Here we sit in Hong Kong, midway through our semiannual review and survey of the major law firm market here. While we normally have someone on the ground here in Hong Kong, only twice a year are both authors of this column in town gathering and compiling the latest and greatest information about who is hiring, who is firing, and what people expect for the future. Given the state of the current global economy and most U.S. legal hiring markets, we were somewhat anxious about what we might find as a result of this survey. We know that our business has seen positive trends this year in Asia, but a valid survey needs to include data not only on our business, but the overall hiring picture for our clients. We are pleased to be able to report, preliminarily, that things look good. While we have detected a note of caution among some of our clients, the outlook on the whole is positive. Most firms remain busy, even if not at as frenetic a pace as in 2007.

With regard to why and how we conduct this survey, we need to provide a few prefatory notes. First, we do not conduct this survey solely to determine firm needs. We are constantly learning about firms’ prospective needs throughout the year. This survey has a selfish reason for being: we want to determine, first of all, whether our market share is increasing or decreasing. It is impossible to determine market share without knowing the overall level of hiring in a market and in the individual firms. By way of example, the importance of having placed five attorneys in a given office of a single firm is impossible to know without also knowing that the firm has hired ten lateral associates in total over the same period. We also want to know whether, using the same example, the other five associates hired were placed by our competitors and, if so, which ones. Taken over a period of years, this data gives us insight into whether what we are doing is working.

Getting to the heart of what interests most of you, we are in a very unique position of being able to set up 20+ law firm meetings in HK on short notice. We have so far visited the offices of, and met with leading partners of, the following firm clients during five days of intensive meetings: Paul Weiss, Skadden Arps, O’Melveny & Myers, Latham & Watkins, Sidley & Austin, Withers, Linklaters, Morrison & Foerster, Allen & Overy, Baker Botts, DLA Piper, Freshfields, Fried Frank, Simmons & Simmons, Weil Gotshal, Cleary Gottlieb, Ropes & Gray, Simpson Thacher, Debevoise, Withers, and Milbank. Schedules have not permitted us yet this week to meet with the following firms, and we will be adding their data to the survey in the very near future: Kirkland & Ellis, Fulbright, Davis Polk, Sullivan & Cromwell, Orrick, Mayer Brown, Clifford Chance and Vinson & Elkins. While certainly not all firms in the market, this gives us a good overview and cross-section of firms.

There were several prevailing themes in the meetings we had this week. First, the IPO market has certainly slowed, but it has not stopped in Asia markets (with the possible exception of India, where IPO’s have been at a virtual standstill since approximately when David Hirsch of Cleary’s and his team completed the Reliance Power IPO earlier this year). The market has been surprisingly busier than expected, considering the global downturn. Firms have needed to be increasingly selective about the listings that they pursue due the difficulty of collecting fees in the event that a public offering does not close. As one partner said, “It’s easy in this market to find you have been busy simply for the sake of being busy.”

A number of firms who focus on M&A have been riding a wave of M&A activity that seems to be only increasing in size at this time. More than one of the representatives of our clients proclaimed that we are in an M&A “boom” at this time, especially in China, more so than even ’06 and ’07. While cautious optimism predominates for now, one well-respected law firm told us that his personal optimism about the increased M&A activity is tempered by concern that the market might be acting a little bit exuberantly. In any case, firms are looking to continue building these practices, albeit with some caution.

Continuing with the theme of cautious optimism, there is a growing consensus within a number of firms here that the most prudent course of action will be to diversify the practice areas represented in Asia. One of our clients anticipates adding a complete IP practice in early 2009 to one of its China offices, while another client has started to beef up its litigation capabilities, using U.S. litigation associates to supplement what has traditionally been only a local litigation practice. Two clients announced that they would eventually be adding antitrust capability in Hong Kong, as deals in HK / China, India and Korea become even bigger. Several clients are considering the addition of a real estate practice as well. Most firms are looking to significantly build up their M&A capability.

Importantly, all of our clients indicated a high level of enthusiasm for the future growth of their Asia practices and that their firms are heavily committed to being in Asia for the long-term. Most clients have plans for office expansion into new Asia markets.

This is obviously a very basic review of some of the things that we have discovered in our survey this week. Please feel free to direct us regarding the topics that you view as important in the comments to this article, or get in touch privately, so that we can go over what we have learned in more detail.