Asian prospects for Insolvency/Restructuring lawyers

As the current economic crisis continues to deepen and spread, apparently to all four corners of the globe, one doesn’t need a crystal ball to predict that increasing numbers of companies, both large and small, will become insolvent in the coming months and years.  From a legal standpoint, here in Asia there are only very limited numbers of genuine insolvency and restructuring specialists and thus the question arises as to what will happen in the probable event that there is a sudden and very significant increase in the amount of this kind of work.

Back in 1997 when the Asian Economic Crisis hit, the situation was rather different, principally because the West was not affected to any significant extent by the downturn.  Accordingly, lawyers could be and were seconded to Asian offices from London, New York and other legal centres.  However, the current economic crisis is global in extent and thus insolvency specialists in the West do not have the same spare capacity that they did a decade ago.  Accordingly, the same kind of help will not be available to anything like the same degree this time around.

Regionally, at the present time, most of the high profile non-contentious insolvency and restructuring specialists in Asia are based in Hong Kong.  Moreover, most of the relevant recruitment activity currently being witnessed is also centered in the former British colony.  However, it seems likely that Hong Kong based teams will operate on a regional basis, targeting the best quality work throughout East Asia from the SAR.

Some firms have started to prepare for the seemingly inevitable by looking to recruit additional insolvency specialists.  However, for the time being, the majority of positions, particularly for non-partner roles, are on the insolvency litigation side of things.  On the non-contentious/restructuring side, the likelihood is that pre-existing banking & finance and corporate teams will be utilized as much as possible, which will prevent a high turnover of staff while also addressing the reality that there is a shortage of true specialists available in the market. 

That being said, it is easier to utilize non-specialists when it comes to more junior lawyers.  Firms looking to attract big ticket work will have to be able to offer experienced partners with respected names in the field in order to compete effectively.  This is reflected in the recruitment currently being undertaken by a number of firms in the region.  Generally, firms are not seeking to recruit junior non-contentious insolvency and restructuring lawyers, as they already have plenty of individuals who can undertake that level of work with nothing more than some limited training and supervision.  The demand is, however, significantly stronger for senior and partnership roles, for which the required depth of knowledge and experience obviously cannot be acquired so quickly.

When it comes to insolvency litigators, significant demand currently exists at all levels from junior to senior.  Of course, unlike the situation in a majority of non-contentious practice areas, in an economic downturn most litigators tend to be extremely busy.  Accordingly, there doesn’t tend to be the same spare capacity within contentious teams to re-tool junior litigators whose primary focus is in other areas of litigation, thus the need to recruit additional staff from external sources. 

However, it is also fair to say that one of the early signs of a downturn is an increase in the number of litigation cases, as businesses and individuals seek to avoid or delay payments.  The incidence of corporate insolvencies will generally increase as the duration of a downturn grows.  Accordingly, the current level of demand amongst recruiting firms for contentious insolvency specialists could also simply be a consequence of the fact that in Asia we are still in the early stages of the economic crisis. 

As months pass, and the crisis deepens, demand for non-contentious insolvency and restructuring specialists will likely increase at all levels.  While some firms feel able to plan ahead and seek to recruit such individuals immediately, it is also worth bearing in mind that other practices might decide that in such a challenging economic climate, they don’t wish to hire additional lawyers until such time as they already have a surplus of work for them to do.  Now is not the time to be paying new hires to be anything other than fully employed. 

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