Published April 27, 2009

Foreign law firms cut fat, shed weight

Some opting for shorter work weeks; others trimming staff, offering sabbaticals

By SIOW LI SEN

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(SINGAPORE) Foreign law firms in Singapore are trimming headcount, freezing salaries and asking staff to work fewer hours.

But the layoffs here are nothing compared to those at their headquarters in the US and UK.

White & Case, one of the biggest US law firms, recently laid off 400 people including 200 lawyers, in its second exercise; last November, it had let go 70 lawyers and 100 staff.

White & Case - one of six foreign law firms to get the qualifying foreign law practice (QFLP) licence which allows them to advise on Singapore commercial law - is also reviewing its numbers here as part of a global exercise.

'We are currently undergoing an evaluation of our partnership, which will result in a reduction in the number of partners, commensurate with current and anticipated business needs,' said Nicholas Clarke, regional media relations manager - Americas, White & Case LLP.

'Although we have no immediate plans for redundancies in this office, we are keeping headcount under review in all of our global offices, as you would expect right now.' - Philip Rapp, managing partner, Clifford Chance Singapore

He said it was clear that the deterioration of the global economy would continue to affect clients and their demand for services for the foreseeable future.

Back home, these foreign law firms have seen massive redundancies. Up until March 13 this year there had been 7,092 layoffs (2,874 lawyers and 4,218 staff) among the largest US and UK firms, said thelawyer.com, getting the data from US legal market blog Lawshucks.com.

'The Asian economy is not immune to these forces. However, we are adopting a long-term view for the region,' said Mr Clarke.

Clifford Chance, another QFLP holder, is also reviewing headcount.

'Although we have no immediate plans for redundancies in this office, we are keeping headcount under review in all of our global offices, as you would expect right now,' said Philip Rapp, managing partner, Clifford Chance Singapore.

'Clearly, we can't rule redundancies out in the future when the market is continuing to evolve,' he said.

thelawyer.com reported in January that Clifford Chance would lay off up to 80 London lawyers. Last month, the firm said it would trim pay for its junior lawyers and freeze salaries for associates.

Taking a different route to saving costs is Norton Rose, which earlier this month voted for a four-day week in order not to have to lay people off.

'It gives the firm flexibility on its overall cost but no one is made redundant,' said Jeff Smith, head of Norton Rose (Asia).

The scheme, which was voted by 96 per cent of worldwide staff, will allow the firm to ask people to work four days a week on 85 per cent of base salary, or take a sabbatical of 1-3 months at 30 per cent of base salary.

Nobody will get less than 20 per cent of their annual income, said Mr Smith, who also voted for the scheme which starts on May 1.

The flexi-scheme applies worldwide, including the Singapore office, which Mr Smith says is very busy. 'I would say it will have limited application here,' he said.

The Singapore office (set up in 1982) has hired more than 10 lawyers over the past year, a handful of them local, Mr Smith said. Norton Rose, a UK-based firm, has over 50 lawyers in its Singapore outfit and is also a QFLP firm.

Local firms say they are benefiting from the redundancies of lawyers who work at some of the branded foreign firms.

'We've got so many applications from those at big international firms like Linklaters, Clifford Chance and Baker & McKenzie,' said Tan Peng Chin, managing director, Tan Peng Chin LLC.

'It's a golden opportunity for us,' said Mr Tan, whose firm has about 40 lawyers and recently recruited a Singapore-qualified lawyer with 6-7 years' experience from DLA, one of the largest law firms in the world.

Published April 27, 2009

IDA turns down hotels' appeal to block Skype

Regulator against any practice limiting consumers' choice

By WINSTON CHAI

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(SINGAPORE) Singapore's telecommunications regulator has rejected requests by four luxury hotels to block the use of popular Internet telephony software Skype.

The appeal came from one 'six-star' and three 'five-star' establishments here, according to Andrew Haire, deputy director-general of telecoms and post at the Infocomm Development Authority of Singapore (IDA).

'That kind of appearance of anti-competitive activity troubled me,' he was quoted as saying at a recent telecom conference in Hong Kong.

Skype allows computer users to call one another over the Internet - a much cheaper way of making long-distance calls. Skype calls made between two computers are free, and calls can be placed from a PC to a fixed line or cellphone for a fraction of typical IDD costs.

This price-advantage has helped make Skype one of the most popular Internet telephony services, with more than 405 million registered users worldwide.

The company's rising star has made it a thorn in the flesh of telecommunications companies because of the threat it poses to their IDD revenue. And its popularity with business travellers and tourists appears to have the same effect on the creme de la creme of Singapore's hospitality industry.

While the hotels may be up in arms, their appeal to block Skype was turned down as software falls outside IDA's telecommunications jurisdiction.

'IDA's approach to regulating the telecommunications market is to ensure that it remains vibrant and accessible by allowing the greatest number of choices for consumers,' an IDA spokeswoman told BT. 'We would therefore discourage any practice, such as blocking access to a service or a capability that eventually limits choice for consumers.'

