US law firms grow in China practice, staff

Major US law firms experienced steady growth in their China practices in 2014, driven by increased business from technology, mergers and acquisitions (M&A) and regulatory matters.

And firms contacted by China Daily said they expect continued growth this year and the addition of more lawyers to their ranks.

"The volume, deal size and sophistication of US acquisition matters from our China-based clients have steadily increased in the past several years. We anticipate continued growth in 2015," said Thomas Albrecht, managing partner Asia-Pacific region with Chicago-based Sidley Austin LLP, which has offices in Beijing, Hong Kong and Shanghai.

Miranda So, a Davis Polk & Wardell LLP corporate partner in Hong Kong, said the China practice was "busy" in 2014 and expects to remain busy in 2015. Davis Polk, based in New York, has offices in Beijing and Hong Kong.

Paul Marquardt, partner at New York-based Cleary Gottlieb Steen & Hamilton LLP, which maintains offices in Beijing and Hong Kong, said after a period during which Chinese investors appeared convinced that any China-linked deal would face protectionist backlash via a review process from the Committee on Foreign Investment in the United States (CFIUS), Chinese acquirers are now confident in addressing CFIUS.

"We've been involved in transactions with major Chinese State-owned enterprises, private companies, and investors that demonstrate that even in potentially sensitive sectors such as energy and telecoms deals can still be done," Marquardt said.

Davis Polk's So said capital markets, M&A and regulatory enforcement were the top areas for the firm's China practice last year. "Many of the largest deals we work on are cross-border transactions that involve teams from both our China and US office.

"Our Hong Kong and Beijing offices have grown significantly in the last few years," So continued. "On the US side, we are focused on recruiting the best talent from US law schools who are interested in practicing law and developing a career in China. Ten years ago, all of our US associates would start in our US offices and work there for a few years before transferring to China. Now, we recruit law school graduates and encourage those who are interested to start hitting the ground right away in China."

Albrecht said Sidley Austin client concerns in 2014 included manufacturing and technology issues. "As the deals have grown in sophistication and complexity, it has become more important to have the deal lawyers located in a time-zone friendly jurisdiction to interface with opposing counsel and other US- based professionals involved in the transaction. In other words, the involvement of our US-based colleagues has increased," he said.

Has Sidley had to add staff and if so where - in China or the US? "Because of the existing depth of our US M&A capability, we have plenty of bench strength to accommodate the increased flow of outbound investment activity from China. We have increased our lawyer headcount in China recently as a result of a general increase in work flow from our China-based clients, but that is not due simply to an increase in outbound M&A activity in the US," Albrecht said.

Sidley has hired more than 130 lawyers that speak Mandarin or Cantonese in the last five years, and plans to add around 15 Mandarin/Cantonese-speaking lawyers in 2015.

Cleary Gottlieb's China practice focuses on M&A, private equity, capital markets, acquisition finance, fund formation, and coordinating antitrust matters in China. "We see significant opportunities in the areas of M&A, real estate, and investment funds. Inbound M&A activity by multinational corporate and PE (private equity) clients continues to grow, as does as outbound M&A by Chinese clients in US, Europe and Latin America," said Cleary Gottlieb partner W. Clayton Johnson.

"There have been Chinese companies seeking our antitrust advice or approaching us for antitrust advice (including transactional, advisory, and litigation work) in the United States and in the EU," added Cleary Gottlieb associate Cunzhen Huang.

"We added six Mandarin-speaking lawyers in our Beijing and Hong Kong offices in 2014, four new hires and two transfers from our New York office. In addition, partner Denise Shiu, a Mandarin and Cantonese speaker, will transfer from Hong Kong to Beijing in early 2015. We plan to hire additional Mandarin-speaking lawyers in Beijing and Hong Kong in 2015," said Ling Huang, partner at Cleary Gottlieb.