Bakers, HSF and Hogan Lovells join magic circle firms on roster

Baker & McKenzie, Herbert Smith Freehills and Hogan Lovells are among a raft of firms to have won spots on China Resources' first international legal panel.

The state-owned conglomerate has appointed about 10 firms to the panel, although it would not confirm the exact number. The panel is subdivided into practice areas that include M&A and litigation. 

Other successful firms include King & Wood Mallesons, Davis Polk & Wardwell and Reed Smith, along with the magic circle quartet of Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Slaughter and May. Between five and 10 firms have been allotted to each practice area, depending on demand.

The Hong Kong-headquartered company invited law firms to tender for places on its panel at the end of last year in a move to formalise the selection of external counsel and control the quality of legal advice. 

Its domestic panel includes Beijing's AnJie Law Firm – a 12-partner spin-off from domestic outfits Zhong Lun, Grandall and Mingtai.

Like the majority of Chinese state-owned enterprises (SOEs), China Resources, which posted total turnover of HK$404.6bn (£33.8bn) in 2012 and ranked 233rd in last year's Fortune 500, had previously appointed legal advisers on an ad-hoc basis.

"Being selected for the panel is good because it is a big client and a big SOE," said one partner, who asked to remain anonymous. "But it is the first time they have done a panel, so it remains to be seen how this will change things. 

"Generally speaking panels are good for companies because they allow the clients to develop relationships with the panel firms and it gives the firms an opportunity to understand the clients – which is why most Western companies have panels."

Reed Smith recently advised the company on its proposed joint venture with Tesco, fielding a team led by Hong Kong-based corporate partner Ivy Lai. 

Last year Clifford Chance acted for subsidiary China Resources Gas Group on a $750m (£465m) bond issue, led by capital markets partner Matt Fairclough, also in Hong Kong.

China Resources would not comment on the panel review. However, in an interview with Legal Week in June, deputy general counsel Anthony Poon said appointments to the international panel were likely to last two years. He said the company would be prioritising expertise and existing relationships ahead of cost.

It is still relatively rare for Chinese SOEs to appoint Western-style panels, with most continuing to maintain an informal roster of firms they use regularly and which are appointed on an individual project or transaction basis.

Where Chinese corporates have put panels in place, partners say they will often select firms with which they have existing relationships and group firms by practice.

"[It is fairly typical for] some Chinese clients within their panels to classify different firms by way of expertise," said projects partner Liu Yue, head of the international practice at Beijing firm Jia Yuan Law Offices.

"If they are an existing Chinese client and they are happy with you then in principle it is no problem for you to be selected for the panel. When they organise the bidding for the panel they have already determined that you should be bidding for it because they are happy with you. But there is a limited number of seats on the panel. Sometimes they will go off-panel where firms have specific expertise."

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