Linklaters is in advanced discussions with two Chinese law firms, Shanghai Capital Law & Partners and Shanghai Kai-Rong Law Firm, as it bids to become the first Magic Circle law firm to practise Chinese law.
Labelled Project Trident, Linklaters has been searching for a local law firm to partner with in the Shanghai free trade zone since the start of the year. Asia managing partner Marc Harvey, who was recently pipped to the managing partner post by banking chief Gideon Moore, is leading the project and has overseen discussions with 10 Chinese firms.
China’s ministry of justice approved plans to allow international firms to enter its legal market through the Shanghai free trade zone last year after decades of protectionism. The move made cooperation agreements available to firms operating in Hong Kong, Macau and Taiwan, allowing international firms to practise Chinese law for the first time, rather than relying on a representative office.
Shanghai Capital Law & Partners and Shanghai Kai-Rong Law Firm, both boutiques, fit with Linklaters plan of tying up with a small local firm. These talks are the most advanced of the 10 firms Linklaters has met with.
Shanghai Capital Law & Partners was established in 2004 and specialises in handling initial public offerings, securities and M&A work. The firm has 12 lawyers.
Shanghai Kai-Rong Law Firm, which specialises in M&A and disputes work, was founded in 1998 by Jin Yu-Lai as one of the first private law firms in Shanghai. The firm has 15 lawyers, six of whom are partners, and is also known for its finance and shipping work. Major clients include Air China, Singapore Airlines and HSBC Insurance.
Yu-Lai is most well-known for his work for Korean Air after one of its aircraft crashed in Shanghai in 1999, killing eight people. He has built up a strong following in this area, acting for Bombardier following the Baotou air crash that killed 54 people in 2004 and also counts Etihad Airways as a client.
One Linklaters partner told Legal Business: ‘We need to set up something in Shanghai. Every firm wants to do that and some already have. Harvey informed senior members of the partnership last month that we are continuing to progress our PRC law speciality, Project Trident, and while we continue with a target law firm, which may be one of these two, we also consider a potential greenfield option should we not be able to identify a suitable law firm.
‘What is really means is that we are still wondering whether we will do a joint venture or set up a greenfield option ourselves. If we did a greenfield option we have a number of qualified Chinese partners, so they could move to their own firm – or ideally, we may want to find one or two individuals and set up a new firm with them.’
Baker & McKenzie became the first international law firm to get permission to practise local law in China in a joint operation with Chinese firm FenXun Partners in April this year.