International firms: quality prevails over size
The past three years have seen the undeniable rise of many PRC firms - and their increasing market strength. In the case of top local firms, they are not only winning mandates from inbound investors and foreign companies but also attracting top talent.

All have put greater pressure on their foreign counterparts, with the prevailing trend for senior lawyers departing international firms for local partnerships in recent months a great manifestation. The key question this gives rise to is whether any international firm can really grow to a substantial size in China, given they have to contend with now not only restrictions on practice but also increasingly stiff competition from PRC firms for cross-border deals. And inseparable from the whole question is the fact that the fee gap between international and local firms is creating natural market segmentation.

In this year's 10 largest international firms in China list, Baker & McKenzie successfully maintained its perennial crown position, while Hogan Lovells has emerged as the second largest - due to the recent merger between US firm Hogan & Hartson and UK firm Lovells. Although most of the international firms' China offices remain relatively small (usually with fewer than 50 lawyers) their role and execution in many of the landmark transactions remains impeccable. 

DLA Piper Asia managing director Alistair De Costa said his firm is confident with its position but will not be complacent in the face of strong competition from Chinese counterparts. "There is no question that Chinese law firms are big," Da Costa said. "This is an inevitable trend [to see them getting into areas where it was previously the domain of large international firms] but I still feel quite confident about how we're positioned in the face of that competition. We have an international reach that is difficult to compare with but we're not complacent and we know that there's competition out there."

Nevertheless, international firms, having been established much longer than their PRC counterparts, still have certain advantages over their local competitors. Their prospects are far from gloomy if they manage to move up the value chain and focus on their core areas of strength. ALB

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