China 2008

There hasn’t been further liberalisation in China’s legal service market for a number of years, but new licences, allowing them to set up representative offices in China, are being granted to foreign firms and Hong Kong firms each month. Many firms are currently in the process of applying for and obtaining a licence.

China has been recognised by many international firms as an important market for growth, while international firms have been considered to be an integral part of the legal market.

 

“All international firms with offices overseas will look to China as a very important part of their international plan and will want to take advantage of the growth. So foreign firms are still coming in and the ones doing well here are trying to expand,” says John Grobowski, former co-managing partner at Baker McKenzie’s Shanghai office who has joined Faegre & Benson as the head of the firm’s Shanghai office.

 

 

 “It’s a market that is rapidly becoming more sophisticated, more diversified and more competitive. The challenge for all law firms, both local and foreign, increasingly will be to acquire and project an identity that differentiates them from their peers,” says Cutler Elliot, the resident partner in charge of Akin Gump’s Beijing office.

 

The entrance by international firms is ostensibly welcomed by general counsel in China, particularly general counsel in domestic companies. To them, international firms can expand the diversity of advisory services in China and better facilitate Chinese companies’ international expansion.

 

“Under our company’s global strategy, our need for international legal services and foreign lawyers is growing significantly,” says Qiao Hai of Beijing-headquartered Udifa, one of the leading providers of management software solutions and services in Asia. “For responsive, cost-effective services and familiarity with the local market, we prefer to work with firms that have an office in Beijing.”

 

More importantly, general counsel appreciate the fact that the increased competition can have a positive impact on local professional standards. “In the more developed regions, such as Beijing and Shanghai, information and knowledge exchanges between international and local firms are happening more frequently. So international firms’ advanced management, approach to customer service and practice experience can be quickly transferred to local firms,” says Qiao. 

Nevertheless, the perennial issues of profitability, fees, recruitment and retention of staff are concerns for some domestic firms.