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Autodesk isn’t exactly a first-time visitor to China. The San Rafael software company established a modest in-house legal division in Hong Kong several years ago as part of its battle against software piracy. Now the company is focusing on China as a key location for product development, opening a research and development center in Shanghai earlier this year. But the batch of corporate work spawned by the new initiative is flowing to local Chinese firms that Autodesk forged ties with in its earlier anti-piracy efforts, rather than its primary law firm, Wilson Sonsini Goodrich & Rosati. “It’s fair to say that the Silicon Valley firms are not yet expert enough in Chinese law to be an exclusive source of legal help,” says Marcia Sterling, Autodesk’s general counsel. “In fact, I’m not sure any national or international law firm could be that for you in China unless they had a local office.” The situation poses a challenge to the Valley’s local law firms since China occupies an increasingly prominent place in the growth plans of U.S. tech companies. Raising the stakes are a handful of out-of-town firms with extensive footprints in Asia that are positioning themselves to cash in on the tech industry’s China frenzy. With no on-the-ground resources in China, Valley firms risk being left on the beach to watch as other firms ride the next big wave of tech-related legal work. White & Case, which moved into Silicon Valley in 1999, is co-hosting a symposium Thursday geared specifically toward Valley companies doing business in China. O’Melveny & Myers and Shearman & Sterling, both relative newcomers to the Valley, have each racked up an impressive list of tech clients with legal matters in China. “I feel that in terms of tech companies, we’re sort of meeting a need that is probably not completely fulfilled right now,” says Carmen Chang, a partner at Shearman & Sterling, which has offices in Beijing and Hong Kong and is in the process of procuring a license to open a Shanghai office. Chang joined Shearman in July, after 10 years at Wilson Sonsini. While Chang was happy at Wilson Sonsini, she says she moved because the nature of her China-centric corporate practice required a firm with offices in China. At least 30 of her clients agreed, including longtime Wilson Sonsini client Google, which moved its China work to Chang’s new firm. Other Wilson clients, including UTStarcom and Fortinet, moved all of their work to Shearman. None of the Valley’s home-grown firms — Wilson Sonsini, Fenwick & West, Cooley Godward, or Gray Cary Ware & Freidenrich — have offices in China. Of the Bay Area’s firms, Morrison & Foerster has put down the biggest bet, with 25 attorneys in offices in Shanghai, Beijing and Hong Kong. Heller Ehrman White & McAuliffe has about 20 lawyers in Hong Kong. For tech companies, the opportunities in China are enormous. Markets for high-tech goods and services in China are growing by 20 to 40 percent a year, says Jennifer Guhl, the director of international trade policy for AeA, a high-tech trade association. “You don’t see those kinds of growth rates in any other country in the world,” Guhl says. With China’s 2001 entry into the World Trade Organization removing many business barriers, American companies are pumping increasing amounts of cash and resources into the country. In 2001, U.S. technology manufacturers invested $4.8 billion in China, up 17 percent from the year before, according to AeA numbers based on reports from the U.S. Department of Commerce’s Bureau of Economic Analysis. “Most companies have China on their radar screen, and either have plans that they are currently implementing or plans that they are currently developing,” says Guhl. While tech companies once thought of China as a low-cost factory for assembling their products, they are increasingly viewing China as a vast market. As a result, the type of legal work runs the gamut from capital markets matters to inking joint venture deals. The Valley’s coterie of venture capital firms is also looking to invest in Chinese companies. Among the topics of discussion at the White & Case symposium on China are tips on doing due diligence on Chinese companies, structuring investments in China for tax efficiency, and protecting intellectual property in China. Not surprisingly, the native Silicon Valley law firms that are accustomed to handling these types of matters for tech companies and venture capital firms are not prepared to cede the market to out-of-town outfits. PUTTING UP A FIGHT “We as a firm are devoted to servicing tech companies,” says Fenwick & West partner Barry Kramer. “And as China becomes more important in the tech world we will absolutely make sure we will be able to provide the legal services people need in China; there’s just more than one way to provide that.” Rather than opening an office in China, Kramer says Fenwick can serve its clients adequately by using affiliate law firms in the country. In some respects, he says, working with affiliates is an advantage because he can pick and choose an attorney that’s got specific expertise in a matter, rather than rely on whomever the firm happens to have in its branch office. “So long as there are good firms that we can use in China to assist us, I think it’s not an issue,” says Kramer. Recently, Fenwick has taken steps to broaden its pool of affiliate law firms in China, and it is considering other initiatives, like hosting seminars, to ensure that clients don’t bypass Fenwick for their China work. John Roos, the managing partner of professional services at Wilson Sonsini, couldn’t be reached for comment about the firm’s Asia strategy. But despite the resolve of local law firms, it’s clear that out-of-town firms with China offices are making inroads into the Bay Area’s technology client base. O’Melveny & Myers opened a Menlo Park office in 2001 after the tech bubble had already burst. While representing Valley firms in China was not the primary motivation for moving into the Valley, it was one of the key facets of the overall strategy, says Howard Chao, the head of the firm’s Asia practice. The practice, which counts offices in Beijing, Shanghai, Hong Kong and Tokyo, is based out of the Silicon Valley office, where Chao spends more than half his time. O’Melveny already had some big tech names on its client roster before entering the Valley such as Sunnyvale chipmaker Advanced Micro Devices. Since basing its Asia practice in Menlo Park, though, the firm has scooped up a number of local tech clients doing business in China, including PeopleSoft, MIPS and Altera. O’Melveny could have based its Asia practice in a number of different cities, like Los Angeles or New York, says Chao. “But I decided to go to Silicon Valley because I felt that was the biggest professional opportunity,” he says. “A huge opportunity to help tech and venture capital firms as they started to expand into China, and it’s definitely proven true.”

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