LSE’s On The Case Podcast Episode 3: Stefan Schmierer – Managing Partner of Ravenscroft & Schmierer
Listen to the full podcast on Spotify.
Nicole: Hello everyone and welcome back to a new episode of LSE’s On The Case. Today, we are very happy to have Stefan Schmierer here. Stefan is from Germany and the managing partner of Ravenscroft & Schmierer, a law firm in Hong Kong. First of all, Stefan, thank you so much for being on the podcast today. Could you briefly tell us about your legal career? I know you did your LLB at the University of Regensburg and you didn’t start off as a lawyer. Could you briefly take our listeners through your legal journey?
Stefan: First of all, hello to everybody from wherever you are listening. Thanks for the introduction, Nicole. My name is Stefan Schmierer, I am currently here in Hong Kong. Originally, I am from Germany. My journey goes back many, many years. I first worked in a bank for two years before deciding to study law, which I did in Regensburg, a medieval university town close to Munich. After approximately four and a half years at university, I finished my LLB. I also finished an LLM in Indianapolis, in the United States. I then did a kind of trainee solicitorship, which is mandatory in Germany, for another two years before coming to Hong Kong in 2009 and starting as a lawyer here.
Nicole: Could you tell us why you decided to do law specifically? And also, given that you studied law in Germany and started your practice in Germany, why did you choose to come to Hong Kong?
Stefan: Quite difficult questions, Nicole. At the end of my two years at the bank, I was only 21 years old and decided that I didn't want to keep working in a bank for the next 40 years. I decided to go to university. I had two possibilities: One was studying economics and the other was studying law. And then I choose to study law, since I had the impression that it does not involve too many numbers, compared to economics. So that’s why I chose law. Why I’m here in Hong Kong? I started practising law as a German lawyer at the beginning of 2009 in Germany, in an international law firm in the M&A practice, when I saw a job advertisement in a legal newspaper, advertising a job in Asia, asking for five years’ experience in M&A transactions and three years’ experience in international taxation. Well, at that time I had neither and I submitted my resume with my application and then one day later somebody called me and asked whether I would like to start working for them in their Bangkok office or in their Hong Kong office. I chose Hong Kong and since then I am here.
Nicole: Wow, it seems like you made a decision that came to you quite suddenly. Speaking of Hong Kong, what do you think are the benefits or disadvantages of practising in an Asian jurisdiction like Hong Kong? Is there anything specific to Hong Kong that you think is great about it or that makes it not so great?
''I submitted my resume with my application and then one day later somebody called me and asked whether I would like to start working for them in their Bangkok office or in their Hong Kong office. I choose Hong Kong and since then I am here.''
Stefan: Let’s start with the not so good part. For me personally, I’m far away from my home country, I’m far away from my family and friends. It’s at least a 15-to-20-hour trip to visit Germany for me. Under the current conditions, I didn’t go there at all in the last, I think, three years. The second part for me is that Hong Kong is a common law jurisdiction. As we know, Germany is a civil law jurisdiction. Switching from common law to civil law was quite a big change for me, and becoming a Hong Kong solicitor, getting admitted as a Hong Kong solicitor, being from a civil law jurisdiction, was quite a big step for me.
What are the advantages for living and practising in Hong Kong? Hong Kong is an international city, it’s one of the financial centres worldwide. There are, especially for my field of practice, M&A transactions. Many, many transactions going on relating to Greater China, relating to the GBA (Greater Bay Area). We have many foreign companies that have their headquarters here, their local headquarters or regional headquarters. There is a lot of back and forth between Europe and Asia, and Asia and Europe. All the large supermarket chains that we know from the US, from Europe, have offices here. Large retailers, they all have a purchasing office here. It’s quite an international clientele that we are serving.
Stefan Schmierer, Managing Partner of Ravenscroft & Schmierer.
Nicole: On your point about civil and common law jurisdictions: As first year LSE law students, we learn a bit about the civil jurisdictions, how judgments are quite short, and judges tend to be trained through a judge school. Whereas in common law jurisdictions, it tends to be that you have a very long legal career before you can qualify to be a judge. In a sort of business sense or commercial sense, do you think there is a very big difference between dealing with common law jurisdictions and civil law jurisdictions?
