Last month, the Chinese law firm Fangda Partners poached real estate partner Maria Wang from Morrison & Foerster in Shanghai. At first glance, the hire might not seem all that remarkable in an age when partners move from firm to firm all the time. But this was not just another lateral move. Wang, who had been a partner with the US firm since 2014, is the sixth partner Fangda has lured away from a large global firm in the past year.

And Fangda is only one of several elite Chinese firms that are on a recruitment tear that targets senior lawyers from global firms. Throughout 2018, nine Chinese law firms hired 22 partners who most recently practised at global firms, according to an analysis conducted by Law.com's  The Asian Lawyer of 228 partner-level hires recorded across Asia during the 12 months ended 31 December 2018.

The 22 partners more than tripled the seven moves from international firms to Chinese firms recorded in a 14-month period ended February 2016. And half of the 22 lawyers had already made partner before moving to Chinese firms, whereas in 2015-16, all seven lawyers made the jump to partner by moving from an international firm to a Chinese firm.

The Chinese firms making most of these hires – Fangda, Han Kun Law Offices, Jingtian & Gongcheng and Commerce & Finance (Tongshang) – already have sound reputations in the market and are financially capable of making more ambitious hires. Firms such as Fangda and Haiwen & Partners have traditionally hired lawyers with global firm experience and offer a shorter partnership track. But they are now willing to invest in more senior hires as they grow, to compete with global players for more premium work.

Part of that expansion is to develop a viable practice in Hong Kong. Last year, 13 out of the 22 partners Chinese firms recruited from international firms were in Hong Kong. That compares to only two in 2015, both hired by Zhong Lun Law Firm, which at the time was one of the few mainland firms with a sizeable Hong Kong office. In 2018, Han Kun, Jingtian and Tongshang, which didn't have or had just started their Hong Kong offering three years earlier, were among the most active recruiters in Hong Kong as Chinese firms expanded in the city.

Many of these hires have been fuelled by a push by Chinese firms for a more prominent role in Hong Kong listings work. Several of last year's most high-profile moves, such as Shearman & Sterling Asia capital markets head Colin Law's departure for Fangda, and Mayer Brown Hong Kong senior partner Elaine Lo's jump to Jingtian & Gongcheng, fell into that category.

The hires made by Chinese firms have overwhelmingly come from US firms; Shearman & Sterling, for one, lost six lawyers, including two partners, to Fangda, Jingtian and Tongshang.

In contrast, the analysis found a drop in the number of lawyers moving into US firms in 2018, compared with three years ago. A total of 55 senior lawyers left UK firms last year, but only 15 of those lawyers, or 27.2%, ended up partners at US firms. In 2015-16, that rate was 45%.

Even those leaving US firms were less likely to join a fellow US firm. Out of the 117 lawyers who left US firms, 46% were hired as partners at peer US firms, down from close to 60% in 2015.

Meanwhile, 16.2% of those leaving US firms became partners at UK firms last year; that rate remained largely unchanged from 15% three years ago.

For the purpose of this study, The Asian Lawyer followed the criteria set by Law.com and its US affiliate The American Lawyer, categorising firms based on where they have the most lawyers. So, despite transatlantic mergers, firms such as Hogan Lovells, Norton Rose Fulbright, Reed Smith, and DLA Piper were counted as US firms despite their strong British roots. Eversheds Sutherland and Bryan Cave Leighton Paisner, however, were recognised as UK firms, despite their significant US arms.

The results of the analysis remain more or less the same even if these six firms are excluded. Thirteen out of 51 departures (25.5%) from UK firms last year went to US firms, down from 42% in 2015. And 15 of the 94 exits (15.5%) from US firms ended up at UK firms, nearly the same as the 14% of three years ago.

The US firms, being latecomers to Asia compared to their UK counterparts, traditionally hired away talent from their British counterparts as they expanded into new practices in the region. But that expansion has mostly passed its peak. As market growth slows, more US firms have turned their focus to organic growth, said Laura Zhao, a Hong Kong-based legal recruiter.

"During the incubation period, the US firms heavily invested in lateral recruitment. But now firms are more about protecting the bottom line and less incentivised to invest, especially as China's economy is slowing down," she said.

Miriam Leung, who leads the private practice team for recruiter Aquis Search, said she saw a growing number of moves from US firms to UK firms during the past three years. Leung pointed out that lawyers' career choices factor into the equation. The US firms, she said, may pay more, but they also tend to have higher performance expectations.

"Lawyers, especially more senior ones, understand the pressure when considering pay," she said, adding that partners tend to move to UK firms during market slowdowns for more firm support and lower expectations for bringing in business, compared to elite US firms.

Fuelled by a surge of Chinese listings both in Hong Kong and the US, and a buoyant M&A market in Japan, the vast majority of last year's hires were transactions lawyers. Less than 23% of the 228 moves were disputes specialists.

But that might change in 2019, according to Leung, as transactions cool down. "In a slower market, firms will look to diversify by either adding or expanding dispute resolution practices," she said.

Last year, Asia also witnessed explosive growth in the legal arms of the Big Four accounting firms. In total, the auditors' affiliated law practices hired 11 partners across Asia, including seven from UK and US firms. EY, Deloitte and PricewaterhouseCoopers all either launched new Asian legal practices or expanded aggressively in Hong Kong or Singapore in 2018. And in early 2019, KPMG also launched a nine-lawyer Hong Kong firm and is planning a Shanghai base.

Leung said the Big Four's legal expansion in Asia will likely continue in 2019. Part of what has made their recruitment efforts successful, she said, is that lawyers in Asia are more open to new ideas.

"Lawyers here are tired of hearing the same things over and over again," she said. "When the headlines start coming in about the Big Four or the Chinese firms, it whets their appetite."

Additional reporting by John Kang in Hong Kong. 

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