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The early Bird & Bird catches the worm – firm prepares to practise Chinese law

Bird & Bird has put plans in place to gain entry to a pilot scheme in China that will allow international firms to practise Chinese law for the first time.

Bird & Bird is looking to establish a joint venture with a Chinese law firm under a pilot scheme set to launch in the southern province of Guangdong. International law firms are currently unable to practise PRC law and the proposal could lead to liberalisation of the country’s legal services market. The ten firms that get the go-ahead to launch joint venture practices in Guangdong will be entitled to practise PRC law across China.

Legal Business understands that the firm, which is one of under four international firms to have a tie-up with a Beijing law firm, is mulling extending its relationship with Lawjay Partners to launch a joint venture in the province under a scheme set to offer 10 firms in Hong Kong or Macau the chance to establish a joint venture with a Chinese firm. Authorities in Guangdong and Hong Kong are looking to get the pilot, which is an extension of the Closer Economic Partnership Arrangement (CEPA) designed to offer Hong Kong businesses access to markets in mainland China, off the ground before the end of 2015. The firm currently refers all PRC law and litigation work to 50-person strong Lawjay Partners, which it formed an association with in 2009.

Justin Walkey, Bird & Bird’s chairman of Asia Pacific, told Legal Business: ‘Our focus would be on the one or more licences to be granted in Shenzhen, as it’s extremely close to the border with Hong Kong and is therefore commutable for Hong Kong staff and has a strong technology focus, with a lot of incubators for tech companies.’

Bird & Bird currently has 45 lawyers in Hong Kong, including 10 partners, and will need to meet minimum investment requirements if it is to appease the Chinese authorities. The firm already has outposts in Beijing and Shanghai but, like all law firms, has struggled to make profits due to their exclusion from the local market.

Walkey adds: ‘It’s CEPA on steroids. What with the number of free trade zones coming up, it potentially cures the conundrum of what’s going to happen to international law firms in China with a closed legal market as clearly the Chinese firms are catching up. The key to being selected is around the identification and selection of the Chinese law firms, being pre-qualified, rather than who they get into bed with.’

At present, Chinese lawyers that move to international law firms have to give up their local practising certificate but this will not happen under this scheme, allowing those selected to have a blend of local and international lawyers. Walkey explains: ‘For Bird & Bird’s model we’re not trying to exclusively practise the international work with international lawyers at international rates. We do a blend of local and national work and you need both sets. It gives you challenges as you’re going to have salary differentials and rate differentials to deal with but that’s no different to what we had in places like Singapore. It [The joint venture] will allow us to have a slightly different cost base for doing local China work, which currently we couldn’t really do if we’re being held to price competition with local firms.’

Under the draft ordinance, joint ventures are excluded from practicing administrative law and criminal law, the latter of which may create a hurdle for Bird & Bird, due to the large amount of IP infringement work it handles that are criminal and civil offences.