It will be a glum holiday season for the lawyers and staff at King & Wood Mallesons (KWM). The multinational law firm giant, a single-branded legal network anchored by British, Australian, and Chinese member firms, is dissolving. The firm website describes the 2,700 lawyer amalgam as ‘the global elite firm of the next century.’ Its motto, ‘The Power of Together,’ is cruelly ironic—especially for many soon to be out of a job.
China is known for its exports, but legal services? Chinese law firms have begun to export legal services beyond its vast domestic market and to create an international footprint. The domestic success of China’s largest firms, liberalized trade agreements, key alliances with Hong Kong firms, and international strategic planning are all factors in fueling the outward reach of China’s legal services
It has been a Good Year for China’s Biggest Law Firms
China’s top thirty law firms had a very good year according to “The Lawyer China Elite 2015” survey that was just released. It found that all but one of the thirty largest Chinese law firms posted revenue growth in the past year with many enjoying substantial gains. This uptick is particularly noteworthy given China’s stock market crash and slowed economic growth. Though the gross revenue and profit per lawyer figures pale compared to many of the top AmLaw and Magic Circle firms, their skyrocketing trajectory suggests that these firms are enjoying a white-hot market fueled, in no small measure, by the international stampede seeking to tap into the vast Chinese market. But it is not all inbound traffic for these Chinese firms.
Chinese Firms are now Players in the Global Legal Marketplace
Chinese firms have quietly emerged as players in the fast-growing Asian legal market and beyond. Consider that BigFour giant Ernst&Young has recently acquired a Chinese law firm and is now engaging in the practice of law there. Within the past few years, some of the world’s largest firms have struck deals to tie-up with large Chinese firms, while other firms are pursuing other international strategies.
Baker&McKenzie entered into a Joint Operation Arrangement with FenXun, Dentons is set to merge with Dacheng, and King & Wood Mallesons (an amalgam of Chinese, Australian, and UK-based firms) has now established its global headquarters in Hong Kong. And make no mistake about it: the Chinese arms of these new global Goliaths will not simply facilitate legal work in China for their foreign partners; they will, increasingly, be involved in representing outbound foreign investment by their domestic clients. And, as a recent survey by Baker & McKenzie points out, Chinese investment in Europe was at an all-time high last year, totaling $18 billion. This helps to explain the Chinese firms’ appetite to strike deals with foreign firms as they service their clients abroad and “follow the money.” [Read more…]