European law firms are sometimes (perhaps rather unjustly) seen as the runt of the law firm litter anywhere outside of their home market, and their presence in this market is no exception. The more established foreign players in the region - the US, UK and Australian firms - rarely regard them as real competition. They dismiss continental firms politely as operating in slightly different markets, and bluntly as merely filling in gaps that established firms have left behind. Yet while continental firms may have moved in late, they are moving fast, often accelerating their growth through acquisitions and alliances.

Further, they have been very good at identifying niches in the market, in which they have now begun to consolidate a leading position. The big players may shrug their shoulders about losing work to continental firms in these specialised areas, but they should be wary that European firms may end up poaching more business through this initial niche play.

The latecomers

It is true that most continental law firms have lagged behind in the race to enter and prosper in China. Their US, UK and Australian counterparts are generally ahead both in size and time spent in the region. "While the Magic Circle firms were setting up offices in Hong Kong, the German and French firms were just beginning to incorporate," says Salans' Greater China managing partner, Bernd-Uwe Stucken. Those early entrants enjoy a natural advantage in relationships, reputation and expertise in the region, as well as being much larger.

Stucken says that continental firms with smaller operations simply cannot achieve the economies of scale the big international firms enjoy. Salans is one of the larger continental law firms with French headquarters, and already has three offices in China. But Stucken says its Beijing and Hong Kong offices are still too small and its Shanghai office would have to double in size, before the firm can come close to its aim of securing a dominant role in China.

Continental firms further suffer the traditional hurdle of jurisdictional disadvantage, because the governing law in large global M&A, bond issue and project financing is usually UK, US and - occasionally - Australian law. As a result, continental firms were held back from capitalising on the surge in cross-border transactional work that these legal counterparts have seen in the past decade.

However, this traditional disadvantage (the limited pool of large financial clients) has worked to their advantage during the financial crisis. "Continental firms have traditionally relied more on strategic investors, which insulated us from the collapse of the financial markets," Stucken says. "We didn't lose as much as others lost." And Stucken's 2010 outlook for Salans is bright. "Revenue is up by at least 20% since last year in our China offices."

Continental firms in PRC

This list does not purport to be exhaustive

Go to page: 1 2 3