who practice something other than capital markets or M&A might find it difficult to land in a US practice of an Asia firm.
The reason for this discrepancy is twofold: (1) the demand for a US-specific skill set is most often found in capital markets offerings where Asia-based issuers seek to avail themselves of US capital without triggering SEC registration requirements and (2) many transaction documents are governed by the laws of Hong Kong or England & Wales, not the laws of New York or another state in the United States, thus the demand for Commonwealth-qualified and Hong Kong-qualified lawyers is much higher in non-capital markets practice groups.
Language Skills
Relevant Asian language skills, particularly Mandarin Chinese, are almost a necessity for practicing within the region. It is currently very difficult to crack the legal markets in mainland China without Mandarin fluency, whereas as recently as 2008 it was not uncommon for English-only speakers to land at some top US firms in the mainland. Today, native speakers of Mandarin are much preferred to fluent Mandarin speakers with a different mother tongue. Many firms have grown in China in recent years with heavy-hitting transactional partners who do not speak Mandarin, but these partners desperately need associate assistance from those who do speak excellent Mandarin and can read Chinese. Thus, while Mandarin is arguably unnecessary for many transactions out of Hong Kong (for example, transactions with entities based in India or Southeast Asia), many employers are making Mandarin fluency a “preferred” criterion.
Further, even when US transactional practices in Hong Kong and China have an opening where Mandarin fluency is not a strong preference, the high number of very qualified US associate candidates on the market today with Mandarin skills makes it difficult for non Mandarin speaking candidates to get noticed at many firms. There are exceptions, where some groups in Hong Kong will make hires of English-only candidates and put no significant degree of importance on Mandarin skills, but firms operating that way are currently a small minority.
Due to the restrictive attorney licensing regime in Korea, US and UK firms remain unable to open offices there. However, UK firms expect to be in Seoul soon, as ratification of the recently agreed EU – Korea Fair Trade Agreement nears. It is uncertain when the US will ratify a fair trade agreement with Korea.
Hong Kong is the headquarters for most of the top international Korea practices, and so Korean language skills are also in demand in Hong Kong, especially with Korean biglaw associates based in Hong Kong typically spending a lot of time on the ground in Korea. The demand for Korean speakers waxes and wanes in accordance with the volume of work at the Korean practices in Hong Kong, as well as the volume of Korea-related work coming to Hong Kong firms without a Korea practice group.
Cantonese language skills are rarely sought after, and few foreign firms have ever, in our experience, sought out Cantonese skills among their foreign attorneys specifically.
In Japan, the biglaw lateral market has not been as hot as in other parts of Asia the past couple of years, due to the recent recession in Japan and also due to Japan relatively well developed market for foreign firms, relative to China. Things have picked up this year and firms are hiring, but Japanese language skills are now a requirement far more often than before the global recession. Firms seeking US associates with Japanese fluency have a much harder time finding good candidates than those seeking Mandarin fluent US associates. Thus, it is an extremely competitive hiring market for the handful of Japanese fluent mid-level to senior US associates coming from top 20 international firms.
In Singapore, few international law firm employers will specify language skills, but occasionally many will ask for an attorney who is barred in multiple jurisdictions – often one Western jurisdiction (New York or England & Wales) as well as India or one Southeast Asian jurisdiction. Because the environment (and client base) in Singapore is so multicultural, it is not unusual for hiring inquiries to include culture-specific “preferred” criteria. A firm which needs to make a hire for its India capital markets practice will often choose an Indian national even though the job does not require any Indian-specific language skills or legal qualification.