She declined to reveal the names of the hotels involved.

When contacted, St Regis and Ritz Carlton - two names often associated with the six-star label here - denied they filed such requests.

While the attempt to cut off Skype may be new in Singapore, a precedent has been set by telecom operators in the United States and Germany.

AT&T prohibits its iPhone users in the US from using Skype over its cellular network.

And Germany's T-Mobile has gone a step further by shutting Skype out of its wireless hotspots and threatening to cancel the contract of any subscriber who tries to sidestep its lockdown.

Published April 27, 2009

Analysts expect pullback in May but see bright side

Profit-taking unlikely to bring market down to March low and presents buying opportunity

By TEH HOOI LING

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(SINGAPORE) Sell in May and go away, so goes the saying on stock markets. Will this play out this year, given that 2009 thus far has been anything but a typical year?

Analysts The Business Times spoke to generally think there will be profit-taking next month. But the positive spin is that the expected price weakness may be a buying opportunity for more intrepid investors.

'Yes, the typical doctrine of 'selling in May and going away' will still work this year,' said Kenneth Ng, CIMB-GK's head of research. 'The market is looking a bit tired. It has rallied ahead of fundamentals.'

However, he reckoned that the selling in May will not bring the market down to the March low.

'There is a lot of liquidity on the sidelines and governments are pulling out all stops to stimulate the global economy. We may see a big, big bear rally in the next few months, which will break the current high.'

Between March 9 and April 15 this year, the Straits Times Index soared 449.04 points or 30.8 per cent, briefly rising above the 1,900 level.

The stock benchmark has since given up some of the gains, but at last Friday's close of 1,852.85, it is still 27.2 per cent higher than the low of 1,456.95 on March 9.

Mr Ng thinks it is still a bear rally because the fundamental problems of the world economy have not gone away. Demand has slumped and the balance sheets of consumers and banks will need time to be repaired. It is still not clear as of now if all the stimulus packages will have the desired multiplier effect in the economy.

'The consensus underweight in equities has led to low exposure to equities. Now, what we are seeing is that markets no longer fall on bad news. And any news that's not as bad as expected is likely to spark a buying frenzy. People are afraid to underperform.'

NetResearch Asia managing director Kevin Scully also believes investors will take some profit off the table given the pretty strong run-up in prices in the last six weeks or so. 'By May, most of the first quarter results will be out. Investors will decide to take profit.'

Explaining the recent rally, Mr Scully said the low in March was a result of panic selling on an end of the world scenario. 'Now, people are beginning to think it's not end of the world, and so some money has gone back to the markets,' he said.

Also, there was a severe depletion of inventories as orders dried up last December and in January. But in the last couple of months, there has been some restocking.

'But a lot of companies will be using up the fat and surpluses in the coming months. If by then, the credit has not loosened and the consumers have not come back, we will see more corporate failures,' he said.

Meanwhile, corporate lay-offs have continued to take place. Also, many banks still need to recapitalise. 'Is the rally pre-mature, has valuation gone too high? By mid-May, we will know if this is a bear rally. Many funds still believe it is.'

Lim Say Boon, chief investment strategist at Standard Chartered Bank Group Wealth Management, shared similar sentiments.

'Our strategy is to buy the dips. We expect there will be further corrections. So we are not keen to chase the rallies.' But he noted that there is value in a range of risk assets including stocks. For example, US equities have fallen lower in price-earnings terms on only two other occasions - the Great Depression and the 1970s/early 80s stagflationary bear market.

'While this recession is arguably the worst since World War II, we do not regard this as a new great depression,' said Mr Lim. Policy makers have much greater monetary policy flexibility today and they are using that very aggressively. Comparisons to the 1970s/early 1980s are also not helpful because of huge interest rate differences - interest rates being the discount factor used in valuations.

'So yes, there will be dips. May? Possibly, in conjunction with the results of the bank stress tests. We don't chase the rallies but we would cost average on the dips,' he said.

Even the CLSA's tongue-in-cheek Feng Shui Index points to May being a weak month for stocks. According to the firm, May 5 to June 4 is the month of earth snake. 'Beware the slippery Snake! Many pockets will be bitten hard this month,' it warned.

So there is near consensus of profit-taking in May. But given how the market works, it still may not be a sure bet - often when just about everyone is expecting an event and preparing for it, the particular event has a tendency not to happen.

Based on the last two years' performance, May wasn't such a bad month for stocks. In 2008, the STI advanced by 1.4 per cent and in 2007, it was up by a whopping 4.7 per cent. The average in the last nine years, however, is -0.6 per cent.

Mr Scully thinks the buying will return in July, while the CLSA Feng Shui Index reckons it will be in August.

Mr Scully's strategy - which will position his portfolio for the next two to three years - is to allocate 80 per cent of his equities portfolio to blue chips (one stock in each sector) and 20 per cent to the massively undervalued mid-cap stocks, those which he thinks will remain solvent.