Of the many newly established partnerships, some have achieved outstanding results and demonstrated their potential to shake up the market. ALB China identifies the 10 rising stars worth watching in the years ahead

The four stages of man are infancy, childhood, adolescence and obsolescence," quipped American author Art Linkletter. Man, perhaps. China's law firms definitely not.

The legal industry is in its adolescence - not mature yet but full of immense potential and showing great promise. It is at a stage in which motivated and ambitious partners of firms start to identify their own niches, find their own ways of how to best fit into the dynamic and ever-changing market, and draw on their past experiences to establish goals for future success.

In the past two years, particularly as the market was still buoyant and corporate work and cross-border transactions were easy to come by, a large number of new partnerships were forged. 

While law firm merger activity continues to be strong, a new trend has emerged in the legal sector in recent years - the sprouting of a large number of new firms in the market. These firms are founded by partners from other firms - always senior partners, sometimes founding partners - after they withdraw from their previously established partnerships.

Law firm mergers can be driven by various strategic objectives: geographical expansion; the addition of a specialised practice area; and access to bigger and better clients, and more sophisticated work. As in any industry, consolidation marks one aspect of marketplace maturation.

However, the main cause of the recent split-offs is the ambition of some senior partners to adopt a good law firm management structure. They have realised that good management practices are essential in order to deliver consistent, high-quality legal services across a range of specialised areas. This is a clear indication that the legal profession is increasingly diverse. And the increasing sophistication of management practices is another indicator of maturation.

"The decision to establish a new firm is a response to changing client needs," said Martin Hu, founder of Boss & Young, who left the firm to set up Martin Hu & Partners (MHP) in 2008. 

"As clients are growing bigger and doing more complex transactions, they increasingly require an integral team of lawyers specialising in different areas to deliver seamless, quality legal services." Hu's goal is to develop a law firm with a team-based approach, characterised by both a strong firm-client relationship and harmonious firm governance. 

The single biggest obstacle to teamwork in most local firms is the eat-what-you-kill business model that, in its purest form at least, gives no incentive for partners to cooperate and results in difficulties representing clients in large deals.

MWE China is another notable firm in the ALB China Watchlist that has adopted an "all for one and one for all" approach to overcome this. It is noteworthy that it has achieved this fundamental change by means of forming an exclusive strategic alliance with international firm McDermott Will & Emery (MWE), based in Chicago.

MWE China's founder John Huang, who also founded AllBright in 1999, noted that the alliance has been a success, with significant growth in his firm's revenues and headcount since its establishment.  

"The strategic relationship with our US partner enables us to have the best of both worlds of local and international legal practices," said Huang. Although MWE China and MWE remain two independent legal entities, they share the same standards for most aspects of the legal practices, including client service, quality assurance procedures and professional training programs, IT and telecommunications infrastructure, and management system. 

"Leveraging MWE's international platform and management skills, we've become an international firm based in China. Our clients and lawyers benefit greatly from this strategic platform," said Huang. "MWE's clients from the US and Europe have also received quality PRC legal services delivered in an international manner." 

Due to increased offerings and capacity in China under the arrangement, the total billable hours of MWE's China practice has increased exponentially.

Similar to the stories of MHP and MWE China, all of the firms on the ALB China Watchlist have managed to balance the often-competing concerns of ambition, risk and growth with pragmatism; they have identified their competitive edges and discovered that which separates them from
the rest.

If their results in the past few years are indicators, these firms are set to accomplish bigger and better things in 2009 and beyond. Whether it is pioneering new practice areas or management techniques, striking tie-ups or alliances, closing the big deals or poaching partners from their rivals, watch for these firms to play far bigger roles in the near future.

2009 ALB China Watchlist*

Next: Know more about the 10 firms in the ALB China 2009 watchlist

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