Asia’s “Biglaw” Lateral Market Has Become Much More Competitive Recently
In 2006 and 2007, US and UK law firms in Asia were hiring at the same pace as today, if not more quickly, but at the time there was a significant shortage of qualified US associate candidates on the market. Today, there are many more qualified US associates on the market than there are positions available and thus firms do not have to make very quick hiring decisions like they did a few years ago. There are several main reasons for this. First, the relatively stagnant economies in the US and EU since 2008 have caused associates with Asian backgrounds to consider Hong Kong and other Asia markets earlier than they had planned or to consider them as alternatives to New York or London for their long-term careers when previously they had intended to remain in the West indefinitely. Second, relatively early moves by young associates with Asian background during the hiring boom of ’06 through early ‘08, generally with positive results in terms of deal-flow and experience, have set a precedent. US associates with Asian background, especially Chinese, are today more confident than ever that they can have the same or better long-term career opportunities, in biglaw and in-house, in Asia as they can have in New York, London and other major Western markets. Other associates with similar backgrounds are considering such moves earlier as well. Third, although the “biglaw” lateral market in Asia is very competitive, it is still easier for an associate with Chinese background from New York or other major Western markets to lateral to a peer firm in Hong Kong or China today than it is for them to make a similar lateral move within their current markets.
Salaries and Expat Packages
One constant in legal hiring is this: law firms who want to be perceived as “top” law firms will seek to hire the best possible candidate of all those they are able to interview for any given position. If the number of possible interviewees increases, as it did in the past year as hiring of associates began anew in Asia, the standards applied to applicants will be dialed up as necessary to make the decision regarding whom to hire difficult and competitive. Since this is the case, there is rarely an opportunity to lower salaries and benefits for firms that wish to be competitive. The 2008-2009 downturn was no exception. The few firms able to hire at all in Asia then (mostly top 20 US firms and UK magic circle firms) wanted only to consider the very best candidates on the market. These firms had some of the highest salaries and expat packages and were competing for the top candidates coming from top five New York firms, each of whom expected those expat packages to continue. Further, these firms, already understaffed in some cases (mostly in their capital markets groups in Hong Kong and China), could not afford to lose their own US associates.
As a result, most top US and UK firms continue to offer expat packages in Asia. Of the firms that offer expat packages in Hong Kong, the range offered for US-qualified associates has been anywhere from US$30,000/year to US$90,000/year, with what is considered “competitive” expat packages being at US$60,000/year and above. Expat packages are not quite as prevalent in mainland China, but are offered there by the majority of US and UK firms, as well as all of the firms that pay competitive packages in Hong Kong. “Competitive” in the mainland is $45,000 and above and can be as high as $80,000. Expat packages are at the moment almost nonexistent in Singapore, but we expect that to change in the future. In Tokyo, the “competitive” range is $90,000 all the way up to $130,000. Keep in mind that all of the numbers mentioned above are for associates with no children, as some (but not all) firms do add to their expat package significantly for associates with children, especially school-aged children.
US associates will typically receive expat / COLA allowances in Asia regardless of their country of citizenship and whether they are liable for US federal income taxes. Some firms have tax equalization policies in Hong Kong and Singapore, but the trend for several years has been to do away with tax equalization in order to be more competitive in recruiting native Chinese and other top associates who are not US citizens or residents.
One of the most striking trends in 2010 regarding salary packages has been a shift toward paying New York-level base salaries to non-US qualified associates in Hong Kong. Traditionally, US-qualified associates have been paid about 20-30% more than their Commonwealth-qualified counterparts, and have gotten a much larger expat / COLA package as well. While an Australian-qualified associate might see a US$20,000/year expat package, her New York-qualified counterpart at the same firm could receive a US$65,000/year expat package, for example. Typically HK qualified associates have not received any expat / COLA package. These days, when a Hong Kong qualified junior to mid-level associate comes to us wanting to leave his or her current firm for another firm in Hong Kong, compensation considerations are usually a motivating factor. Of course, it is easier for a US firm building a new HK corporate practice to offer NYC top market base salaries to their few new HK qualified associate hires than it is for a well established and large HK practice to raise the salaries of their many HK practice associates.
As a result of rising expat packages, some mid-tier firms have begun specifying that they want to hire only non-US citizens for their open positions in order to save some portion of the expected expatriate compensation bonus. In view of the current trend to pay expat packages to even Commonwealth-qualified associates at many firms, this tactic seems to be losing its potency to reduce costs. Increasingly, the most qualified associates are all being tempted by potential expatriate benefits regardless of their country of origin.