Stefan: At the end of the day, the difference is how to go there, and that’s where both jurisdictions differ. Whereas in civil law jurisdictions, you open the thick law books and look at the law and the commentaries, which is already quite time consuming, but then you have to resolve faster. Whereas in a common law jurisdiction, you go for court decisions, you need to study court decisions from Hong Kong, from the UK, from Singapore, Australia, which is also quite time consuming. I prefer the civil law way, but I think that’s since I’m coming from a civil law country.
Nicole: In your opinion, are there any upcoming commercial or just regulatory trends in Hong Kong or perhaps even in the wider area of China to look out for? I know for example, the development of the Greater Bay Area is something a lot of people have been watching out for.
Stefan: The GBA (Greater Bay Area) is certainly something that we have on the radar here in Hong Kong, because it is a great opportunity for Hong Kong companies, but also foreign companies in Hong Kong to extend their market. From 7 million people to approximately 80 or 90 million people. On the other hand, what Hong Kong and China did in the last two years with COVID, they cut themselves off from the rest of the world - stopping flights, stopping international travel. The main homework that Hong Kong, and also China has now, considering what is going on in Shanghai, is restarting their economy and restarting on getting connected to the rest of the world regarding financial, commercial regulatory issues that could go into a lot of detail here. My message to the Hong Kong government and also the Chinese government is to cut down these travel restrictions, get your economy going again.
''The main homework that Hong Kong, and also China has now, considering what is going on in Shanghai, is restarting their economy and restarting on getting connected to the rest of the world.''
Nicole: Personally, I have been quite affected by it as well, because I’m from Hong Kong and I haven’t been able to see my family for a long time, just because of the whole 21-day quarantine or the flight bans. How do you think your personal life has been like in Hong Kong? Have you enjoyed the culture, like the food, the people, or the pace of life?
Stefan: I’ve been here now for almost 13 years. If I wouldn’t enjoy, then I wouldn’t be here anymore. I was lucky the last two years that I was stuck in Hong Kong and not somewhere else, because Hong Kong is so different. So many different people, so many different kinds of food. You can go to the beach, and you can go hiking. What you can do in Hong Kong, what you cannot do in any other city of the world, is, on a Saturday morning, you go to the office, you do your emails a little, spend Saturday morning in the office. After working in the office, you can go hiking directly from the office and you will stop the hike or end the hike at a beach, jump into the sea. Then have a couple of drinks at the beach bar and then later, go partying in Central Hong Kong, in Lan Kwai Fong, or Wan Chai. In 24 hours you can have everything that makes life enjoyable.
Nicole: And also the public transport system is quite convenient in Hong Kong, right?
Stefan: Definitely, fast and cheap!
Nicole: It’s my first year here in London and taking the ‘’tube’’ (underground) has not been a very enjoyable experience, to say the least. I really miss the public transport, MTR, things like that. Is there a favourite Chinese dish that you have tried or cuisine in general?
Stefan: There are so many! I like hot pot a lot, especially in winter, we ate hot pot a lot. Beef noodles is one of my favourite. I don’t know, except for stinky tofu and congee, I like everything!
Nicole: Stinky tofu, I hated that as a kid as well, but my parents loved it. Moving on to the firm, can you tell us a little bit about the firm in general? Ravenscroft & Schmierer is a full-service firm. Can you tell the listeners what exactly that means?
Stefan: Yes, certainly! As you said, we are a full-service law firm, and we are all together eight lawyers. For my part, I am obviously taking care of the German speaking clients in the office, mostly advising on corporate law and M&A transactions and international tax law. Besides this, we have a notary public, who is doing notarial work, mediation, family law and inheritance law. We have another partner responsible for our international litigation and international arbitration department. We have two to three more associates who are helping us on the commercial side. We are doing criminal cases, we are doing regulatory cases, we are advising on SFC (Securities and Futures Commission) matters, etc. We are doing IPOs. We offer a lot of services except for conveyancing matters. Selling or purchasing real estate -- we are not handling that.
''I am mostly advising on corporate law and M&A transactions and international tax law. Besides this, we have a notary public, who is doing notarial work, mediation, family law and inheritance law. We have another partner responsible for our international litigation and international arbitration department. We are doing criminal cases, regulatory cases, advising on SFC (Securities and Futures Commission) matters, etc. We are doing IPOs. We offer a lot of services except for conveyancing matters.''
