International law firms are being forced to tender in front of rivals for some corporate work in Asia as Chinese companies try to cut back legal fees. 

Partners in Hong Kong confirmed that pressure to reduce costs has resulted in occasional instances of state-owned enterprises asking tendering firms to reveal fee quotes in front of their competitors, with several magic circle and US law firms among those stating that they have been required to publically bid for some work in recent months. 

The new tender process, while still relatively rare, comes as the previously booming Asian markets have increasingly felt the impact of the global economic slowdown. The Hong Kong initial public offering (IPO) market has been hit particularly hard, with competition for work resulting in some law firms quoting advisory fees of less than $1m (£624,000) for a float. 

"The situation varies [between firms and deals] but there are horror stories where you have to do a public tender to advise on an IPO – it's happening," said Benita Yu, a corporate partner at Slaughter and May in Hong Kong. 

"It's more with state-owned enterprises, but that's where the big deals are. A few firms are required to sit in front of a panel, each one reading out their quote in front of the others. They then go through an interview, and then the panel decides who will win the bid." 

In addition to the use of public pitches, Chinese companies have been developing more rigid procurement processes to get the lowest price for legal advice, with requests for fixed fees for M&A work becoming more common. 

Baker & McKenzie Hong Kong corporate partner Elsa Chan commented: "It's not uncommon these days for [Chinese] companies to ask for fee caps on M&A transactions. It has always been fixed fees for IPOs but M&A used to be based on time costs. However, because the market is so competitive I understand some firms are ready to accept a fee cap."