While there was little change in expat allowances among the most highly regarded firms in Hong Kong during the global recession and hiring freezes, many among the less competitive firms dramatically lowered their allowances during ’09 and early ‘10, in many cases erroneously assuming that the top of the market were dramatically lowering theirs. Some of the firms that tried this were highly ranked US and UK firms. That trend (fortunately for associates) has reversed recently, with most firms that lowered their expat allowances now bringing those allowances back up to, and in some cases surpassing, the 2007 and 2008 levels.
Gaining Value from and Keeping Lateral Hires
In addition to attracting lateral hires through competitive salaries and benefits, firms know that they need to manage their talent so as to gain as much value as possible from their work over as long a period as possible. Whereas established New York and London offices of international firms typically have the size and deal flow predictability to support a full-fledged training program, complete with “mentorship,” “career development” partners, and the like, many Asia offices of law firms are only just beginning to acquire some of these structures. It is more difficult, therefore, for associates to obtain the necessary training. Associates in smaller overseas offices will have to rely on their supervising partner to play a strong mentoring role. Personality fit and partners’ desire and ability to train / mentor associates can thus be a bigger factor to associate retention in overseas offices than it is in large US or London home offices.
Corporate associates at US and UK firms in Asia usually move for one or more of the following reasons: a) compensation (usually having to do with expat / COLA allowances) concerns; b) desire for a more diverse corporate practice (usually due to more cap markets work than they expected; c) personality fit issue with supervising partner; d) concerns about long-term career advancement and security at current firm; e) a desire for more responsibility (every biglaw associate in Asia will know a number of same class year associates in the market that have higher levels of responsibility, based on a particular associate and firm’s circumstances); and f) being in an understaffed group and thus being overworked.
During boom times, the f) factor is the most prevalent reason for associate moves. Associate hires in US and UK based firms in Asia can be much more strategic and important than a typical associate hire in US and UK large home offices, for obvious reasons. Understaffing is a big problem in busy overseas offices, where one or two associates leaving a firm at the wrong time can cause the entire office to be overworked for months (replacement hires can take months, especially if the best candidates come from US or UK). Once a serious understaffing problem occurs, overworked associates will turn into unhappy associates and the firm involved will develop a reputation in the market (whether deserved or not) for being an unpleasant place to work.
HK Local Practices Being Built at US Firms
The growing importance of Hong Kong as not only a gateway to China and Southeast Asia, but also as a regional financial center in its own right, has compelled many foreign firms to add a Hong Kong local practice. For the last two years, Hong Kong has been the world’s leading IPO center (surpassing New York and London) and clients are increasingly seeking one firm to handle both the US and Hong Kong side of the IPO. Even General Motors was reported to have seriously considered a Hong Kong listing along with its planned NYSE/Toronto listings, only to drop the idea in part because of Hong Kong’s more restrictive listing requirements. Hong Kong is already the preferred market for international share offerings by China’s behemoth state-owned enterprises, which previously might have considered listing in Europe or the US.
Not all US firms will see an immediate need to acquire a Hong Kong practice as long as they continue to land major deals because of the participation of their US clients (mainly US-based financial institutions) in Asia-based transactions. Yet, as long as Hong Kong continues to be the world’s IPO leader and Asia continues its financial dominance, there will be pressure on foreign firms to add a Hong Kong arm to their practice.
Furthermore, a US firm adding a Hong Kong practice to an already strong US law practice is a throwing down of the gauntlet, so to speak – a signal to the more-established Magic Circle firms that they are committed to Asia and intend to be “all in” as a major regional player. In response, some British firms in Hong Kong have recently invested heavily in expanding their already strong US practice in Hong Kong, with Allen & Overy being a perfect example.
