Last year Baker & McKenzie obtained a coveted “001” licence from Chinese regulators. The designation confirmed that it would be the first foreign law firm allowed to establish a “joint operation” with a Chinese counterpart, FenXun Partners, in the Shanghai free-trade zone.
Overseas law firms have long been frustrated by the restrictions they encounter in China. When they recruit talented Chinese lawyers, for example, their hires must give up their local law licences — and thus their ability to represent their new employers’ clients in Chinese courtrooms. In many industries, most notably banking, it is far easier for Chinese companies and service providers to go overseas than it is for their foreign rivals to enter China.
Foreign law firms are revelling in the continuing Chinese mergers & acquisitions bonanza, advising local companies on overseas purchases that exceeded $100bn last year and then surpassed that amount in the first quarter of this year alone. But their ability to service multinationals in the world’s second-largest economy is far more constrained.