We teamed up with Chambers-rated Han Kun to bring you the latest on the next generation of law firms in the PRC, covering everything from how they are building their practices and the pathways you can take to join them.
The legal profession often evolves in tandem with the economic development of the home country and nowhere is this truer than in present day China. In 1988, when official data was first available, there were 31,410 registered lawyers in the entire country. By the end of 2020, that figure surpassed 520,000, while the number of law firms mushroomed from a handful to well over 34,000 today. Simultaneously, caseload at all levels of the People’s Courts throughout the country increased at breakneck speed. During the same time span, the Chinese economy grew from the bottom of the ladder to the second largest in the world and continues to date as a major contributor to global growth.
The rapid expansion of China’s legal profession underscores a growing public confidence in law that translates into people’s willingness to retain legal services to structure their activities and shape the outcome.
“As many Chinese law firms expand their practice, capabilities and global footprint, they have become the platforms of choice for top law students to begin their legal careers.”
This is the backdrop against which the next generation Chinese law firms are emerging. They firmly believe that the trajectory of China’s development promises continued expansion of the legal profession. They are confident that their training and services will contribute to the social and economic transformation of the country. Furthermore, as China is ever more integrated in the world affairs, Chinese law firms are gradually becoming international as measured by their capabilities, activities of their clients and the nature of their services. The traditional boundary between domestic and international practice is blurred and many firms like Han Kun are able to handle both international and domestic assignments across the full spectrum of their practices.
As many Chinese law firms expand their practice, capabilities and global footprint, they have become the platforms of choice for top law students to begin their legal careers, coinciding with years of steady migration of senior and highly experienced lawyers from major international law firms to Chinese ones.
At the same time, there has been a growing sense of social responsibility among Chinese law firms which enhances their traditional commitment to pro bono legal services. For example, many firms like Han Kun have established scholarships supporting law graduates to pursue advanced legal studies in China or abroad. They are also active in natural disaster relief efforts and environmentally friendly activities with spontaneous, widespread and overwhelming employee participation.
These are some of the hallmarks of the next generation law firms in China. They are confident, energetic, socially responsible and outward looking with a growing awareness of the impact of their services on the social and economic environment.
Dispute resolution (both litigation and arbitration) is likely to occupy a more prominent position among the next generation Chinese law firms. It is both a function of increasing confidence of clients to resolve disputes in a contentious format and a growing need for well-managed firms to inform other practice groups of lessons learned from dispute resolutions. It would not be surprising to see dispute resolution leading the growth in large full-service PRC law firms in the years to come.
“As technology plays an ever more important role across all industries, IP practice (both IP litigation and prosecution) will see substantial growth.”
From our vantage point, high-end manufacturing, artificial intelligence and its applications, and life sciences will continue to attract substantial investments in the foreseeable future. This will impact a broad swathe of practice areas and many law firms are strengthening their corresponding capabilities and industry knowledge to meet the needs. As technology plays an ever more important role across all industries, IP practice (both IP litigation and prosecution) will see substantial growth.
At the other end of the spectrum, corporate and debt restructuring practice is likely to kick into a higher gear, in the context of credit tightening and volatility of market swings, to deal with the aftermath of years of breakneck expansions.
Chambers Associate: In which ways has Han Kun adopted a company structure?
Han Kun is a centrally managed and highly integrated law firm. Cooperation among partners is a cultural imperative and the Firm has adopted a series of internal rules and regulations to foster cooperation, encompassing general HR management, associate hiring and retention, client intake, and credit sharing and partner compensation. These rules and regulations are transparent and consistently applied to minimize manipulation and ensure fairness and sustainability. Most importantly, they act as a reminder to Han Kun employees what the Firm stands for and reinforce what has made the Firm a productive and enjoyable place to work.
Chambers Associate: What have been the benefits of adopting this structure? How has it influenced the way work is done and the culture at the firm?
Law firms are most productive when cooperation is the norm and camaraderie a shared value. From the perspective of clients, they too appreciate that their lawyers work closely together and treat each other with respect. They understand that collegiality of service providers not only ensures quality and efficiency, but also projects positively on themselves.
“Beijing is seat of the central government and various industry regulators and home for most major SOEs and financial institutions.”
Over the years, clients increasingly give more importance to law firms having centralized management. Many even inquire during pitches how their prospective law firms are organized and parcel out assignments in favour of centrally managed firms.
These are some of the principal benefits of the centralized management structure that Han Kun has adopted. Culturally, this structure helps strengthen the unity of Han Kun, enhances collegiality among our partners and associates and enlivens the work environment at the Firm.
Han Kun currently has four offices in Beijing, Shanghai, Shenzhen and Hong Kong, which are economically the most advanced cities in China. Although they share a lot in common, their differences are sufficiently distinct for law firms to structure their practices accordingly.
Beijing is seat of the central government and various industry regulators and home for most major SOEs and financial institutions. Any practice that requires regular interactions with the government, such as issuance of securities, anti-trust, outbound investment/finance and dispute resolution will need to have a strong presence in Beijing.
“Many law firms with a presence in Shenzhen organize their practice to service the development of these tech companies.”
Shanghai has the largest concentration of multinational corporations where FDI work and corporate compliance continue to be a major source of law firm revenues. Shanghai is also home for major outward-looking SOEs, which feeds into outbound investment and international arbitration assignments.
Shenzhen is the domicile of many global tech companies and is located next to Hong Kong. It is young, energetic and outward looking. Many law firms with a presence in Shenzhen organize their practice to service the development of these tech companies, their investments and their cross-border activities.