Increased Practice Complexity
Transactional work will remain many firms’ bread and butter in Asia. As is clear from the associate hiring trends, discussed below, the traditional transactional practices remain where the bulk of the hiring is occurring. But there is a growing belief among international firms that building a more full service offering, including white collar and regulatory compliance, as well as traditional litigation capability in Asia, is crucial to solidifying their long-term presence in the region. In addition to Gibson Dunn’s move to hire Kelly Austin, GE’s regional compliance chief, earlier this summer, Latham & Watkins launched a Hong Kong litigation practice, Skadden Arps last year launched an arbitration practice in Hong Kong, and top Australian firm Mallesons Stephen Jacques recruited a senior Clifford Chance litigation partner to its Hong Kong office. Last year Winston & Strawn also made a major move in the litigation practice, hiring partner David Hall-Jones from Heller Ehrman. Due to the local nature of litigation practices, opportunities for non-Hong Kong qualified litigators in Hong Kong are rare, but the trend is nevertheless a relevant indicator of general law firm strategy.
Hiring, Salaries and Popular Practices
Asian offices of foreign firms have historically been drawn to the region to take advantage of its importance as a regional financial center (especially in the case of Hong Kong) and the increased volume of inbound/outbound M&A/FDI as well as intra-Asia transactions. While certain regions might have a slightly shifted focus – for example, there is more project finance and energy work out of Singapore, more FDI work out of mainland China, and more capital markets work out of Hong Kong – the backbone of an Asia practice for a foreign law firm practicing in Asia is traditionally transactions-focused. One of the best indications of work flow has traditionally been the lateral associate hiring demand and compensation trends in law firms.
Most Desired Skill Sets for Associates
The most sought-after associates in Asia are those with strong capital markets and M&A skills. Commonwealth-qualified associates with capital markets, project finance, fund formation, acquisition finance, general corporate, real estate and even litigation skill sets can readily find open positions in Asia, whereas US-qualified associates who practice something other than capital markets or M&A might find it difficult to land in a US practice of an Asia firm.
The reason for this discrepancy is twofold: (1) the demand for a US-specific skill set is most often found in capital markets offerings where Asia-based issuers seek to avail themselves of US capital without triggering SEC registration requirements and (2) many transaction documents are governed by the laws of Hong Kong or England & Wales, not the laws of New York or another state in the United States, thus the demand for Commonwealth-qualified and Hong Kong-qualified lawyers is much higher in non-capital markets practice groups.
Language Skills
Relevant Asian language skills, particularly Mandarin Chinese, are almost a necessity for practicing within the region. It is currently very difficult to crack the legal markets in mainland China without Mandarin fluency, whereas as recently as 2008 it was not uncommon for English-only speakers to land at some top US firms in the mainland. Today, native speakers of Mandarin are much preferred to fluent Mandarin speakers with a different mother tongue. Many firms have grown in China in recent years with heavy-hitting transactional partners who do not speak Mandarin, but these partners desperately need associate assistance from those who do speak excellent Mandarin and can read Chinese. Thus, while Mandarin is arguably unnecessary for many transactions out of Hong Kong (for example, transactions with entities based in India or Southeast Asia), many employers are making Mandarin fluency a “preferred” criterion.
Further, even when US transactional practices in Hong Kong and China have an opening where Mandarin fluency is not a strong preference, the high number of very qualified US associate candidates on the market today with Mandarin skills makes it difficult for non Mandarin speaking candidates to get noticed at many firms. There are exceptions, where some groups in Hong Kong will make hires of English-only candidates and put no significant degree of importance on Mandarin skills, but firms operating that way are currently a small minority.
Due to the restrictive attorney licensing regime in Korea, US and UK firms remain unable to open offices there. However, UK firms expect to be in Seoul soon, as ratification of the recently agreed EU – Korea Fair Trade Agreement nears. It is uncertain when the US will ratify a fair trade agreement with Korea.
Hong Kong is the headquarters for most of the top international Korea practices, and so Korean language skills are also in demand in Hong Kong, especially with Korean biglaw associates based in Hong Kong typically spending a lot of time on the ground in Korea. The demand for Korean speakers waxes and wanes in accordance with the volume of work at the Korean practices in Hong Kong, as well as the volume of Korea-related work coming to Hong Kong firms without a Korea practice group.
