US, China law firms pool their expertise

Baker & McKenzie LLP, the world's biggest law firm by revenue, said it has been making progress in its joint operation with local Chinese law firm FenXun Partners, a move to expand its presence in the "brutally competitive" legal service market in China.

The two firms have jointly carried out about 70 projects involving technical advice in cross-border mergers and acquisitions, fundraising and antitrust issues, according to Milton Cheng, managing partner of the firm's Hong Kong office.

"It has been a success for us," Cheng said.

"We are getting the benefit of understanding how the Chinese law firms operate and gaining valuable perspectives on how Chinese clients are thinking."

In April the firm gained regulatory approval to set up a joint operation office with FenXun Partners in the China (Shanghai) Pilot Free Trade Zone, the first of its kind in the country.

The alliance allows the two firms to share their client bases and strategies while remaining structurally and financially separate.

The managing partner said the move was also seen as a sign of the gradual liberalization of China's highly restricted legal service market to international law firms, which have been facing competitive challenges in China.

Cheng said Baker & McKenzie has taken a long-term view on China despite the increasingly intense competition for international law firms due to the emergence of Chinese firms of sophistication and size.

"Pricing has been brutal for some types of work," Cheng said. "Law firms with less long-term views and less tolerance may be deterred by this. But we plan and invest for the long term."

The alliance between Baker & McKenzie and FenXun Partners, labeled as a prototype for foreign firm's operations in China, enabled the Chicago-based law firm to advise their multinational clients on both Chinese and international law.

The tie-up followed the merger between international law firm Dentons and Chinese firm Dacheng Law Offices in January, which created the world's largest law firm by lawyer headcount.

Erik Scheer, a member of the global executive committee of Baker & McKenzie, said that the firm's global clients have supported the joint operation with the Chinese firm.

"It is important for us to get a local operation in China as it brings our global clients closer to the market and the legal environment," he said.