Milton Cheng was recently elected as the firm’s new global chair, following the death in April of his predecessor, Paul Rawlinson. He is the firm’s first Asian chair and was previously the managing partner of the Hong Kong office, in addition to overseeing business in eight markets across the Asia-Pacific region. His four-year tenure began in October. Here he talks to India Business Law Journal about his thoughts and plans for the firm
IBLJ: As the global chair, what is your vision or strategy for Baker McKenzie? What are your top priorities for the firm in the coming year?
Milton Cheng: Our vision and purpose remains the same, which is to help simplify and navigate a complex world for clients, and to work with our clients and our people to serve our communities globally.
My priorities will be to fortify and align our client programmes around the world, our key client initiatives. We will make sure that we properly package and articulate ourselves internally; and for the resource market externally, what it means to be a Baker McKenzie lawyer, not just what it means to be a lawyer, in today’s world, and for the future.
We are going to continue our efforts for profitable growth, but updated from three-and-a-half years ago, when we launched our strategy, is today’s market, where, in addition to the focus we have on New York, London and China, we will look at other key markets as well, as trade and global macroeconomic circumstances change.
We will, as part of all of this, embrace innovation, not only in technology terms, but in broad mindset terms so that Baker people will remember that this means being willing and keen to approach and adapt, and embrace change. Changing our business model, changing the way we can help our clients, because our clients are doing so themselves.
And lastly, we will continue our various efforts to work closer together as one global team, to collaborate more on our client programmes and facilitate working more across teams. We recognize that financial integration and structural integration are subject to a lot of regulatory and other constraints. But we’ve worked well for so many years as one team globally, we need to continue pushing that.
IBLJ: So far, India hasn’t opened up its market to international firms. What’s your outlook for this market and how are the firm’s operations regarding India progressing?
Cheng: We have a very large India practice. It’s an offshore India practice because there aren’t any law firms that are allowed to have an Indian office or branch yet. We have 300 people in offices around the world. I’ve only mainly been interacting with those who are within, you know, the offices I oversee in Asia.
However, I can say that India is a priority market we are keeping a close eye on. We do have, as I said, 300 lawyers involved in India, offshore India-related work, transactional financing, advisory and tax, etc., and we continue to do quite a lot of headline transactions and matters for Indian companies operating outside of India.
The relationships are being built, the relationships with the intermediaries are being built, the relationships with good Indian law firms and lawyers continue to be built. We know it is a highly regulated market, and as soon as the market is liberalized, we will definitely want to be at, or near, the front of the queue of people waiting to go in.
IBLJ: Do you foresee India opening up in the near future?
Cheng: It really depends. You know, now with the new [Prime Minister Narendra] Modi term and now that it is no longer needed to think about re-election, he’s got the security of his platform and his legacy. Opening up of the legal sector in almost any market is not exactly a top government priority, so it’s understandable that in the first term it wasn’t yet done. We’re hopeful that in this term, we will see some liberalization, and then we will be very interested.
IBLJ: Tell us about the latest developments with your China operations.
Cheng: The operation is going well. We are four-and-a-half years in, coming up to the fifth anniversary of the joint operation [with FenXun Partners]. This is just the latest evolution of our China platform that has been there for a few decades already. The growth efforts are continuing. It’s gone well.
We’re learning a lot of lessons along the way. People who are familiar with the Chinese legal market know what kinds of challenges we face, and the structural constraints.
We continue to be very happy with FenXun and [managing partner Wang] Yingzhe, and his team share our vision. They’ve aligned a lot of their systems and the growth has come very happily, not just from organic growth of hiring people into the original team, but also from a lot of laterals that we’ve managed to bring in from law firms like JunHe and Zhong Lun, also from some international firms.
A lot of the people who had to give up the licences to join Baker before we had a joint operation have revived the licences and transferred into FenXun so they can work under the combined Baker-FenXun banner. So that’s going well.
We now have a full-service practice in China covering both transactional advisory and contentious work. Financials are doing good. We are now moving on to phase 2A and 2B, which are actually happening concurrently, because Chinese government is now very keenly looking at opening up Southern China.
Also, we are looking at making sure that we are hiring team members, I say members because it’s not just lawyers but can also be business development people, client relationship support people, people who understand Chinese investments going overseas in the investment destination markets, so whether it’s continuing to try and hire in Singapore and Indonesia, in Europe or Eastern Europe and so on.
