The law firm Reed Smith has launched a formal law alliance (FLA) with Resource Law of Singapore, allowing it to offer full service in the city state’s trade and commodity space.

Prior to this, the firm was unable to practice Singapore law. It had, however, built up a team of 20 lawyers there from 2012, supporting clients in the energy and natural resources sectors. The firm was able to work on cross-border trade and commodity finance transactions in the region where English law was the main governing law of the documentation.

Its partnership with the nine-lawyer team at Resource Law will enable it to practice local law, which Reed Smith Singapore’s managing partner Barry Stimpson tells GTR will extend its services in the areas of physical commodities transactions, commodity and energy derivatives, commodity and trade finance, regulation and licensing, defaults, enforcement, dispute resolution, bankruptcy, insurance products and environmental issues.

The Singaporean government has been steadily liberalising its legal market to allow the entry of international firms. In 2008, it awarded six Qualifying Foreign Law Practice licences, while it begun awarding FLAs in 2012. Since then, a number of firms have successfully attained FLAs, including Clifford Chance, Stephenson Harwood, Holman Fenwick Willan and Herbert Smith Freehills.

Stimpson says that Resource Law will help boost Reed Smith’s offering in the areas of shipping, energy and natural resources, financial industry and life sciences. It will also bring geographical experience in the likes of Cambodia, Indonesia, Vietnam and Malaysia to the table, as well as a host of regional language capabilities.

Resource Law is headed by Mohan Subbaraman, formerly of Ince & Co and its Singaporean subsidiary Incisive Law.

Stimpson says that despite the downturn, he is confident that regional trade and commodity finance will continue to be profitable for the firm.

He explains: “The Asian market will continue to focus on prepayment structures where traders are driving the financing of producers unable to obtain financing directly from banks, particularly in jurisdictions where banks may be less willing to tread, such as Indonesia. Traders will continue to obtain refinancing from banks using existing lines of credit or strong banking relationships to obtain new transaction specific financing. Other structures, such as pre-export financings, will remain rare in the short to medium term.”

He adds that he expects local banks, such as those of China, Singapore and Japan, to fill the void left by departing western banks, with alternative lenders also expanding their presence in the area.