Hong Kong

As was the case last year, the industry most well-represented by Hong Kong’s In-House Community was Financial Services with 46.9 percent employed in that area.The second-highest industry for representation amongst the community, as was the case last year, was Technology, Media and Telecommunications, with 15.6 percent.

Team size
41.3 percent of legal departments were of two-to-five people. This was followed by teams of six-to-20 and teams of 51 or more, each claiming 22.2 percent. The remainder have in-house legal teams of 21-50 (9.5 percent) and one person (4.8 percent).

The majority of respondents (63.3 percent) expect their teams to remain the same size in the coming year, while 30 percent anticipate growth and the remaining 6.7 percent reckon their teams will shrink. Asked why they gave their responses, those who forecast growth overwhelmingly pointed to an increased workload and company size. Having to balance workload with budgetary constraints was the predominant reason for in-house lawyers expecting their teams to remain as they are. The few who said they can foresee shrinkage in team size mainly referenced cost and outsourcing of legal work.

Recruitment
Legal recruiters are once again the most popular method of hiring in-house counsel in Hong Kong, with 60.9 percent of participants preferring this method. Second, with 32.8 percent, was placing of job advertisements, while third and fourth were referrals, with 29.7 percent saying the most common way was referrals from inside their own company and 26.6 percent trusting referrals from other in-house lawyers.

KEY ISSUES AND CONCERNS
Managing compliance across a number of areas is a frequently cited concern of those surveyed in Hong Kong: “Growing compliance requirements and development of an internal control system which can comprehensively monitor the operation” was the challenge to be met in the words of one. This was often coupled with “keeping abreast of changes in the law and being able to advise on the impact [they will have] on the operation of the company”, and “balancing commercial interests with the technical application of laws and regulations”.
With many in-house counsel in Hong Kong holding cross-border and international responsibilities, some respondents brought up the fact that having a multitude of languages and legal systems to adhere to creates a hardship, and “[in] developing jurisdictions, it is difficult to locate good-quality and responsive local counsel who have local knowledge, but who are also commercially minded”. Whilst many noted that their interaction with markets outside of Hong Kong, particularly emerging ones, would require their input, most still saw domestic issues as being most poignant going forward.

Anti-trust issues, AML and FATCA compliance were common concern areas in-house counsel in Hong Kong shared with their regional peers, and looking to the future, respondents estimated that regulatory issues will be of growing concern over the next 12 months.

Working with external counsel
In the coming year, Hong Kong’s in-house lawyers predicted that they will generate about the same amount of work for external lawyers, with 66.1 percent stating that they saw no reason for adjusting the degree to which they outsource. This is a jump of more than 10 percent from last year, when 55.6 percent saw themselves using external counsel about as much. Almost all of the remaining assumptions were that there would be increased use of law firms (32.2 percent) with only 1.7 percent claiming they will use less outside aid, down from 5.6 percent in last year’s survey.

Anticipated increase in reliance on external counsel seems to be a result of a workload that’s growing in both volume and diversity, often due to business growth. It’s also seen as a cost-cutting measure by some, as they only have to pay external counsel when in use. Those who said they expect to use external counsel as much and those who said they’d use them less over the next year often pointed to expense as a reason.

According to Hong Kong’s In-House Community, the most influential factor when deciding which external counsel to use is their expertise, as 60.9 percent gave this as a reason. The second most popular decider was fees, which is a priority for 48.4 percent. This was also the case last year, as was the third most important attribute being responsiveness, which this year was cited by 35.9 percent, and closely followed by reputation of a law firm with 34.4 percent. Individual lawyers are important in this jurisdiction too though, with personal relationship with a lawyer and reputation of a lawyer both receiving votes from 29.7 percent of those surveyed. (Figure 11)

Excessive fees once again took the top spot as the main concern when it comes to hiring external counsel in Hong Kong, with 54.7 percent of respondents noting it. Work being performed slowly or inefficiently came second, with 31.3 percent and was followed by 28.1 percent marking down unexplained fees. According to the survey, external counsel also often fail to answer questions and concerns in a reasonable amount of time (23.4 percent) and don’t give updates regularly enough (21.9 percent). (Figure 12)

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