11 June 2012

Odd bedfellows

Chinese and western law firms are getting closer -- but there are still plenty of reasons for both sides to be wary

First came Europe, then the Middle East, and now it is East Asia in the cross hairs with Africa and South America likely to be in the line of fire before long.
The ravenous appetite of global law firms – namely, US and City of London-based practices – is well documented. Transatlantic player DLA Piper and global behemoth Baker & McKenzie are effectively the legal profession’s equivalents of Starbucks – no matter in which remote corner of the world one finds oneself, it is a fairly safe bet that one of their lawyers will be relatively close to hand.
Those are just two obvious examples. A horde of global law firms has advanced across continents in the past 15 years, sweeping almost all before it. Established European practices were often too hidebound in traditional structures to withstand the assault, while those that have survived best have simply adopted Anglo-Saxon techniques and management methods, as much as they loathe having to admit doing so.

Making a buck

But is that US-UK dominance on the brink of meeting its match with the tide to be turned back in Asia? As our cover article this week argues (see page 12), China, in principle, at any rate, is capable of producing a global legal profession to rival the Anglo-Saxons.  
It is no secret that China’s Communist Party leaders have little difficulty sidelining Maoist doctrine when it comes to making a buck – years ago they launched economic free zones to encourage capitalist investment and now they have liberalised historic constraints on domestic lawyers to allow them to be more competitive on the world stage.
Indeed, Chinese law firms are already sniffing the air around cross-border deals. Our commentator maintains that this is just the beginning and that eventually the UK-US firms – or perhaps even the global European practices – will have to consider a Sino merger if they want to remain competitive in East Asia. The culture clash would be monumental, but the potential prize of global domination might be too much to resist.

Red tape

However, there remain important ethical issues around the practice of law in China and the Chinese government’s approach to domestic law firms. Earlier this year, an edict was passed down from on high in Beijing that all Chinese lawyers must sign a loyalty oath to the Communist Party. Some in the West appear happy to minimise the significance of the move, dismissing it as being little more than another roll of Chinese red tape.  
But the idea of lawyers swearing an oath to anything apart from the rule of law and the principle of fair justice is and should be anathema to any democratic legal profession. The recent case of Chen Guangcheng – the so-called barefoot lawyer who holed up in the US embassy and is now in America preparing to study law – highlights that all is not as well with the rule of law in China as perhaps many at Western law firms would like to think, or have deluded themselves into thinking.
China is a huge market that presents significant opportunity and challenge for global law firms. But before jumping into bed with Chinese law firms, they should first whip off the duvet and have a good look at the mattress.

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