Nicole: Just to clarify, what is the SFC?
Stefan: SFC, Securities and Futures Commission. It’s for regulatory issues, when you want to get listed or you want to advise listed companies here in Hong Kong.
Hong Kong's skyline seen from Victoria Peak.
Nicole: What kind of clients does the firm work with? Is it mainly German speaking clients? Or is there a wider mix?
Stefan: It’s a wider mix. Obviously, most of my clients are German speaking. I have a lot of Hong Kong inbound business from German speaking clients from Austria, Germany, and Switzerland. I have some local clients. I have Mainland Chinese clients. They work out of Hong Kong with businesses that are invested in Europe, that have shares listed in different companies in Europe. But when I talk to other lawyers, most of their clients are from Hong Kong or Mainland China. It’s quite a mix, we have clients from the United States and from Australia. We are very international.
Nicole: About your job within the firm more specifically, it says that you mainly specialise in German speaking companies with operations in Hong Kong. I guess as a case scenario: If a German company came to you and they said: ‘’We are interested in setting up operations in Hong Kong.’’ What is the typical run-down of things that you would go through with them in order to make sure that their setup is successful?
Stefan: Basically, there are two scenarios under which German speaking clients would like to setup a company in Hong Kong, which is first, they would like to purchase goods from Asia and sell them to Europe, or they would sell their own goods in Asia via a Hong Kong company. It’s either one way or the other way. And so, then the first question is: would it make sense to have a Hong Kong company as it costs money to setup a Hong Kong company, it costs money to run the company. Operating a Hong Kong company when the management is in Europe might have negative tax implications in Europe. The first question that we are usually solving is: does it make sense to have a Hong Kong company and start a feasibility study for the Hong Kong company. Once this is concluded and once the client decided to go ahead, then we setup the company. As we know, setting up companies in Hong Kong is easy and straight forward and after this we start renting an office, hiring people for the client, being the administrator for the Hong Kong company, for the client, handling issues with the regulators here, etc. Then it goes into the stage of drafting contracts or negotiating contracts with the suppliers, with the purchasers, with the sellers, etc. Maybe we are registering trademarks in mainland China or in Hong Kong and then, if something goes wrong in one of the contracts, then our litigation team comes into the picture.
''I have a lot of Hong Kong inbound business from German speaking clients from Austria, Germany, and Switzerland. I have some local clients. I have Mainland Chinese clients. It’s quite a mix, we have clients from the United States and from Australia. We are very international.''
Nicole: Just quickly back to the firm in general, would you say it’s sort of a corporate based firm or would the firm also deal with any potential disputes?
Stefan: We are definitely corporate driven, M&A driven, transactions driven. But M&A, corporate, company matters always bring litigation issues. It’s kind of an anchor business. Litigation is a one-off business and once litigation is finished, the client is happy or is not happy. Whereas for corporate matters, it’s an ongoing business and with ongoing businesses, sooner or later the client has litigation problems and then naturally comes back to us, since we have been working with that client for many years.
Nicole: On the point of the clients then: do you find yourself working with a lot of new clients? Or is it sort of simply ongoing client relationships that you have established over a very long period of time?
Stefan: I have clients that I have worked together for over 10 years now already. It’s definitely a long-term relationship. I also have new clients coming in, but it’s not so much a project based work that we are doing here, especially not in the German Desk. With our other lawyers it’s more project based, project to project. But speaking here for the German Desk, it’s a long-term relationship with the client. I speak of relationships of three years and more.
Nicole: Does Ravenscroft & Schmierer work with any other law firms across the world?
Stefan: We don’t have branches, not in China, not in Europe or anywhere else in the world, but we are a member of two international networks. One is a worldwide network comprising of law firms in over 50 countries and another one is a network focused on Asia, consisting of German speaking lawyers in Asia, which are in their country like me for many years already and where we are their go-to law firm. And since we have colleagues in Singapore, Bangkok, Korea, Japan, etc., when a German speaking client comes to us, they usually do not only have a problem in Hong Kong, but maybe also have a branch in Singapore or a factory in Vietnam. And then we can offer everything to them from one hand, cooperating with our partners from that network.
