Davis Polk & Wardwell is launching a Hong Kong law practice with two new partners, the firm announced Monday.
Incoming partner Bonnie Y. T. Chan is joining Davis Polk from the Hong Kong Stock Exchange, where she was senior vice president of the listing division and head of the initial public offering transactions department. Prior to joining the exchange in 2007, Chan held senior in-house positions at Morgan Stanley and Deutsche Bank.
Also joining Davis Polk's 45-lawyer Hong Kong office as a partner is Antony Dapiran, most recently the Beijing managing partner for Freshfields Bruckhaus Deringer. A leading capital markets lawyer (he was profiled in The American Lawyer's April feature, "The New China Hands"), Dapiran has worked on several high-profile transactions for Chinese state-owned enterprises. He recently worked side-by-side with Davis Polk representing Agricultural Bank of China on its dual listing in Hong Kong and Shanghai, which this week became the world’s largest IPO ever with over $22 billion raised.
The news puts to rest months of speculation over the firm's Asia plans. William Barron, Davis Polk's Hong Kong-based Asia head, says the firm had decided some time ago to launch a Hong Kong practice but it had been waiting to find the right people. "We are just thrilled to be getting the caliber of people that we have," Barron says.
"Our goal is to be one of the leading players in this practice," he continues. "We're not doing this to be an also-ran."
The Hong Kong corporate bar has been abuzz for months about possible local moves by top-tier U.S. firms. To be sure, several have already taken the plunge into local practice, notably Skadden, Arps, Slate, Meagher & Flom, Latham & Watkins, and Shearman & Sterling. Others, including Simpson Thacher & Bartlett, Sullivan & Cromwell, Paul, Weiss, Rifkind, Wharton & Garrison, and Cleary Gottlieb Steen & Hamilton have only practiced U.S. law in Asia.
Many of these firms have in the past been wary of the lower rates local work commands as well as Hong Kong's status as a former British colony with an inherited British legal system, making it the home turf of London's Magic Circle firms, most of which have large local practices.
But the growing importance of Hong Kong as a financial center and as the gateway to China has altered U.S. firms' calculations. Hong Kong has led the world in IPOs in the past two years, and has emerged as the preferred destination for international offerings by China's giant state-owned enterprises, many of whom previously might have listed in the United States. Though U.S. firms continue to land key assignments because of the heavy participation of U.S. institutional investors in these deals, there is widespread fear that firms without local capability could face long-term marginalization in future key market.
Barron says Davis Polk's move will open new doors for the firm's Asia practice. "In some ways, we were competing with one hand tied behind our backs," he says.
Competitors agree Davis Polk's move likely will shake up the market, with more leading U.S. firms expected to follow in short order. Michael Liu, whose own move from Allen & Overy to Latham & Watkins shook the market two years ago, says Davis Polk has recruited a "formidable" pair and predicts a continued shift in the competitive landscape between British and American firms.
"In five year's time, if we look at who the leading international firms are in China and Hong Kong, one should not be surprised if the majority are of U.S. origin and not U.K. origin," says Liu, now Latham's Hong Kong managing partner.
David Johnson, a partner in Allen & Overy’s Hong Kong office, agreed that Magic Circle firms will face tougher competition for talent and business. “Davis Polk are clearly saying they want to be all the way here,” said Johnson. “They’re bound to take their share of the market. We all have to take note of that."
But he noted that most of the Magic Circle firms already have substantial U.S. law capabilities and can already offer clients in the region a “one stop shop.” Johnson, a U.S.-qualified lawyer, served as U.S. law counsel to the underwriters on the Agricultural Bank IPO. "There will certainly be more competition, but anyone worth their salt is looking forward to it."This article first appeared on The Am Law Daily blog on AmericanLawyer.com.