The impact of the global financial crisis on the legal market has become increasingly visible over recent months. Redundancy announcements at major international firms' China offices have been making headlines and while news about layoffs at top-tier domestic firms has not been made public, it is currently a hot topic among lawyers, alongside salary cuts, recruitment freezes and the four-day working week.

On Totoo, a popular online forum for Chinese law students and lawyers, the most read and responded to messages are those containing details about major plunges in revenues and cost-cutting measures at market-leading firms such as Jun He, King & Wood, Zhong Lun and Commerce & Finance.

However, this is not necessarily bad news for everyone in the legal market. Since the beginning of the year, there has been a steady flow of top-level lawyers joining mid-tier firms. As promotions and recruitment in the top-tier firms have slowed, many mid-tier players now have a better chance to attract lawyers who previously worked for international or large domestic firms and have a proven history of cross-border transaction work. A little more than a year ago, recruiting these types of candidates would have been a tough task.

"International firms and top-tier domestic firms are among the most affected groups by the global financial crisis. Mid-tier businesses are also experiencing a slowdown, but not as drastically," says Scott Guan, co-managing partner of Shanghai firm Jade & Fountain. The firm recently appointed three new partners who joined from Freshfields, Gide Loyrette Nouel and Zhong Lun.

"As large firms adjust their productive capability and capacity to demand, many senior associates and partners start to review their career path and progression. For them, joining mid-tier firms, particularly those with an effective management structure and good prospects for growth, has become an attractive career development option in a changed business climate," he says.

Another factor contributing to this trend is that, compared to top-tier counterparts which are in advanced stages of development, mid-tier firms have significant growth potential, in light of geographical expansion, depth in particular practice groups and breadth of expertise. That is why some mid-tier firms are still actively hiring, especially in selected areas.

Jade & Fountain, for example, appointed international trade and anti-dumping expert Song Liwei as a partner to expand the firm's practice into this new area. Other recent examples include Beijing Broad & Bright's appointment of Xiong Tao from O'Melveny & Myers in Shanghai; and Hanyi's hiring of an ex-Jingtian & Gongcheng partner to head its Beijing office.

Run Ming is another firm where job openings remain. In April, the firm appointed two new partners in Beijing, and one of them is the new executive partner Charles Liang, who was previously general counsel for Alstom in China.

"We are actively looking for high-calibre lawyers to join the firm. We want to continue to strengthen our existing practices, and fill the gaps between client demand and our service provision," Liang says. "It is a good opportunity for us to hire people, because there's much more talent available in the market than before."

On the radar

In addition to attracting skilled and experienced lawyers, the current economic situation also presents opportunities for mid-tier players to develop new clients and win more instructions from companies that traditionally used international and top-tier domestic firms.

With lower overheads, mid-tier firms are generally regarded as competitively priced alternatives, especially when it comes to lower risk services. Amid the global financial crisis, the price advantage has made mid-tier firms more attractive to general counsel, who are under pressure to find ways to reduce legal spending.

However, partners from leading mid-tier firms argue that the main reason for general counsel to switch to mid-tier firms is not lower fees but their ability to offer better value for money.

"For some types of transactions, using a good mid-tier firm probably costs as much as using a top-tier firm, but clients will get much more value from the mid-tier firm for the same amount of legal fees," Guan says. "Mid-tier firms can dedicate more resources to service one client and partners are hands-on and readily accessible to clients."

Kingfield partner Nancy Zhang agrees that lower costs alone won't help mid-tier firms acquire top clients in the current miserable economic conditions. "As clients become more cost-sensitive, top-tier firms will also lower their fees if necessary to retain their clients. The global financial crisis will result in lower average legal costs," she says. "And even under great cost-cutting pressures, large and sophisticated companies won't want to take higher risks for using cheaper legal advice."

However, Zhang points out that good prospects still exist for some mid-tier firms to gain a greater share of the top-end market. "In times like these, large companies are more willing to look outside their traditional relationships and seek other options," she says. "But they will only give an opportunity to a new firm if it has the right knowhow, appropriate resources, and a high quality and proven track record."