Foreign law firms tilt China strategy on upbeat economic outlook

Foreign law firms have adjusted their China strategies amid solid expectations of a post-pandemic economic recovery since the mainland government lifted the lockdown at the end of 2022.

Holman Fenwick Willan (HFW) and Morgan Lewis established a presence in Shenzhen in June, the first time since the 2020 outbreak that a foreign law firm has opened an office in the city.

Brinks Gilson & Lione, Fish & Richardson and Maucher Jenkins, all of which are known for their expertise in IP practice, have also established offices in Shenzhen. Other foreign law firms, including Rouse, Perkins Coie and Parker & Parker, opened Shenzhen IP agencies four years ago or earlier.

HFW had previously set up representative offices in Shanghai and Hong Kong as did Morgan Lewis, which also added a Beijing office.

While the firm’s existing offices are already handling matters for mainland businesses and assisting their push into overseas markets, adding a Shenzhen representative office, especially adjacent to Hong Kong, provides easy access for international capital to tap the China market, said Justin Sun, HFW’s Shenzhen chief representative. A number of HFW’s lawyers in the Hong Kong office passed the Greater Bay Area legal qualification examination and received their practising certificates in 2022.

“With Hong Kong, Macau, and nine other most developed cities in the region, our representative office in Qianhai, Shenzhen, offers door-step access to China’s huge domestic market and serves as an important link to the international market, which unlocks new growth for international law firms like HFW,” Sun said.

Morgan Lewis’ new office will focus on IP practice, mainly advising on life sciences and technology. “Shenzhen is a major hub of China’s technology industry with the highest density of startups of all the mainland cities in China, and it is a staging ground for large high-tech companies from all over the world,” said the firm’s chair Jami McKeon.

The Shenzhen team is set to expand Morgan Lewis’ IP reach in China, advising on the full range of IP matters, including patent and trade secrets disputes, as well as advising on licence agreements, commercial contracts, leading transactions and due diligence.

“China continues to be an important market for many businesses, driven by its market potential and growth, particularly in the Greater Bay Area,” says Tracy Wut, managing partner of the Hong Kong and mainland China offices for Baker McKenzie. She was appointed in July for a three-year term.

“We have reoriented our firm to ensure we are supporting businesses as they seek opportunities across this fast-developing southern area that includes Hong Kong, Shenzhen and Guangzhou.”

She estimates a moderate increase in outbound deals involving Chinese companies later this year. New economy businesses focusing on innovation, technology and consumption are expected to stimulate the economy in China and around the region, under the urgent need of digitisation and net-zero transition, which aims to cut greenhouse gas emissions to as close to zero as possible.

The potential, however, does not prevent Proskauer closing its office in Beijing and retreating from the mainland. As for its only Asian office in Hong Kong, there is only one partner left.

Chinese clients matter a lot for any international law firm, admits Peter Lu, the global head of McDermott Will & Emery’s China practice, but having a branch in the country requires a careful long-term strategy to bring its market position in China in line with the rest of the world.

Lu joined McDermott’s London office as a partner in May. Although the firm does not have a representative office in China, Lu sees no impediment to operating its China practice.

“We want to monitor our quality closely and with offices everywhere, it will be almost impossible.”

He deems it an advantage to run the global China practice from London, saying “I only take on very complex matters which require the commitment of a world-class legal team … Recruiting such lawyers is only possible in the world’s leading financial and legal centres, such as London.”

If needed, he adds, the team can enlist local Chinese law firms and lawyers for critical matters for clients.