Cantonese language skills are rarely sought after, and few foreign firms have ever, in our experience, sought out Cantonese skills among their foreign attorneys specifically.
In Japan, the biglaw lateral market has not been as hot as in other parts of Asia the past couple of years, due to the recent recession in Japan and also due to Japan relatively well developed market for foreign firms, relative to China. Things have picked up this year and firms are hiring, but Japanese language skills are now a requirement far more often than before the global recession. Firms seeking US associates with Japanese fluency have a much harder time finding good candidates than those seeking Mandarin fluent US associates. Thus, it is an extremely competitive hiring market for the handful of Japanese fluent mid-level to senior US associates coming from top 20 international firms.
In Singapore, few international law firm employers will specify language skills, but occasionally many will ask for an attorney who is barred in multiple jurisdictions – often one Western jurisdiction (New York or England & Wales) as well as India or one Southeast Asian jurisdiction. Because the environment (and client base) in Singapore is so multicultural, it is not unusual for hiring inquiries to include culture-specific “preferred” criteria. A firm which needs to make a hire for its India capital markets practice will often choose an Indian national even though the job does not require any Indian-specific language skills or legal qualification.
Asia’s “Biglaw” Lateral Market Has Become Much More Competitive Recently
In 2006 and 2007, US and UK law firms in Asia were hiring at the same pace as today, if not more quickly, but at the time there was a significant shortage of qualified US associate candidates on the market. Today, there are many more qualified US associates on the market than there are positions available and thus firms do not have to make very quick hiring decisions like they did a few years ago. There are several main reasons for this. First, the relatively stagnant economies in the US and EU since 2008 have caused associates with Asian backgrounds to consider Hong Kong and other Asia markets earlier than they had planned or to consider them as alternatives to New York or London for their long-term careers when previously they had intended to remain in the West indefinitely. Second, relatively early moves by young associates with Asian background during the hiring boom of ’06 through early ‘08, generally with positive results in terms of deal-flow and experience, have set a precedent. US associates with Asian background, especially Chinese, are today more confident than ever that they can have the same or better long-term career opportunities, in biglaw and in-house, in Asia as they can have in New York, London and other major Western markets. Other associates with similar backgrounds are considering such moves earlier as well. Third, although the “biglaw” lateral market in Asia is very competitive, it is still easier for an associate with Chinese background from New York or other major Western markets to lateral to a peer firm in Hong Kong or China today than it is for them to make a similar lateral move within their current markets.
Salaries and Expat Packages
One constant in legal hiring is this: law firms who want to be perceived as “top” law firms will seek to hire the best possible candidate of all those they are able to interview for any given position. If the number of possible interviewees increases, as it did in the past year as hiring of associates began anew in Asia, the standards applied to applicants will be dialed up as necessary to make the decision regarding whom to hire difficult and competitive. Since this is the case, there is rarely an opportunity to lower salaries and benefits for firms that wish to be competitive. The 2008-2009 downturn was no exception. The few firms able to hire at all in Asia then (mostly top 20 US firms and UK magic circle firms) wanted only to consider the very best candidates on the market. These firms had some of the highest salaries and expat packages and were competing for the top candidates coming from top five New York firms, each of whom expected those expat packages to continue. Further, these firms, already understaffed in some cases (mostly in their capital markets groups in Hong Kong and China), could not afford to lose their own US associates.
As a result, most top US and UK firms continue to offer expat packages in Asia. Of the firms that offer expat packages in Hong Kong, the range offered for US-qualified associates has been anywhere from US$30,000/year to US$90,000/year, with what is considered “competitive” expat packages being at US$60,000/year and above. Expat packages are not quite as prevalent in mainland China, but are offered there by the majority of US and UK firms, as well as all of the firms that pay competitive packages in Hong Kong. “Competitive” in the mainland is $45,000 and above and can be as high as $80,000. Expat packages are at the moment almost nonexistent in Singapore, but we expect that to change in the future. In Tokyo, the “competitive” range is $90,000 all the way up to $130,000. Keep in mind that all of the numbers mentioned above are for associates with no children, as some (but not all) firms do add to their expat package significantly for associates with children, especially school-aged children.
