China’s Legal Market: Trends and Observations in 2019

China has experienced a high level of instability throughout the year due to domestic crises and international disputes. However, global players and the country’s leading law firms have continued to expand in China. The Shanghai Free Trade Zone (FTZ) and the Greater Bay Area have contributed to the growth.

The rise of joint operation in the Shanghai FTZ

On 7 January 2020, Allen & Overy announced that they would launch a joint operation office with Shanghai Lang Yue Law in the Shanghai Free Trade Zone, making the Magic Circle law firm the 7th global player to enter into a structured free trade pilot zone by the Chinese authorities. 

The other 6 global legal players have taken the cooperative mechanisms trail in the Shanghai FTZ:  Baker McKenzie with FenXun in 2015, Holman Fenwick Willian with Wintell & Co. and Hogan Lovells with Fujian Fidelity both in 2016, Linklaters allied with Zhaosheng and Ashurst with Guantao both in 2018, and Herbert Smith Freehills with Kewei Law in 2019. 

Under current Chinese rules, foreign law firms or legal practitioners are not allowed to provide formal legal opinions and appear at local courts in the country. In December 2014, the Shanghai Municipal Bureau of Justice released two regulations that gave the green light to the joint operations model. It allows the firms to offer clients international and local law advice, especially in areas like dispute resolution, labor, IP, and financial regulatory, and also to exchange lawyers between offices under certain conditions within the Shanghai FTZ.

The next opportunity in the GBA

The Greater Bay Area Initiative is the central government’s plan to link 11 southern China cities into an integrated economic hub. Shenzhen, China’s technology and innovation hub, has become a targeted city for both the PRC and international law firms to expand their corporate, TMT, IP, and real estate/infrastructure practices.

Shenzhen is home to China’s top tech companies, including Huawei and Tencent, and it is clearly on the rise. To global law firms, Shenzhen has already shown its appeal. In July 2019, Simmons & Simmons is the first UK firm to establish their Shenzhen which is led by the TMT partner, Shi Jingyuan. She was newly joined with Alex Cao as Counsel, who travels between HK and Shenzhen to provide advice on corporate and technology transactions in the life sciences and the TMT sectors.

It is not surprising that firms specializing in IP and tech-related work will be based around the world’s largest tech companies and startups in Shenzhen. In 2018, two leading US IP firm Brinks Gilson & Lione and Fish & Richardson opened their first China offices in Shenzhen. In the following year, Rimon Law, an alternative US law firm also opened their first China office in Shenzhen and represents their Chinese and US enterprises clients in cross-border IP transactions, business investment and dispute resolution. In addition, another 2 leading IP law firms Rouse and Perkins Coie, who already have offices in China also expanded their China IP operation to Shenzhen in October and November 2019 respectively. PRC firms, including Tiance, Zhenjiang, and Hylands, have expanded aggressively in Shenzhen.

As the Greater Bay Area continues to grow, we believe more top-tier international and domestic law firms will open their Shenzhen office soon. With over 35 plus years’ legal recruitment experience in the region, we can provide unparalleled strategic advice and recruiting solutions for the firms’ Southern China growth plans.  

Highly Demanded Sectors

  • Merger & Acquisition (M&A)
  • Telecommunication, Media & Technology (TMT)
  • Intellectual Property (IP)
  • Dispute Resolution
  • FCPA/ Compliance Investigation
  • Data Privacy

A key development that in 2020 the legal practitioners should be keeping on their radar is China’s new Foreign Investment Law. It came into effect on 1 January 2020 abrogating substantial parts of the legal framework that has governed foreign investment in China for the past 40 years. It formulates the new landscape of China’s foreign investment moving forward. Both foreign investors and law firms will continue to closely monitor all new developments in relation to the market entry approvals and restrictions on corporate governance. 

Contributor: Vicky Liu

Editor: Fai Choi

Published by Hughes Castell

Asia's Premier Firm for Global Legal, Compliance, Risk and Regulatory Executive Search

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