With the economic downturn overshadowing much of the region, many international firms in Greater China are looking at the essentials and reassessing their business models. A majority have announced budget cuts or adopted other strategies to keep themselves buoyant, while some have actually decided to downsize.

However, a few firms still see opportunity to expand at this time. US firm WilmerHale, for example, is in the process of applying for a license to open its second China office, in Shanghai (the firm's only current Asian office, established in 2004, is in Beijing).

UK firm Simmons & Simmons is reportedly looking at a plan to set up an office in Beijing, its second in mainland China. The firm is particularly interested in serving clients in the energy sector, after it hired Brian Downie in Hong Kong as head of international projects group in Asia from Minter Ellison last November.

Eversheds, another UK firm, is also on an expansion drive. Having opened an office in Shanghai in 2006, it has now lured five partners from DLA Piper and one from Fried Frank, as part of its plan to launch a Hong Kong office in March.

The new partners are banking partners King Tak Fung and Michael Yau and litigation partners Ivan Ng, Ronald Sum and William Leung from DLA Piper's Hong Kong office, and corporate partner Stephen Mok from Fried Frank Hong Kong office. In January, Eversheds opened its Singapore office and appointed DLA Piper's former Singapore managing partner Desmond Ong to head the new office.

The firm's Asia practice and expansion is headed by partner Nick Seddon, who joined from Heller Ehrman last October. He had been the head of Asia at DLA Piper.

"From a recruitment point of view, it is a good time to expand in Hong Kong, because many firms are downsizing and there is a lot of talent available in the market," said Seddon. He noted that all the partners recently appointed were not part of any downsizing but valuable practitioners. Three of the new partners focusing on litigation, an area will deliver strong growth prospects for 2009.

"Recruiting people who have solid business will help a firm expand profitably and weather the economic downturn," said Seddon. The next thing on his agenda is hiring associates for the Hong Kong office.

Some industry observers believe that a new measure, recently introduced by DLA Piper, requiring all partners to make capital contribution, was part of the reason for the departure of the five partners.

In response, DLA Piper's Asia managing director Alastair Da Costa stated: "As with many large law firms, we have a capital requirement for our partners and we see this as an important part of the status of partnership in our firm. All partners in our firm, wherever based, have this obligation to input capital.

"Those departing partners have decided to join a smaller firm and pursue other interests. They go with our good wishes," he said.

In the past a few months, a number of other firms have also established themselves in China or announced plans to add one more offices to their China practices (these firms include Proskauer Rose,  Miller Canfield, Loeb & Loeb, Bird & Bird, Slaughter & May and Spanish firms Cuatrecasas and Uria Menendez).

But as Frazer Xia, managing director of China Legal Career, pointed out, most of these firms handed in their applications last year when the crisis was less obvious, and are still opening offices because of the momentum of decisions made in the past.

However, there is still an upside to the downturn. "This downturn could mean opportunities for firms to recruit a team quickly and less expensively. Were it still a booming market like that of the first half of 2008, it would be hard to imagine hiring many partners within a short period of time," said Xia.

With uncertainty in the market, firms will continue to cut back on hiring. But Xia has predicted that lateral hires could still happen this year. In addition to new firms entering this market, there will be other drivers for partner moves.

"Some firms will take stock of valuable partners in anticipation of market turnaround in the future, while partners with book of business in labor, litigation, bankruptcy, restructuring are looking for places where they could be better compensated," said Xia.