After boosting its Asia Pacific turnover by more than 10% last year, Allen & Overy (A&O) has become the latest City giant to receive approval to practise law in China’s Free Trade Zone (FTZ).
The arrangement comes by way of a joint operation with local firm Shanghai Lang Yue Law Firm – called Allen & Overy Lang Yue (FTZ) Joint Operation Office – which received approval from the Shanghai Bureau of Justice, A&O said today (7 January).
The move makes it the second Magic Circle firm to commit to the region, with Linklaters in May 2018 striking a similar arrangement with local firm Zhao Sheng. FTZ rules allow international players to tie-up with domestic firms and practise local law.
For Linklaters, the agreement contributed to double-digit revenue growth in the firm’s non-European offices in the year to April 2019, with Asia-Pacific turnover surging 15% to £226m, its LLP accounts published in November showed.
The latest deal will combine Lang Yue’s PRC law capability with A&O’s international platform to advise on corporate, M&A, private equity, venture capital investments, capital markets, regulatory advisory and compliance matters.
Victor Ho, A&O’s Beijing & Shanghai managing partner, told Legal Business the two firms have been working together on mainly in the corporate/M&A, DCM and ECM areas.
He commented: ‘For example, the teams are currently advising a number of Chinese domestic clients with their overseas IPO projects, in particular by way of red chip or H share listing in Hong Kong. Other examples include assisting on the Chinese portions of large global transactions. All of these projects require close collaboration between PRC firms and their international counterparts, the joint operation allows our teams to bring this collaboration to a very high quality level.’
Wenxin Zhou, partner at Lang Yue, said the firms were introduced by a mutual contact a few years ago and have worked together on a significant number of client mandates. ‘The success of that work is what led to discussions for the Joint Operation and is a continuation of an exceedingly close collaboration.’
Simon Makinson, corporate partner and head of A&O’s Myanmar practice, has played a leading role in the cooperation and will continue to do so.
On A&O’s strategy, Ho added: ‘Growing our China related business is one of our global strategic priorities as we are committed to providing our clients with the best quality legal coverage wherever they operate and where we can. This includes not just representing MNC clients in China investing in China and Chinese clients investing abroad but assisting our global network with the growing number of Chinese-related projects, Chinese counterparties and China regulatory-related issues.’
A&O’s recently-published LLPs were a fillip for a firm that saw its plans for global elite status stymied by its much-publicised failure to secure a merger with O’Melveny & Myers.
The firm benefited from a foreign exchange gain of £9m, which contributed to 5% revenue growth to £1.627m from £1.552m in 2018, as well as an 8% uptick in pre-tax profit to £708m from £653m the previous year. Profit per equity partner (PEP) was up 1% to £1.66m from last year’s £1.51m, excluding foreign exchange gains and last year’s £21m in exceptional property costs.
Revenue rose across the board geographically, with Asia-Pacific’s income increasing to £244.5m from £221.7m, an uptick of more than 10%.
Meanwhile, A&O is gearing up for a February leadership election that has seen Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, standing for the managing partner role. The spot is hotly-contested after Andrew Ballheimer said in early December that he would retire from A&O at the end of his current term on 30 April 2020.
Liu will be up against London candidates including global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures, as well as has Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels.
Senior partner Wim Dejonghe is standing for a second term and will be up against Philip Bowden, the City giant’s well-regarded banking co-head.
Other firms to have entered the FTZ include Hogan Lovells, through its association with Fidelity Law in October 2016 and Baker McKenzie, which a year earlier became the first international firm to launch a joint office in the area with Beijing firm FenXun Partners. Holman Fenwick Willan, meanwhile, formalised a local partnership with Wintell & Co in April 2016.