While Hogan Lovells' Sino Global Legal Alliance has expanded, Chris Johnson asks whether it's actually delivering results for the firm

Ask any expat partner and they'll tell you that, when it comes to business in China, relationships are key. These days, Chinese state-owned corporations are generating an ever-increasing amount of lucrative outbound M&A work. But for foreign firms – restricted by regulation to just two offices in China – establishing relationships with potential clients outside the traditional confines of Beijing and Shanghai is a problem not easily overcome.

In 2007 Lovells (now Hogan Lovells) decided to tackle this issue by launching what remains a unique network that links it to leading law firms in nine regional Chinese centres. The Sino Global Legal Alliance (SGLA) gave Hogan Lovells access to other firms (and, perhaps more importantly, clients) in Shanghai, Guangzhou, Shenzhen, Hangzhou, Qingdao, Tianjin, Wuhan, Shenyang and Chongqing.

Three years on, how is the network faring? Although the SGLA has matured and expanded, tangible results are not immediately apparent. "We've always been quite open about the question of what's in it for us," says Hogan Lovells Asia managing partner Crispin Rapinet, "but you have to be realistic about the time required to get these outbound relationships going."

The SGLA initiative was largely driven by Lovells' former Beijing managing partner and longtime champion of the Chinese legal market, Robert Lewis. Utilising contacts he had generated by running training courses for Chinese lawyers in conjunction with the country's Bar association, Lewis and his team spent a year identifying prospective members for the SGLA, using criteria based on quality of management, clients, technical ability and overall positioning within the market.

China's regulatory environment, which prevents international law firms from practising Chinese law, requires that the alliance be non-exclusive. The individual firms, which include Allbright Law Offices, Shanghai's largest, have separate client engagement letters and also negotiate their own fee arrangements. They are forbidden from sharing profits, although members share costs on areas such as training and marketing. Hogan Lovells also offers six-month secondment schemes to lawyers from the Chinese SGLA firms.

Since its launch, the network has expanded, first to Chengdu in August 2008, then to Beijing and Xiamen the following March. It could easily have grown further, says Rapinet.

"There's been quite a degree of interest from other Chinese firms that are keen to join," Rapinet says. "We could easily expand it by including firms from the next tier of regional cities, but we see little direct benefit in doing that, and it would dilute the relationships we've spent so long building."

There is even a possibility that some of the SGLA firms could merge, according to Lewis, who, on 1 May 2010 – the very day the Hogan Lovells merger went live – left to join Allbright. (The move saw him step down as chairman of the SGLA to take up a newly-created role as chief administrative officer. Xue Yunhua, managing partner of Guangzhou-based member firm Guangda Law Firm, replaced Lewis as chairman.) As part of this drive towards further integration, three network members – Guangda, Beijing Supreme People's Court boutique Tiantong & Partners and Wuhan's Dewell & Partners – recently signed a deal to share office space with Allbright in Beijing's Oriental Plaza development.

But for all these logistical developments, critics within the China market question the extent to which the SGLA has generated actual instructions.

Rapinet cites several assignments won in part thanks to the SGLA: advising Texas Instruments, alongside Chengdu SGLA member Tahota Law Firm, on the acquisition of a semiconductor manufacturing plant in Chengdu and helping educational organisation The British Council set up language training centres throughout China, a project that will involve a number of SGLA firms as the centres are rolled out. However, he admits that the network has yet to generate much outbound work.

"There have already been a number of examples [with pitches] where we have been more successful [thanks to the SGLA] than we might have been otherwise, but it's hard to say in concrete terms how much you can directly attribute to the alliance, as it's just a factor in the mix," says Rapinet. "The SGLA was always very much a medium-term play, and we're now moving into the second phase of its development, where it really starts to deliver."

This article first appeared in The Asian Lawyer, a supplement from Legal Week affiliate ALM.