The Chinese firm Fangda Partners has hired Shearman & Sterling's Hong Kong capital markets team headed by Asia capital markets team leader Colin Law.

The four-lawyer team also includes Hong Kong partner Peter Chen, one counsel and one associate. A start date and details of the transition are still being worked out. Fangda and Shearman will collaborate on ongoing projects during the transition period.

Law and Chen, both Hong Kong-qualified, advise on listings and transactions related to the Hong Kong Stock Exchange. Last month, Law represented the underwriters, including Goldman Sachs and UBS, on Shanghai-based drugmaker Hua Medicine Ltd.'s $110 million initial public offering in Hong Kong. In 2016, both Law and Chen represented the underwriters on power generator maker VPower Group International Holdings Ltd.'s $208 million Hong Kong listing.

The duo joined Shearman from O'Melveny & Myers in 2010 to launch Shearman's Hong Kong law practice. Law was previously a partner with legacy Lovells.

The arrivals will add a crucial Hong Kong law piece to Fangda's capital markets practice in the city, and help the Chinese firm build toward a market-leading corporate practice. The firm has recently also recruited former King & Wood Mallesons partner Christine Chen, who specializes in U.S. securities law. Chen practiced with Davis Polk & Wardwell in Hong Kong and was an in-house counsel at JPMorgan before joining King & Wood Mallesons.

U.S. firms have long faced fee pressure in Hong Kong capital markets work and the diminishing profitability of the practice has led firms to cut back from the market or exit completely. More recently, Troutman Sanders decided to close shop in China because the firm didn't want to focus on Hong Kong securities work. Before that, New York's Cadwalader, Wickersham & Taft and Fried, Frank, Harris, Shriver & Jacobson closed their China offices in 2016 and 2015, respectively. In 2014, Milbank, Tweed, Hadley & McCloy dropped its Hong Kong law license due to low profitability.

Meanwhile, the Chinese firms have been picking up the slack, trying to expand their roles beyond advising Chinese law. Before Fangda hired Law, several other Chinese firms picked up ex-Shearman lawyers in attempts to build up a Hong Kong law practice. Earlier this month, Jingtian & Gongcheng hired former Shearman associate Stella Yeung as a partner in its Hong Kong associate firm L&C Legal. In May, former associate William Ji formed an association with China's Tian Yuan Law Firm.

Shanghai-based Fangda reported 485 lawyers in 2017, surpassing rival JunHe for the first time. The firm had $169.5 million in gross revenue and $1.1 million in profit per equity partner, making it one of the most profitable domestic firms in China.

Besides Law and Chen, the Hong Kong office has six other partners: U.S. law capital markets partners Matthew Bersani and Alan Yeung, investment funds partner Lorna Chen, mergers and acquisitions partner Stephanie Tang, projects partner Sean Wang and international arbitration partner Nils Eliasson. Four additional partners also spend time in Hong Kong: M&A partners Paul Strecker in London, Li Chen in Beijing and Sidharth Bhasin in Singapore and capital markets partner Kyungwon Lee in New York.

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