A&O, Freshfields and Herbert Smith 'express interest'; red tape still limits growth
Baker & McKenzie and Linklaters have become the latest firms to announce plans for a second Chinese office. A host of firms are expected to apply under the Chinese government's relaxed rules on foreign law firms, but the application process has been subject to significant administrative delays. Since 1992, the Ministry of Justice (MoJ) has operated a 'one firm, one office' rule when considering applications for licences. Until now, the practical effect has been that most law firms have had to choose between Shanghai and Beijing. As part of the liberalisations announced when China joined the World Trade Organisation (WTO), the government agreed to relax its quantative restrictions. Although second offices are not permitted officially, a few firms have been able to make forays beneath the Chinese administrative radar. In the case of Clifford Chance and Freshfields Bruckhaus Deringer, they have achieved this through European mergers with firms that had their own offices in China. Allen & Overy (A&O) recently opened a Shanghai office using the abandoned premises of Loeff Claeys Verbeke, whose Dutch and Belgian practices it subsumed.
"Although there is a primary regulation in place to allow firms a second office, the Chinese government is also believed to be drafting some implementing rules"
A&O still intends to apply for a Shanghai office on its own account. Beijing-based partner Kenneth Chan said: "The new rules present a chance to reregister with the same name." Freshfields head of Asia Ruth Markland confirmed that her firm had been in discussions with the MoJ concerning a new office. In January, Herbert Smith poached Simmons & Simmons senior Shanghai partner Gary Lock and installed him into the Shanghai office of best friend Gleiss Lutz Hootz Hirsch. Linklaters currently has an arrangement with the Beijing office of alliance member De Brauw Blackstone Westbroek, but like Herbert Smith desires its own office. Baker & McKenzie has told The Lawyer that it intends to apply for a second office, and most of the US firms are expected to follow suit. However, the applications process has been difficult. Although there is a primary regulation in place to allow firms a second office, the government is also believed to be drafting some implementing rules. No firm can apply formally for a licence until these rules are published. So far lawyers have been restricted to filing an expression of interest with the MoJ.