Sidley Austin will close its Shanghai office in September, making it the fourth US-based law firm to close a branch in China this year.
“As part of our review of office space and attorney requests to relocate or retire, we will not be renewing our Shanghai lease,” a spokesperson of Sidley Austin told China Business Law Journal.
“We will consolidate our China operations in September 2024 with relocations to Beijing, Hong Kong, and other Sidley offices.”
The spokesperson vowed that clients would not be affected by the closure, but did not reveal details of the next move for the firm’s lawyers in Shanghai.
Sidley Austin’s website shows 11 lawyers are based in the Shanghai office, including chief representative and partner Tang Zhengyu and partner Ji Ruchun.
Aside from Shanghai, Ji is also based in Beijing and Palo Alto in the US. He is the only partner in Sidley Austin’s Beijing office.
Since June last year, seven China offices of Western law firms have closed their doors, and all of those involved are US-based. In the first three months of this year alone, Weil, Orrick and Perkins Coie have shut their branches.
Leslie Zhang, vice president and general counsel of the United Energy Group, said the main reason why US-based law firms had closed their offices was because clients in China were deterred by the expensive legal fees.
For example, a partner from a US-based law firm might charge USD1,800 per hour, but clients in the mainland would only accept a price range of USD600 to USD1,000.
Zhang said: “Combining other factors such as the Sino-US relationship, the economic downturn and that clients, such as state-owned enterprises of large-scale and good quality, might have concerns over US-based law firms, so those firms have ultimately shut down.”
He added some state-owned companies had data security concerns and would prefer to work with China-based law firms. “They will let US or UK law firms handle tasks that cannot be completed by China-based firms,” said Zhang.
In-house counsels’ work will not be affected by the wave of exits as Zhang believes UK-based law firms are a replacement.
Zhang said UK-based law firms had attracted Chinese clients as they were considered a politically safer option than their US counterparts. In addition, they were able to provide “flexible” consultation arrangements and pricing.
