With the U.S. market promising little growth in 2011, law firms are looking at emerging markets in Asia and South America for spurring their expansion.
Most law firms feel that the so-called BRIC countries - Brazil, Russia, India and China - and other countries like South Africa, Australia and Canada will provide growth platforms for them despite challenges such as recruiting or relocating legal talent and clearing regulatory hurdles, according to a Law360 report.
Wherever there are investment opportunities, there are going to be lawyers, Law360 quoted Larry Mullman, global practice leader of the law firm practice group at legal recruiting firm Major Lindsey & Africa, as saying.
Agrees Francis B. Burch, Jr., global chairman of DLA Piper. If you look at where the large multinationals and the most attractive emerging technology companies are generating their revenue and their net income and where they expect to see the most growth, it's in the BRIC countries, Burch said.
According to Eric Hellige, head of the corporate and securities practice at Pryor Cashman LLP, China is the most attractive market as it presents a huge opportunity, given the growing middle class...the increase in the quality of life [and] the number of entrepreneurs and wealthy individuals in China.
In this regard, Hong Kong - as the gateway to Shanghai and Beijing - will be a hotbed of legal activity and at least 11 new law offices are expected to open in 2011.
Almost all firms want to be in China, Mullman said. They want to reap the benefit of the phenomenal growth in that country.
However, things won't be easy. Tight regulations that restrict out-of-country lawyers from practicing law in China and the steep costs of expansion will prove to be formidable obstacles.
But these factors are not going to deter the law firms as the lure of future legal work that would primarily focus on international arbitration and mergers and acquisitions, particularly in the area of natural resources, is too great.
Like China, Brazil is also being seen as the future destination for law firms as not only the country is in the middle of building its infrastructure but also it is a major source of rich mineral deposits.
In fact, most law firms are beginning to sniff out transactions in the country and those that don;t have operations in South America are even mulling setting up offices in Miami.
Canada and Australia are also seen as attractive destinations for opening law offices as these countries are key trading partners for China and other BRIC countries.
A stable banking sector, secure borders, a settled political system and rich natural resources are some other reasons why global firms like DLA Piper, Allen & Overy, Norton Rose, Baker & McKenzie, Skadden Arps Slate Meagher & Flom and Dorsey & Whitney haven't given a second thought before touching bases in these two countries.
However, at all emerging markets present a rosy picture to the firms. Take for instance, India and Russia. While India has stringent rules that prohibit foreign law firms from practicing within its borders, opening a law firm in Russia is more of a political challenge.
However, if a market is important enough for a client to do business in, regulatory or political challenges notwithstanding, chances are that the law firms are going to find out a way to get there, DLA's Burch said.
A good example is Singapore, which has become a hotbed of legal activity because of its proximity to India.