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Asia-Pacific

The COVID-19 virus crisis in Asia & the impact on legal

The COVID-19 pandemic has wreaked havoc across countries and industries throughout Asia, and the region’s legal services sector is not immune.

As the novel coronavirus outbreak subsides in key Asia markets and finance hubs slowly prepare themselves to re-open, lawyers are still counting the cost of a once-in-a-century pandemic that has afflicted more than 8 million people worldwide and resulted in more than 440,000 fatalities, as of mid-June.

In the legal industry, layoffs, furloughs, pay cuts, and compensation freezes have been the order of the day, and many lawyers are still unclear whether things will ever return to normal — and, what exactly that new normal will be. That said, many in the legal industry feel that it is one of luckier industries, with firms not as severely impacted as other sectors of the economy. “When you compare it to hospitality and travel, which have been completely reduced to zero, the law actually hasn’t done too badly,” says Tony Williams, principal at Jomati Consultants.


This blog post was adapted from an article written by Elizabeth Beattie in the in the June issue of Thomson Reuters Asian Legal Business.


Alan Tsoi, Asia-Pacific tax & legal leader at Deloitte, agrees that lawyers were able to quickly adapt and keep working, particularly those with flexible working arrangements in place. “Many of our lawyers, even before COVID-19, were working away from the office quite a bit, whether it was at the clients’ office, or the airport, so our lawyers had experience doing this,” Tsoi says. “We do have to rely on technology a lot to get things done. The good thing is that we are not unique, as our clients are doing the same thing.”

But while they may have been able to keep working, for the most part, law firms have not been impervious to the impact of COVID-19. Williams has observed a dramatic fall-off in transactional work, for example, but he notes that demand for other kinds of work is rising. “There has been quite a lot of advisory work as well… and [clients are] also seeking advice on employment law,” he explains.

Asian market impacts

In major Asian markets, the impact has been pronounced.

Singapore

When COVID-19 hit Singapore near the end of January, the city-state sprung promptly into action, monitoring the situation closely and meeting the rising number of cases with a range of preventative measures including temperature screening, suspension of school classes, and eventually stay-at-home notices.

“Every single legal professional, every single law firm, and every single bar association, is experiencing adversity, turmoil and disruption in varying degrees,” says Gregory Vijayendran, president of the Law Society of Singapore, adding that the pandemic has united the legal community there. In fact, the Law Society was quick to launch several initiatives to support law firms in the country’s highly competitive market, Vijayendran says.

Still, for law firms, the market itself has posed challenges difficult to mitigate. Stefanie Yuen Thio, joint managing partner at TSMP Law Corporation, says Singapore deal-making “has pretty much ground to a halt in the last two months as businesses come to terms with our circuit-breaker rules and work-from-home measures.”

Hong Kong

In January, law firms working in mainland China and Hong Kong were exercising caution, with many advising their staff to work from home. As the end of January neared, local media reported the first case of a “SARS-like coronavirus”, triggering the city’s clear memory of the SARS outbreak. This made the citizens take precautions seriously, with face masks prevalent and working from home quickly becoming the norm.

“At the beginning of the year, when COVID-19 first reached Hong Kong, there were lots of rumors saying that law firms were laying off people, culling extensively and so on,” says Huen Wong, a partner at Fried Frank and a past president of the Law Society of Hong Kong. After reaching out to his contacts, however, Wong says he learned this was not as widespread as expected. In his circle, both smaller firms, as well as more established outfits, were able to escape the major impact. “For them, it was pretty much business as usual.”

From the perspective of Tsoi’s at Deloitte, things weren’t quite so calm. Describing law firms as being in “fire drill mode,” he says many are carrying out cost-cutting internally. “They’re making sure they have enough positive cash flow just to stay alive and maintain the status quo,” Tsoi says.

Where to now?

While each jurisdiction must navigate their specific market issues, law firms across the board face many similar challenges. For those heading back into the office, for example, this approach will continue to be important as the impact of the crisis slowly subsides even as challenges remain. Lawyers are also thinking about how to adapt longer-term and emerge from the crisis stronger and ready to tackle the new normal, whatever that may be.

The Asian legal industry is in an interesting position. For a long time, there’s been internal calls to change and external pressures to bring law firms into the future by way of technology and office culture overhauls. We’ve seen workplaces adopt flexible working arrangements, for example, but regular use of such programs has not been the norm.

Indeed, the way in which internal office cultures function is likely to change post-pandemic, as many in Hong Kong and Singapore have observed.

As TSMP Law’s Yuen Thio observes, investing in legal tech is one obvious solution, but other changes will have to be made to ensure firms are truly ready to emerge into the post-pandemic market stronger. “We also need to reinvent how law practice functions,” she explains. “For law firms that have made money over the years building up a factory churning out legal products such as banking documentation, standard employment, and lease agreements, and handling routine disputes such as road accidents cases, they have to come to grips with those roles being taken over by technology.” In the future in Asia, we’ll see fewer High Street lawyers and generalists doing retail work, she adds.

Looking ahead to expansion, Jomati’s Williams says it’s difficult to tell if the outbreak is likely to effect business expansion plans. “Many of the large global firms have made quite a significant commitment to Asia over the years, but for most of them, it’s still a relatively small part of their global revenues,” he says. “When you look at the major U.K. and U.S. firms, in most cases, Asia is less than 15% of their business.”

The reality, Williams explains, is lawyers will still by-and-large “go to or stay where the activity is.” Indeed, he adds, that should markets grow less open to China in the future, and if the Chinese economy slows down, this could have something of a “chilling effect across Asia-Pacific.”

Conceding that these are uncertain times, Williams notes that “uncertain times aren’t necessarily bad times for lawyers, because the good lawyer shows their value in uncertain times. They help clients navigate that uncertainty.”

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