US associates will typically receive expat / COLA allowances in Asia regardless of their country of citizenship and whether they are liable for US federal income taxes. Some firms have tax equalization policies in Hong Kong and Singapore, but the trend for several years has been to do away with tax equalization in order to be more competitive in recruiting native Chinese and other top associates who are not US citizens or residents.
One of the most striking trends in 2010 regarding salary packages has been a shift toward paying New York-level base salaries to non-US qualified associates in Hong Kong. Traditionally, US-qualified associates have been paid about 20-30% more than their Commonwealth-qualified counterparts, and have gotten a much larger expat / COLA package as well. While an Australian-qualified associate might see a US$20,000/year expat package, her New York-qualified counterpart at the same firm could receive a US$65,000/year expat package, for example. Typically HK qualified associates have not received any expat / COLA package. These days, when a Hong Kong qualified junior to mid-level associate comes to us wanting to leave his or her current firm for another firm in Hong Kong, compensation considerations are usually a motivating factor. Of course, it is easier for a US firm building a new HK corporate practice to offer NYC top market base salaries to their few new HK qualified associate hires than it is for a well established and large HK practice to raise the salaries of their many HK practice associates.
As a result of rising expat packages, some mid-tier firms have begun specifying that they want to hire only non-US citizens for their open positions in order to save some portion of the expected expatriate compensation bonus. In view of the current trend to pay expat packages to even Commonwealth-qualified associates at many firms, this tactic seems to be losing its potency to reduce costs. Increasingly, the most qualified associates are all being tempted by potential expatriate benefits regardless of their country of origin.
While there was little change in expat allowances among the most highly regarded firms in Hong Kong during the global recession and hiring freezes, many among the less competitive firms dramatically lowered their allowances during ’09 and early ‘10, in many cases erroneously assuming that the top of the market were dramatically lowering theirs. Some of the firms that tried this were highly ranked US and UK firms. That trend (fortunately for associates) has reversed recently, with most firms that lowered their expat allowances now bringing those allowances back up to, and in some cases surpassing, the 2007 and 2008 levels.
Gaining Value from and Keeping Lateral Hires
In addition to attracting lateral hires through competitive salaries and benefits, firms know that they need to manage their talent so as to gain as much value as possible from their work over as long a period as possible. Whereas established New York and London offices of international firms typically have the size and deal flow predictability to support a full-fledged training program, complete with “mentorship,” “career development” partners, and the like, many Asia offices of law firms are only just beginning to acquire some of these structures. It is more difficult, therefore, for associates to obtain the necessary training. Associates in smaller overseas offices will have to rely on their supervising partner to play a strong mentoring role. Personality fit and partners’ desire and ability to train / mentor associates can thus be a bigger factor to associate retention in overseas offices than it is in large US or London home offices.
Corporate associates at US and UK firms in Asia usually move for one or more of the following reasons: a) compensation (usually having to do with expat / COLA allowances) concerns; b) desire for a more diverse corporate practice (usually due to more cap markets work than they expected; c) personality fit issue with supervising partner; d) concerns about long-term career advancement and security at current firm; e) a desire for more responsibility (every biglaw associate in Asia will know a number of same class year associates in the market that have higher levels of responsibility, based on a particular associate and firm’s circumstances); and f) being in an understaffed group and thus being overworked.
During boom times, the f) factor is the most prevalent reason for associate moves. Associate hires in US and UK based firms in Asia can be much more strategic and important than a typical associate hire in US and UK large home offices, for obvious reasons. Understaffing is a big problem in busy overseas offices, where one or two associates leaving a firm at the wrong time can cause the entire office to be overworked for months (replacement hires can take months, especially if the best candidates come from US or UK). Once a serious understaffing problem occurs, overworked associates will turn into unhappy associates and the firm involved will develop a reputation in the market (whether deserved or not) for being an unpleasant place to work.
eric seiger
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