Chinese firms get in shape to take on Western big-hitters in Hong Kong
With UK and US firms vying for dominance in the Hong Kong legal market, a number of Chinese firms are also emerging as serious contenders in the Asian financial hub.
One in particular is King & Wood, which is understood to be in merger discussions with Mallesons Stephen Jaques.
Due to China’s regulations regarding profit-sharing with foreign firms the base for the merged operation is widely expected to be Hong Kong, where both firms have extensive presences.
The combined Hong Kong base would have 26 partners and more than 100 other fee-earners, making it one of the 10 largest firms in Hong Kong by headcount.
Negotiations on terms and conditions between the two firms are still ongoing and few details of the tie-up have been made available. However, a partner at King & Wood’s Hong Kong office told The Lawyer that his firm will press ahead with its international expansion strategy even though a deal is still being finalised.
“We’ve reached a fork in the road. There are options as to how we go about globalising our firm, but it’s certain that we’ll go ahead one way or another,” said the partner, who went on to identify cultural compatibility and the ability of the firm to retainits own identity as the biggest challenges in the process.
“It’s inevitable that Chinese law firms will increase their market shares in Hong Kong,” he added. “I expect that in five years the UK, US and Chinese firms will be the major forces in the market, each backed by their own client bases and with different advantages and strengths.”
Jun He and Zhong Lun, King & Wood’s closest domestic competitors, have also grown their Hong Kong capabilities recently.
Jun He, which opened in Hong Kong in 2006 and acquired Hong Kong law capability in 2009 through a merger with its local association firm XJ Wang & Co, has grown its Hong Kong office through lateral hires, with partners Daniel Wan and Jasson Han being the latest additions.
Wan, a Hong Kong capital markets lawyer who previously practised at Herbert Smith and Bird & Bird, cited his move as a long-term strategic career move.
“US firms are expanding in Hong Kong and offering lawyers much higher salaries, but I decided to join a Chinese firm because I value its potential in Hong Kong, along with the opportunity to develop long-term and consistent relationships with clients as a partner,” said Wan. “Chinese national firms with extensive domestic networks have built up strong and vast client bases. These clients have increasingly been using Hong Kong as a platform for fundraising, M&A activities and public listings.
“The amount of mandates generated from existing mainland clients is enough to keep the Hong Kong practice prosperous.”
However, Wan also stressed that even if Chinese firms have strong Hong Kong law capabilities they will not replace their international counterparts, but rather exist alongside them.
Zhong Lun opened its Hong Kong office in 2010 and operates in association with six-lawyer Hong Kong firm Roger Ho & Co. Roger Ho’s merger with 21-lawyer Hong Kong firm Boughton Peterson Yang Anderson earlier this year and the recent joining of partner Clifford Ng from K&L Gates’ Hong Kong office have given Zhong Lun’s Hong Kong practice a significant boost.
Beijing-based Hylands is the latest mainland China-based firm to join the Hong Kong race, opening a Hong Kong office in association with local firm Cheng Wong Lam & Partners.
Dacheng Law Offices’ Hong Kong office, which is currently in an association with local firm Wong Poon Chan Law & Co, is forging a plan for localisation.
