Eversheds Sutherland follows transatlantic tie-up with Singapore merger deal

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Eversheds Sutherland is to merge with Singapore’s Harry Elias Partnership after receiving approval from the  Singapore Ministry of Law.

The long-awaited deal creates a combined firm – Eversheds Harry Elias – with more than 90 lawyers in Singapore and Brunei. Eversheds, which will own 33% of the combined firm’s equity, will have full access to all aspects of Singapore law practices.

Approval of the merger comes nearly two years after Eversheds first made contact to discuss an alliance, with initial discussions taking place years before the union between UK firm Eversheds and US firm Sutherland Asbill & Brennan went live this month.

When discussions started in March 2015, Eversheds had been in Singapore for six years but growth had been slow. With only six lawyers, the base was significantly smaller than the firm’s office in Hong Kong, which opened after the Singapore office but had four times as many fee earners.

Part of the problem was that Eversheds in Singapore could not practise local law. In Singapore, foreign law firms are not permitted to practise local law unless they have a joint venture or an alliance with a local firm, or are one of nine firms with a Qualifying Foreign Law Practice license. This meant Eversheds could not provide full-service legal advice to clients in Singapore, which greatly limited the scope of its business.

Harry Elias, meanwhile, had been in existence for 27 years but was looking for a partner in order to better compete in Singapore and Asia.

The firm now has close to 80 lawyers in Singapore and Brunei and has worked on landmark Singaporean projects such as the iconic Marina Bay Sands and the Singapore Flyer – the city’s observation wheel. But to break out of the local Singapore market, partners at Harry Elias realised they needed an international platform.

“A huge amount of time and effort has been invested in the arrangements and all believe that we have established a robust, one-of-a-kind platform that will reap rewards for all stakeholders,” said Eversheds Asia managing partner Stephen Kitts, who led the merger negotiations.

Kitts said they looked at all the options, including the Joint Law Venture and the Formal Law Alliance, before deciding to pursue a merger, as around that time local firm Stamford Law Corp and US firm Morgan Lewis & Bockius announced they were merging. That deal produced the first ever financially integrated merger between a Singaporean firm and a foreign firm.

Kitts said: “When we sat down and started talking, the benefits of a merger from a client perspective quickly became apparent. It was a win-win for both Eversheds and Harry Elias.

“Once we made up our mind,” he added, “it was really just how to put our businesses together and not think about the ‘us versus them’ mindset.”

Harry Elias managing partner Philip Fong said: “The international firms in Singapore are winning more of the larger mandates, while the local firms are being relegated to a secondary role. Eversheds came across as a very strong international firm…naturally there were some concerns but it was clear there were more pros than cons.”

A merger in Singapore between a local firm and a foreign firm, according to a law passed in 2012, has to take a very specific form: the foreign firm can own no more than one third of the office. It was less complicated when Morgan Lewis merged with Stamford, since the US firm did not have a Singapore office at the time. But the requirement meant Eversheds would have to transfer its entire Singapore office to Harry Elias.

The two firms spent the next seven months trying to work out the nitty gritty of the deal, with Hong Kong-based Kitts making frequent trips to Singapore. The difficulties boiled down to finding common ground between the two firms’ different business models. While Eversheds’ Singapore office is integrated into the global firm, Harry Elias has a more Singapore-centric business.

Both firms signed a one-page memorandum of understanding in May 2016 and worked out all details in the final agreement in July.

But there was one more hurdle – just as Eversheds and Harry Elias were finalising their merger negotiations, Singapore overhauled its legal profession regulating regime. The Legal Services Regulatory Authority (LSRA) was launched in November 2015, to oversee all lawyers and law – domestic and foreign.

That meant an entirely different group of people would be reviewing Eversheds’ application.

Eversheds and Harry Elias submitted their merger application to the newly launched LSRA in the first week of August 2016. Theirs was the first to go before the new agency, which was cautious about potentially opening the floodgates to foreign mergers.

The likelihood of the Singapore merger also helped Eversheds in its discussions with Atlanta-based Sutherland, as the US firm did not have a Singapore base.

“The Southeast Asian region attracts a lot of interest from US companies and there is latent demand from the Sutherland clients to use our expanded capabilities in Singapore and the region,” Kitts said. “We are already seeing a steady flow of opportunities that bodes well for the future.”