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China - a desirable destination for international law firms

Posted by: Laurence Simons 11/02/14

While China's economic growth may not be reaching the giddy peaks it saw earlier this century, the country remains a major international powerhouse and a desirable destination for legal organisations keen to spread their wings and move into new markets.

However, the Chinese legal sector is complex and subtly different to its Western alternative, meaning any firms keen to launch offices in the country should plan their approach carefully before making a move.
 
Writing in the Global Legal Post, Kai Xue of Chinese company DeHeng offered some guidance to foreign legal service providers considering opening a representative office (RO) in mainland China.
 
As China continues to be a desirable location for multinational conglomerates - and, indeed, as businesses based in the country attempt to expand into new markets - the demand for foreign legal advice has increased.
 
About one in three top Anglo-American firms have established offices in China, including many of those considered part of the Magic Circle and Biglaw categories.
 
Businesses need to be aware of the litigatory and administrative complexities involved in opening an office in the country, however.
 
"The law firm will need to have insurance coverage for malpractice liability in China. More so, the insurance policy must specifically name China as a jurisdiction under the coverage as well as the individuals to be appointed as representatives," said Mr Xue.
 
An application must be filed to the provincial level of the Ministry of Justice, which can take some time to be fully processed and dealt with, he added.
 
Last year, an in-depth report from the Legal Gazette highlighted many of the problems with penetrating the Chinese legal market, noting that foreign firms face a number of restrictions that must be circumvented if they are to operate effectively.
 
Further market liberalisation could be set to take place over the coming years, but until it does legal companies need to carefully consider the pros and cons before opening a Chinese office.