Nicole: You would be kind of the middleman in everything?
Stefan: Exactly. It’s much easier for the client to have one point of contact instead of having many points of contacts and that’s where our benefit comes in.
The two international networks of Ravenscroft & Schmierer: ADWA (Alliance of German Business Lawyers in Asia) and CBBL (Cross Border Business Lawyers).
Nicole: That makes a lot of sense actually. You were talking about COVID-19 recovery. As Hong Kong and the wider China area gets more connected with the world, do you see that affecting the business of your clients in any ways?
Stefan: The challenge is that the last two years they somehow forgot their Asian business, their business in Hong Kong and their business in China. They still have their operations in Hong Kong, but the focus on Asia or the focus on China went down a little. And that’s something. I said it before and I’ll say it again, Hong Kong and China need to do their homework and show to the international community that they are still there, that they’re still worthwhile going via Hong Kong or going via Shanghai or China to conduct business.
Nicole: Moving on to our last section, which is about general advice for students such as myself at the LSE. For people who are looking to kickstart their commercial career or just simply, if they want to improve on their understanding of commercial topics, do you have any advice for them?
Stefan: I definitely have advice. Studying commercial law and knowing how to draft contracts is definitely not enough these days. Students and also lawyers need to know about the background, they need to know how to read a balance sheet, they need to know what a profit and loss statement is, they need to know where the equity is in a balance sheet. Otherwise, they cannot understand the client. The client is not looking from a legal perspective, the client is looking from a commercial perspective and as long as the lawyers do not understand the commercial perspective, there will be miscommunication between the lawyer and the client. Also, when it comes to international trade, and international transactions between related companies, lawyers at least need to have a basic understanding of tax law, because that’s the core where everything burns down. It doesn’t help to setup a Hong Kong company, it doesn’t help to make a lot of business in Asia when at the end of the day all my profits need to be taxed in Europe anyways. Definitely do not only study law, study commercial law. Get, somehow, background information about financials and get a basic understanding of tax issues including international double taxation agreements.
Nicole: How important would you say the EU (European Union) is? If you are in a German speaking country, it’s very important. But for other areas, do you think the EU in particular has a presence in everything that you do?
Stefan: It’s not a presence in everything in what I do, but when it comes to clients, be it European clients or Asian clients, that are doing business in the EU, they need to get an understanding of European Union law and they need to get and understanding on what a ‘directive’ is and what a ‘regulation’ is. They need to have an understanding about European employment law, about European data protection law, etc. Just sitting here in Asia and saying: ‘’Europe is far away’’, is definitely not enough.
''Studying commercial law and knowing how to draft contracts is definitely not enough these days. Students, and also lawyers, need to know about the background, they need to know how to read a balance sheet, they need to know what a profit and loss statement is, they need to know where the equity is in a balance sheet. Otherwise, they cannot understand the client. The client is not looking from a legal perspective, the client is looking from a commercial perspective and as long as the lawyers do not understand the commercial perspective, there will be miscommunication between the lawyer and the client.''
Nicole: A very interesting point on data protection: Do you think that’s a very up and coming issue for the firm? I know recently in China, they just passed a new data protection law.
Stefan: It is already very important for clients. It doesn’t matter whether you are dealing with Europe, or whether you are headquartered in Europe, or whether you have a branch in Europe. You are definitely caught in the problem of the data protection law of the European Union. And as you said, the Chinese are implementing the same, and once the Chinese have it and the European Union also has it, then everybody worldwide is caught in it. So, it’s definitely a hot topic.
Nicole: Would you recommend LSE students or students from UK universities to work in Hong Kong? Even if they didn’t grow up there?
Stefan: It depends. It’s not so much if you like working in Hong Kong, it’s whether you would like to live in Hong Kong. Because working is several of hours in the office, but the rest of the day you need to be familiar with Hong Kong culture, with Chinese culture. And if you want to try this out, or if you have tried it out and want to continue this, then Hong Kong is a place to go.
Nicole: Thank you so much for being on the podcast today. If you want to find Ravenscroft & Schmierer they have a website, and they are also on LinkedIn. With that, thank you so much to everyone for listening and we’ll see you in the next episode. Bye!