From the IBA President - June 2010

China's leading law firms prepare for world stage

I have visited China several times in the last 12 years. Before going to Shanghai and Beijing in May, my previous visit was in 2007. Analyzing and evaluating all the conversations held with partners of leading international Chinese law firms in Shanghai and Beijing, I have noticed interesting changes in the local legal profession.

International foreign law firms are still prevented from practising Chinese law and, therefore, providing Chinese legal advice. Nevertheless, a good number of them have, among their professional staff, Chinese lawyers assisting them in rendering their services in China and abroad. In these circumstances, the Chinese lawyer’s licence to practise is suspended while they work for a foreign law firm. Meanwhile, Chinese law firms have been hiring foreign lawyers as consultants and lately some of the leading international local law firms have hired some of the leading partners of international law firms with offices in China. Read article

In China - as in Japan and Singapore - it will, in time, be permitted for foreign law firms to practise local law, to hire associate local lawyers or to go into a joint venture with local law firms, but the international legal community must be patient. International Chinese law firms still face important challenges.

 

Several factors will influence the future of the local and foreign legal profession in China in the years to come. The gradual evolution of the Chinese legal system, the legal profession and international Chinese law firms, as well as the role that China increasingly plays in the global economy are important, as is the transformation of several of its main cities into significant commercial and financial centres.

The large majority of partners that founded the leading international law firms in China are fluent in English and were trained in European or North American law firms, learning about foreign law and practice in a foreign jurisdiction. A combination of post-graduate studies and training abroad prepared Chinese lawyers to establish their practices throughout the nineties. Along with the new generation of lawyers, they have been able to face the challenges imposed by the development of the legal profession and the globalisation of legal services.



‘Leading international local law firms have hired some of the leading partners of international law firms.’



Within the last five years, many of the international Chinese law firms have grown dramatically. They have become much more aggressive and sophisticated, expanding their presence in China and abroad, giving them a platform to advise their clients within and outside China. Some have expanded their presence in China through networks and others have decided to expand in China through a franchise scheme, raising serious challenges for those firms.

In 2010, it remains the case that only a few Chinese law firms are organised as true partnerships. The large majority still practise as cost sharing centres. One of the main challenges they face is their transformation and organisation as partnerships.

The global financial crisis has reduced the volume of inbound investment into China. This has meant a greater emphasis on the investments of public and private Chinese corporations abroad. The interest that Chinese law firms have in assisting their clients in outbound work imposes upon them the need to have a platform to develop a wider range of contacts with international business lawyers and firms abroad. In this regard, I believe the IBA offers them a unique platform, for establishing contacts with lawyers from around the world, to interact with them and take advantage of all the benefits that the IBA offers to its members. The Association’s conferences, special projects, publications, and our LLM all present opportunities to become important players within the global legal profession.

Some commentators have suggested that, in the not too distant future, the largest global law firms might be Chinese. Whether or not this proves to be the case, the IBA will assist them in consolidating their growth, to continue developing their management skills and will prepare them to compete even better within the international legal arena.


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