Hong Kong stands out as a global finance hub and practices capitalism under the “one country two systems” regime. It is also the only common law jurisdiction in the PRC. Finance and capital market practices are the mainstay for many law firms in Hong Kong. In addition, Hong Kong courts and the Hong Kong International Arbitration Centre have long been recognized as choice forum to resolve disputes in the region. For that reason, Han Kun has targeted dispute resolution, along with corporate finance, as priority practice areas.
These four cities also offer different lifestyles with distinct history, culture, climate and convenience. Han Kun provides assistance to our employees who wish to transfer from one office to another to meet their professional or personal needs.
Chambers Associate: What qualities does a next generation PRC lawyer need to have?
Clients expect nothing but the best from their lawyers. Although a cliché, it is truer than ever. Today, technical skills alone are no longer sufficient to win an assignment or the trust of clients. What distinguishes the next generation lawyers is a combination of good understanding of clients’ business objectives, anticipation of their needs, speed and efficiency of delivery of services and practicality of solutions to clients’ problems.
“Many of our clients are fast-growing tech companies with an expanding global footprint. They are sensitive to market changes.”
Chambers Associate: What does the future hold for next generation law firms in the PRC?
The next generation Chinese law firms will compete in an environment where clients expect law firms not only to provide quality legal services, but also help them deal with the volatilities of the global market. For one thing, Chinese clients of both the old and new economy are more exposed than ever to the risks of the global market. For another, in the past few years, geopolitical volatilities have often upended established expectations and market norms in ways that challenge the viability of businesses dependent on open markets and global supply chains. Under such circumstances, Chinese law firms have been, and will continue to be, called upon to anticipate and deal with the consequences.
This, of course, goes beyond the services that law firms are traditionally expected to provide. In order to meet this new challenge, the next generation PRC lawyers must diligently keep abreast of the economic and political developments where their clients operate and provide counsel in a manner that is economically feasible and politically unassailable. Technical skills remain very important in this regard, but speed and efficiency of service and judicious advice are often what matters most to clients and separates the best lawyers from the rest.
“Next generation Chinese law firms will compete in an environment where clients expect law firms not only to provide traditional legal services, but also to help them deal with the volatilities of the global market.”
This is where Han Kun increasingly finds itself. Many of our clients are fast-growing tech companies with an expanding global footprint. They are particularly sensitive to geopolitical changes because of their capital formation and dependence on the global market. Their corporate strategies often require that they take advantage both of the fast-expanding Chinese market and global supply chains. As such, they are more susceptible than others to geopolitical volatilities and market sentiment. As a firm, we take time to train our lawyers to help clients anticipate and deal with these eventualities and to compete successfully in today’s ever evolving markets.
Chambers Associate: Would overseas expansion be something Han Kun would consider as important to its strategy?
We constantly evaluate how we can improve our services to clients and our geographic coverage is one of those considerations. If an overseas office could better meet the needs of our clients, we would actively consider opening such an office. At the same time, we are fully aware that an overseas presence would bring about new challenges including establishing and maintaining the requisite capabilities and adjusting our relationships with foreign law firms. If the benefits outweighed the challenges, expansion into foreign jurisdictions would be a natural outgrowth for Han Kun.
“Firms like Han Kun compete to hire the best graduates from top law schools.”
Chambers Associate: How would a domestic citizen qualify as a lawyer in the PRC and gain a position working at Han Kun?
This is a relatively straightforward process. Passing the PRC national bar exams is what it takes to become a lawyer in the PRC. There are certain prerequisites for taking the bar exams, and for most domestic citizens it requires a Chinese law degree.
Firms like Han Kun compete to hire the best graduates from top law schools. Although not a prerequisite, most Han Kun new hires have already passed the national bar exams and have advanced law degrees. In addition, many have spent time at Han Kun as interns during their academic studies.
We are also active in the lateral hire market for both associate and partner level candidates to strengthen our existing practice areas or venture into new ones.
Chambers Associate: What are the routes to working as a lawyer in the PRC as an overseas citizen?
For an overseas citizen to work in the PRC as a lawyer, the requirements are (i) the person is qualified as lawyer in a foreign jurisdiction; (ii) the person has worked overseas at a law firm for at least two years; and (iii) the person applies to the relevant judicial bureau to work in the PRC as a lawyer.
The next question is where the person wants to work, at a Chinese firm or at an office of a foreign law firm. As of today, most overseas lawyers work in the PRC have chosen to work at offices of foreign law firms. Although it is possible for such foreign lawyers to work at Chinese firms, they have to meet certain additional requirements. In this regard, Hong Kong offers an attractive option where overseas lawyers may choose to work at offices of either Chinese or foreign law firms. The requirements are easy to comply with and approvals readily obtainable.
“What separates the best from the rest will be experience and judgement delivered with speed and efficiency.”
Chambers Associate: What career advice would you give to those who are looking to practise law in a next generation PRC law firm like yours?
It is a lifetime commitment if one decides to become a trusted legal advisor to clients. Solid legal skills, robust experience and sound judgement will continue to be the primary benchmarks against which clients select their counsel. As legal education and training programs become more and more readily available, technical skills will improve across the board so much so that they will be considered as a given, at least for lawyers working at firms like Han Kun. What distinguishes the best from the rest will be experience and judgement delivered with speed, efficiency and care. It may sound simple and easy to do, but it requires diligence, continuous learning and non-stop practice for the duration of one’s career. There are no short cuts for those who choose the legal profession and want to excel. The ultimate reward, on the other hand, is the joy of being trusted by clients and the thought that your training and experience have been put to good use.