Legal Support in China
Robert Lewis is a former General Counsel and now works as International Managing Partner with Chinese law firm Zhong Lun in Beijing. He is one of relatively few Western lawyers to make this transition and this, coupled with his commercial experience, makes him an invaluable resource.
I was therefore very interested when Robert alerted me to a blog series he has written to provide ‘A Foreign Lawyer’s View from the Inside’.
You will need to read the original articles to gain all the insights that are offered, but a number of points struck me and I will therefore write a brief summary. Firstly, Robert comments upon the rapid maturing of the Chinese law firms and observes that they retain a monopoly on litigation and regulatory advice. In addition, the Chinese Government has put controls over the extent of any merger with a non-Chinese firm, requiring a high degree of operational separation (which does not apply if the Chinese firm is itself expanding overseas). Given Robert’s expectation that the industry will see a lot more mergers over coming years, this could be a significant issue. Right now, he reports, most of the foreign firms operating in China are believed to be running at a loss.
The most successful foreign law firms are those which traditionally had a base in Hong Kong. This experience appears to have offered a sustained advantage, even though most work has now moved to Beijing or Shanghai. Hong Kong’s separate legal system and readiness to work in English is not an advantage when it comes to doing business in mainland China, where English-language negotiation is almost unheard-of. Hong Kong does remain the preferred center for dispute resolution.
Negotiators must be prepared to work in Mandarin, or at the very least in dual language with translators. They must also accept that the form and structure of contracts is very different from that of the West.
When it comes to selecting a law firm, Robert has built from the annual survey undertaken by The Lawyer. He lists the top twenty local firms and the top twenty international firms. There are relatively few ‘full service’ options – most choose to specialize. The leaders are also firmly based in Beijing, not – as some expect – in more commercially-minded Shanghai. Robert comments on the distinction between ‘rule of law’ and ‘rule by law’ – with China firmly in the latter category. This, he observes, means that being close to Government and the ministries where law is made remains fundamental to legal practice.
Overall, a very useful set of articles for anyone needing to understand more about the Legal market in China, or having the need to identify a local provider or adviser.