Rise of private capital a boon for law firm Withers
Source: Business Times
Article Date: 08 May 2024
Author: Joan Ng
The industry jumps from US$9.7t in 2012 to US$24.4t as at Q1 2023 – an increase of over 150%.
Family offices, venture capitalists and crypto billionaires have mushroomed across Asia, creating a wealth of work for law firms with private client teams.
Their demands are validating a decision by law firm Withersworldwide to expand into the private client space when many law firms were exiting to focus on corporate work.
“Twenty years ago, the private client arena was regarded as a bit of a Cinderella area,” said Margaret Robertson, chief executive of Withers, who recalls many Wall Street law firms and big London law firms getting out of the business at the time.
“People saw it as dwindling, and I think they saw the world’s wealth being dealt with in a very institutional way.”
Withers was already becoming something of a one-stop shop for private clients at the time, but it saw the opportunity to expand its presence.
“We were seeing an increasing trend of private clients starting to become international,” Robertson said. “We started to think about whether there was a role for a global player in acting for private clients.”
The firm began taking over private client teams that were being shed by London’s “Magic Circle” firms – the term used to describe the five largest London law firms – and then continued building out its business into the United States, Switzerland and Asia.
Today, Withers is among a handful of law firms that the industry considers a private client specialist – meaning it focuses on matters such as estate planning, entrepreneurs’ business dealings and private investments.
Its business has grown in tandem with the rise of private capital as a force in the global economy. Data compiled by EY showed private capital markets rising from US$9.7 trillion in 2012 to US$24.4 trillion as at the first quarter of 2023 – an increase of over 150 per cent. The fastest-growing category has been venture capital (VC), up 750 per cent to US$3.4 trillion.
In Asia-Pacific, the private capital markets have grown at an even faster pace of over 260 per cent – from US$1.3 trillion to US$4.7 trillion in the same period. Here, too, VC was the fastest-growing, charting a blistering growth rate of 1,600 per cent to hit US$1.7 trillion in Q1 2023.
Robertson said she cannot claim full credit for the decision to plunge into private client work, but she has witnessed the increase in the range of work that the firm has been called upon to do.
It was roughly after the 2008 financial markets crisis, she said, that private capital started to become more of a force in the world.
“The generation of people who sat on passive wealth and real estate was ageing out, and their children were far more active,” Robertson said. They became fund managers, set up family offices and began “investing more than many public companies would invest”.
The crash also undermined faith in the banks and left many looking to private capital from family offices, she added. “So, the range of services that people needed were wider, and they needed more corporate commercial services rather than the more personal tax and estate planning that traditionally had been provided.”
The Covid-19 pandemic added another dynamic to private client advisory. There is today a greater acceptance that more work can be done remotely. As a result, Robertson said, the wealthy are much more mobile and much more international.
“It’s driven a bit by the pandemic and a bit by technology. People can do so much business and so many things virtually, that they can make decisions about where they are physically that have less impact on their businesses than used to be the case,” she said.
This international nature of private client work plays into yet another Withers strength, Robertson said. “Our competition doesn’t really have the same geographical reach that we do.”
Besides enabling remote work, technology has minted more millionaires and billionaires – who are now seeking the firm out.
Withers represents several founders of companies in the Web3 space, for instance. Web3 is an umbrella term for businesses and technologies based on concepts such as decentralisation and blockchain.
The changing nature of Withers’ work is reflected in the articles written by its lawyers and featured in its thought leadership magazine Insights Asia. Topics include how to prepare your cryptocurrency business for a liquidity crisis, and how digital assets such as cryptocurrencies and non-fungible tokens are treated in divorce.
Those who made their money in tech also seem to be most wary of it, Robertson said. “Protecting themselves from AI (artificial intelligence) going rogue is also a thing that they’re very interested in,” she said.
“I can see that being a growth area, with individuals wanting to take action to protect themselves against some of the things that the AI companies and robots may do.”
Source: Business Times © SPH Media Limited. Permission required for reproduction.
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