China 2008

 

 

Articles included in this report: Beijing: home to top talent and top firms; Shanghai: bucking the global trend; Guangzhou: remaining in the top three; and, International firms shake up the market

 

 

The year 2008 will go down in history as the year the Beijing Olympic Games symbolised the rise of China. It will also be seen as the year when “the quantitative changes of the Beijing legal profession transform[ed] into qualitative changes”.  

 

Jiang Jiang, a partner with Hylands, is one of the lawyers using “qualitative changes” to describe the development of Beijing firms. Hylands was founded in early 2007 based on the merger of Hao Tian and Li Wen & Partners, two firms with strengths in different practices. Jiang notes that the merger of equals is a pattern that is emerging in the evolving Beijing legal services market.

 

“The increased size of a firm can definitely add competitive advantages when bidding for large-scale transactions. But, more importantly, the merger of firms with different specialisations can expand practice areas and add specialised capabilities,” says Jiang.

Hylands, the newly created force in Beijing’s legal services market, now has 26 partners and more than 100 lawyers across offices in Beijing, Shanghai and Nanjing.

 

“The capability to provide the full spectrum of legal services for businesses by specialised practice groups is what has made Beijing firms the most sought-after legal advisors across the country, especially when companies face sophisticated and large-ticket legal issues,” Jiang says.

 

Wang Ling of King & Wood agrees with the concept of “qualitative changes”, saying the traditional geographical advantage of Beijing firms is no longer the major determinant of clients’ decisions to bring on board Beijing firms in important projects and deals.

 

“In the past, Beijing firms had an advantage in being chosen for some record-breaking transactions due to their proximity to industry regulators, law makers and government offices,” says Wang. “Today, although the geographical advantage still exists to an extent, Beijing firms’ biggest advantages have changed to the know-how and experience they’ve accumulated over 15 years, and the proven track record and solid portfolio of landmark transactions.”

 

As a result of the “qualitative advantages”, PRC counsel in high-profile listings, M&A deals and international commercial dispute resolution are mostly Beijing firms.

Having similar advantages to those that private practice firms had in the past decade, in-house departments in Beijing are widely considered to be more sophisticated and larger than in-house departments in other parts of the country, with Shanghai possibly the closest rival.

 

“The majority of large SOEs and top 100 companies are based in Beijing, as well as the high-profile general counsels and CLOs,” says Liu Hongqiang, the China representative of the Association of Corporate Counsel (ACC) and the general counsel of Beijing-headquartered central SOE, the China Electronic System Engineering Corporation.

 

“In-house practitioners in Beijing are usually more sophisticated and functional than those in other cities. Of course, in Shanghai there are many good general counsels in multinational companies.” Based on an overall analysis, Liu says, ACC has decided to locate its China headquarters in Beijing where the global organisation can best facilitate its members in China.

 

Knowing how to instruct external counsel and how to be selective, in-house departments in Beijing have been helping to enhance the service quality of Beijing firms. At the same time, their rapid business development has caused a surge in demand for legal services, and pushed their external counsel to acquire more cutting-edge practices and services.

 

“The past year has been a year of great success for our clients, and there have been many interesting and challenging transactions for us to deliver outcomes on,” says Zhang Xuebing, the managing partner of Zhong Lun.

 

It is unarguable that the average charge-out rate of Beijing firms is usually higher than the average rate in other cities, but it is not stopping companies from using Beijing firms.

 

“Most in-house counsel are very willing to pay because of the expectation of having a good result when cooperating with external counsel,” says Liu.

 

Wang Lihua, managing partner of Beijing firm Tian Yuan, backs up Liu’s claim, adding that the average charge-out rate of Beijing firms is usually higher than firms in other cities. However, the efficiency and quality of work can add value to clients’ businesses and eventually justify the total cost. “To a large extent, increasingly selective clients with quality-driven approaches have been pushing the Beijing legal industry forward,” says Wang.

 

 

 

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