Read our latest coverage on the scramble to get American law firms — and lawyers — into China.
As the exploding Chinese economy has attracted U.S., British and other foreign firms, lawyers have been forced to maneuver around Chinese restrictions. China prohibits foreign law firms from practicing law in that country, and Chinese lawyers who join U.S. law firms must give up their local licenses. Because the MWE lawyers will not have to give up their local licenses, McDermott clients will have access to U.S. lawyers and Chinese lawyers who can practice local law, says Huang.. “It would feel to clients very seamless,” says Freishtat.
U.S. firms with offices in China typically focus on cross-border transactions that they don’t consider to be practicing law in China. Last April, however, the Shanghai Bar Association issued a harshly worded memo accusing foreign law firms of illegally practicing law and urged the government to regulate and “purify” the foreigners. Since then, it doesn’t appear that the bar association or the government has taken any action. Huang says his new firm did not need the approval of the Shanghai Bar Association or other Chinese authorities for its alliance with McDermott.
‘This will be the prevailing model adopted by many firms. But we are the first mover.’� John Huang
Chinese lawyer
He also did not seek an outside opinion that this arrangement complied with Chinese law. “It was our conclusion that it was not necessary to get a legal opinion,” he says, noting that he is well-versed in this area of expertise.
“This will be the prevailing model adopted by many firms,” asserts Huang. “But we are the first mover.” Not all firms may be eager to jump on the bandwagon. “For firms that are already active in China, this may not be necessary,” says Howard Chao, a partner at O’Melveny & Myers, which has 95 legal professionals in China.
“If you’re trying to make a splash quickly, this is what you might try to do.” Benjamin Bai, a partner at Jones Day, which has more than 150 legal professionals in China, says an alliance with one firm can be problematic: “You’re committing each other to exclusivity, which hurts both law firms in the long run. Most Chinese law firms don’t have that much work to send to U.S. firms.”
Barry Levin, a partner and former chairman at Heller Ehrman, which has 35 lawyers and consultants in China, adds, “A lot of Chinese firms don’t want to affiliate with a single U.S. firm. It limits their access to other U.S. firms.”
Freishtat says that the typical friendly but loose affiliation with Chinese firms is fine, but not ideal: “We wanted to develop something more integrated.”
Susan Beck is a senior writer with The American Lawyer, a Recorder affiliate based in New York City.