So, which one is 2A which one is 2B doesn’t matter. We at first thought perhaps opening other offices would come a little bit slower. But obviously with Greater Bay Area and the government push towards it, it’s encouraged us to accelerate that a little bit. And we’re looking quite closely at trying to do something there, regulations permitting.
IBLJ: Tell us about the demands upon you now of overseeing so many markets.
Cheng: Perhaps you can say that it’s something that an insider brings because of the years I spent leading a large part of our business in Asia, where I had Hong Kong, the team that I was in before, which covered market centres like Hong Kong and Singapore and Shanghai, and also covered emerging markets like Indonesia and Vietnam. So perhaps I bring a new insight to this.
I truly believe that Baker is the leading truly global law firm. A law firm and its success is driven ultimately by its leadership and its partnership. We have 700-plus equity partners within the Baker family across the world.
There are dozens of different nationalities, even more languages based everywhere in the world driving the business. It means that they are able to see opportunities not just in two or three or four traditionally obvious markets, but everywhere around the world.
That has implications for how we apply our client programme as well, because when we are developing not only the existing incumbent relationships on your traditional markets, head office markets, we are also building a pipeline of the global clients of the future.
As Asia itself grows, as Latin America grows, as Africa becomes more and more important in the global economy, that’s what we can do. We decide on our global policies in our collective discussion across people who are from as far ranging places as Istanbul to Sydney, to Tokyo, to New York, and Chicago to London, to Johannesburg. These are people who are part of our leadership, but the culture is what makes it the most different.
Meanwhile, I am the first Asian global chair, but I come from an incredibly strong lineage. I’m a guy from Singapore and Hong Kong, who had taken over from a guy from Colombia, who’s taken over from our first British global chair, who took over from our first chair from Latin America, from Brazil, who took over from a chair from Chicago, who took over from our first French chair, who was also the first ever female global chair of a law firm.
IBLJ: Within Asia we’ve seen that companies are expanding their in-house legal teams and investing heavily in them. Do you think they will rely less on external law firms? If so, how is that impacting your firm’s business?
Cheng: I think what I would say is that this has been happening already for quite some time. When I first came to Hong Kong from England in 1993, I’d see a typical in-house team was probably no more than 10 in-house lawyers. Right now, one of my biggest clients has 400 people around the world, and they’re one client – about 150-200 in Hong Kong alone.
So yes, I understand, many [in-house lawyers who] used to practise in law firms as well. I think it does put pressure on external lawyers to be able to show they can add value. It does put pressure on us to make sure we continue to stay at the right part of the value pyramid.
In the past 27 years I’ve been in Hong Kong, which I can speak most closely to, the nature of our involvement is different. Even a client with an in-house team will still come to us where our scale helps them, or our local knowledge helps them. They will still need some help from us where they don’t have coverage, or where they don’t have a deep enough coverage in a country, with cross-border M&A deals, for example, where they need due diligence support in the team, where there are not staff enough to cover corporate due diligence, real estate due diligence, tax due diligence, or even regulatory approvals, antitrust approvals.
IBLJ: Do you think we are approaching an era of deglobalization?
Cheng: Absolutely not. In fact, when I was in London recently at one of my discussion sessions, I used a Chinese analogy: Water will find a way to flow to the sea. Just because the world’s two biggest markets, trading partners, are trading less or differently with each other doesn’t mean trade will stop. Trade will flow; if it doesn’t flow as much between these two, it will flow elsewhere. And Baker McKenzie is everywhere else. So it may mean we shift, we look at changes in supply chains, and we can still be relevant.
It may mean that more China trade will flow through Southeast Asia, where we’re strong, it may mean that more North American trade may flow through Southeast Asia or Latin America, where we’re strong, or it may mean that more trade from China will flow through Eastern Europe, where we’re also strong. So, if we look at where trade and capital flows will go, I think we are actually better placed to [weather] that than many other global law firms.
IBLJ: How will the trade war affect the firm’s US and China business?
Cheng Some of it is as I said already. Our partners with Chinese clients will have clients who are looking to invest perhaps in non-traditional places. Many of our clients are not shying away from long-term investments. Cycles such as this are not new, and clients will not revamp their global strategy permanently because of that. They may be a bit more cautious to invest in a few alternative places, but typically they take a long-term view. And that’s where we are aligned, because we always take a long-term view.