O'Melveny Adjusts to Changing Asia Market
For years O’Melveny & Myers has been viewed as an undisputed heavyweight among foreign law firms in the China market. But, like many global firms, O’Melveny is now figuring out how to navigate a shifting Asia landscape.
Under Asia head Howard Chao, the firm built a formidable practice advising multinationals doing business in China—tapping dozens of local lawyers working in the firm’s Beijing and Shanghai offices for help. (These Chinese lawyers were called legal consultants and were not typically counted in O’Melveny’s professional head count.) But it was in part due to them that O’Melveny became a go-to firm for inbound China work to rival earlier market entrants like Baker & McKenzie or the now-defunct Coudert Brothers.
Chao had led the firm’s Asia practice since the mid-90s, but the firm eliminated the role in 2011 in favor of an Asia management committee, which included Chao and the regional office heads. He stepped down as a partner in June to become of counsel and senior adviser on Asia. But, even before then, the China practice he built had been hit hard by the global financial crisis as well as the swift growth of large Chinese law firms. In that time as well, O’Melveny has been moving to catch up in other Asian markets and in certain practices where it has fallen behind rival firms. The shifting market and a series of departures and leadership changes—in the U.S. as well as Asia—have raised questions about the firm’s Asia strategy.
The firm has refocused in some areas, but O’Melveny chairman Bradley Butwin says the firm remains committed to a strong Asia practice, even with somewhat fewer lawyers on the ground in Asia.
“Today our Asia practice is more closely tied to the rest of the firm than ever before,” says Butwin. “We consistently work across offices and have common firmwide clients. That’s why the number of people we have on the ground in any given office is less important than it once was.”
O'Melveny's current head count in Asia appears to be largely the same as it was in 2008. The firm says it currently has 101 lawyers in Asia, which is about even with the 98 lawyers it had five years ago, according to figures from sister publication The National Law Journal. But the firm acknowledges that those numbers don’t include the dozens of legal consultants it had during the heyday of its China inbound practice. At the same time, the head counts in Hong Kong and Tokyo are down. Where Hong Kong had 28 lawyers in 2008, there are now 20 in the office, according to O’Melveny’s website. In Tokyo, the number of lawyers over the same period has fallen to 14 from 27.
The departures have included a number of partners. In July, Hong Kong partner Gordon Ng and Tokyo partner Mangyo Kinoshita left for Dentons and White & Case, respectively. Last year, former Hong Kong restructuring partner Neil Campbell moved to K&L Gates, while Shanghai counsel Sean Tai became a partner at Paul Hastings. In fall 2011, former Japan head Dale Araki moved to Morrison & Foerster, and former Hong Kong managing partner Yi Zhang joined Gibson, Dunn & Crutcher. Also that fall, former Hong Kong partner Douglas Freeman and counsel Victor Chen both left for Fried, Frank, Harris, Shriver & Jacobson, the latter winning a promotion to partner.
A current partner attributes the slightly smaller Asia footprint to the fact that the firm’s new leaders are still finding their feet in Asia. “I think the new management is in a period of adjustment,” he says. “We need time for new management to know more about practice, the trends here, the market out here.”
Most former and current partners praised the growth the firm experienced under Chao. O’Melveny chair Butwin noted that Chao remained at the firm as senior adviser to the Asia practice and assisted with business development. The firm declined to make Chao available for interviews.
Asia has been a difficult market for many firms in the last five years. After Lehman Brothers filed for bankruptcy in 2008, foreign investment in China cooled off dramatically. O’Melveny acknowledges that a downturn in the China market led to many of the layoffs of its Chinese legal consultants at this time. The firm, which also conducted sizable U.S. associate layoffs around the same time, wasn’t alone in cutting back in China. Domestic firms and other international firms that had invested heavily in local hiring, such as Paul Hastings, also thinned their ranks.