The raft of foreign firms piling into mainland China has drained the country of available commercial lawyers, which adds up to a headache for law firm management, according to new research.

The report, published by management consultancy firm Hildebrandt, concludes that the only way for foreign law firms to resolve the recruitment problem is to train lawyers themselves, something only a handful of international firms in China have so far done.

The report states: "The total number of foreign lawyers working for international firms on the mainland is very small, perhaps 1,000 lawyers across the country – a mixture of ex-pats, Hong Kong lawyers and foreign-qualified returnees. Given that there are in the region of 200 representative offices of foreign law firms in China, the problem is obvious."

The research also claims firms should not rely on further liberalisation to the market – foreign firms are currently not permitted to practise local law – as the timeframe for changes to the regime remains unclear.

The findings follow the influential Shanghai Lawyers Association last April accusing foreign firms of acting illegally by skirting the regulations that prohibit them from practising local law and calling on the Chinese Ministry of Justice to clamp down on them.

Hildebrandt director Guy Hinsworth, who wrote the report, commented: "There is a serious shortage of talent, and in the long term the
only solution will be for firms to train the lawyers themselves, which a few firms are already doing."

He added: "It would be dangerous for firms to build business strategies that presume further liberalisation. The local bar associations protect their own interests and the timescale for further opening of the market is unclear."