While many international firms and clients have acknowledged Chinese firms’ rapid rise of late, the prevailing view continues to be that these firms are not financially integrated, lack real partnership and that most operate effectively as barristers’ chambers, where only costs are shared and individuals or teams work independently under one brand.

Is this the reality? This week’s cover story sheds light onto this traditionally opaque area of Chinese law firms’ business.

At the heart of this issue is the partner remuneration system. Eat what you kill is still the predominant model among Chinese firms, but the form it takes varies widely. As this year’s The Lawyer China Elite research revealed, of the eight ‘red circle’ firms only four have a unified profit pool for equity partners.

But putting profits into a single pool will not in itself create a strong partnership. It is how you divide the profit that decides whether the interests of firm and partners are properly aligned.

Two of China’s elite firms, Haiwen & Partners and Jun He, have confronted this issue and made big changes. This signals that traditional market leaders are re-engineering their partnerships in response to a step change in the purchase and delivery of legal services in China.

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