Goodwin Procter pledges commitment to Beijing despite shelving launch plan

US firm Goodwin Procter has said it remains committed to opening a Beijing office, despite withdrawing its application for a representative office in the city last year.

Beijing: Goodwin Procter’s next location?

Details have emerged that Goodwin Procter had planned to open in Beijing in 2011 and instructed Chinese firm Jun He to provide assistance in filing an application with the country’s Ministry of Justice. However, it later decided to withdraw its application prior to a licence being granted.

It is understood that the withdrawal was largely due to staffing issues, as the firm struggled to secure a key partner hire to lead the new office in the process of the application.

Goodwin Procter Hong Kong-based partner Yash Rana, who is chair of the firm’s Asia practice and Hong Kong office, said that the firm remains interested in a presence in mainland China “when the time is right”.

“Beijing is a natural next step for our expansion in Asia. But the timing essentially depends on when we find the right person to lead the team,” said Rana. “We’re looking to find the right chief representative and will go through the process in Beijing once a leader is identified. While it’s not urgent, it is an important part of our plan.”

In addition to searching for qualified partners externally, the firm may also consider moving lawyers from other offices for the Beijing opening.

“While we’ve not lost transactions or engagements because we don’t have a Beijing office, we certainly want to be there as it will add an advantage to our practice,” Rana added.

Goodwin Procter opened its first international office, in Hong Kong, in 2008. The Hong Kong office remains a small and focused presence with about 10 lawyers including three partners. The office’s main focus is on private equity, venture capital, technology companies and fund formation. Rana noted that his main priority at the moment is to grow the Hong Kong office. Most recently, the firm appointed Paul Weiss senior associate Gloria Liu as a private equity partner in Hong Kong.

As highlighted by last week’s Notebook (21 January 2013), good partners are getting harder to come by in Asia due to an influx of new firms expanding into the market.

Goodwin Procter is not the only one facing challenges in finding a lead partner for Beijing. A partner from Chinese firm Guantao, who has assisted a number of international firms with their applications, pointed out that one of its clients – a US firm – had to suspend its application for several months because the original chief representative listed in its application left and it took time to find a replacement.

Generally, the applications take about nine months to go through various regulatory processes and once a licence is granted firms have to establish their office within a certain timeframe. International firms are increasingly instructing leading local firms to provide professional assistance with their applications, a service priced at $15,000 on average.

In addition to the talent gap, the increasing cost incurred in establishing an office in Beijing and Shanghai is another concern of firms. The estimated cost for a bare-bone, start-up office with two partners and five lawyers in either of the cities would be between $1.5m to $2m.

“The continued appreciation of the Chinese currency and the growing labour cost in the country, combined with increasing pressure on legal fees from clients, have certainly made it less attractive to expand into mainland,” said a legal recruiter based in Beijing.

“Apart from a very limited pool of potential partners for international firms, it’s also harder for firms to move partners from Hong Kong to Beijing, given its tougher living environment and higher tax rates in the mainland,” the recruiter added.

By the end of 2011, Beijing played host to 83 representative offices of foreign firms, compared to Shanghai’s 124, according to the list provided by the country’s Ministry of Justice.