Erwandi Hendarta, the managing partner of Hadiputranto, Hadinoto & Partners, spoke to Thomson Reuters’ Asian Legal Business about his strategy for growth, challenges faced by Indonesian law firms, and the development of the local legal market.
ALB: How would you describe your overall strategy for the firm?
Hendarta: Currently, we have six practice groups and around 130 lawyers — a lot by Indonesian standards. The overall strategy, then, is how to balance things to achieve an optimum level of size, of market share to go with profitability. Personally, I don’t believe that if you have the largest market share, you’re the biggest. Your profitability needs to be commensurate to that, so I want to look at our size, which will determine our market share, and also at profitability, which reflects whether we are doing things correctly or not.
ALB: Where do you still see room for growth and improvement? Are there any practice areas you are looking to target?
Hendarta: This again is a two-pronged strategy. You want to maintain your strength in the existing work you’re doing, but then you also want to be agile to look at growth and improvement. I’ll give you an example: we have to adapt to the market, and this year and in the coming few years, it looks like the market will tend heavily towards infrastructure, as per [President] Joko Widodo’s plans. This means we also need to focus on infrastructure, which fits very well with our depth and breadth. Normally, infrastructure means big projects that require a lot of time and resources. If you are a small firm, then you won’t have these.
Another potential area for growth is in tax. The country is focusing more and more on raising revenue through tax, and this is leading to many tax disputes. As a result, we are doing very well on this front, because there are a lot of tax disputes in the tax courts. Finally, we want to be at the cutting edge of things, and we are lucky in a sense that Indonesia is a developing economy, with a lot of room for growth in terms of technology. For example: e-money, e-commerce… they are all new things for us. So from a law firm’s perspective, this is an exciting new practice area.
ALB: How have you seen Indonesia’s legal market develop during your career?
Hendarta: I’ve been working as a lawyer for about two decades, prior to which I spent about 10 years working as a banker. The Indonesian legal market, I would say, started to grow only from 1997, following the Asian financial crisis. Because at that time — under a lot of stress — corporates realized the importance of a good legal system and good legal advice. As a firm, we were founded in 1989, but things took off faster from 1997. I don’t know whether you’ve noticed, but while there are a lot of law firms in Indonesia today, paradoxically I see few large law firms.
ALB: What are some of the challenges Indonesian law firms face today in growing their business?
Hendarta: I think the biggest challenge is internationalization or globalization, given that we are now dealing with more multinationals in the Indonesian market. Law firms face the challenge of educating and improving their lawyers, from being purely domestically focused to becoming comfortable when working at a regional level, or even at an international level. The challenge here, if you want to grow your business, is to provide top-notch legal services combined with a strong local knowledge. And then on the other side of the coin, you need to also have fluency in dealing at the regional and international level.
You can read the entire interview with Mr. Hendarta at Asian Legal Business.