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I will never forget that night some time in the early 1980s. I was sitting in my office in San Francisco, sipping a glass of cabernet and looking over the sameness of work piled on my desk. That was the moment when I determined to change my professional life. I had recently read an article in The Recorder about a Chinese lawyer who was interning at a local law firm, and the next morning I called to make an appointment. During our meeting he chuckled when I told him of my interest in practicing law in China. It was impossible, he said, since only Chinese citizens who had passed China’s bar examination were permitted to practice in China. Me, I was an American citizen who spoke no Mandarin, had no clue about Chinese law and, indeed, had never even been to China. Even so, I decided to figure out how to make a living representing clients who were doing business there. A couple of years passed before I had my first China-related business client — someone who wanted to enter into a publishing joint venture in China. I read everything I could about Chinese foreign investment law and bought a book about how to negotiate with communists. In the dead of winter, in an overly warm room in a government office building in Beijing that was thick with smoke from cigarettes that dangled from the mouths of a dozen people on the opposite side of the table, my client and I, with the help of a translator, negotiated for several days. The negotiations, I have to say, were going poorly. I dropped 10 pounds and smelled like a smokestack. In the middle of the proceedings, the Chinese side declared that if there were to be a joint venture, it would not be an equity joint venture but rather a new contractual joint venture. I asked to see a copy and was told it was “in the drawer.” I learned that was a term that meant it was not yet public, which prevented me from seeing a copy of the law. Trust us, they said. I realized why people feel so nervous whenever lawyers use that phrase. Welcome to China. Two decades and many clients later, I still make my living through law in China. I live most of the time in Beijing and Shanghai, with monthly trips back to San Francisco for a breath of fresh air, both literally and figuratively. In Beijing, my wife and I have a consulting company in which she focuses on governmental relations and I advise and assist corporation counsel in evaluating the performance and cost-effectiveness of outside counsel working in China. In Shanghai, I serve as an of counsel at one of the largest Chinese law firms in the country. Back in San Francisco, I maintain an international immigration law practice that specializes in advising companies doing business in China on outbound immigration. During the first 10 years of my work in China, it felt as if I were witnessing the opening of the Wild West — with the legal system presided over by the likes of Judge Roy Bean. New laws were being turned out with assembly-line frequency. It was all a matter of guesswork when it came to the interpretation and administration of these laws. The enforcement of legal claims amounted to a genuine Pandora’s box of challenges and surprises. More recently, however, China has made significant progress in reforming its legal system. Administrative processes are now more predictable and accountable. The judiciary is more professional. Law school graduates are going abroad and gaining practical training in large international firms before returning to China to start local law firms. Despite such progress, however, China’s economic engine continues to outrace the development of the rule of law. The laws may be on the books, but their interpretation often remains frustratingly inconsistent. Enforcement, too, is often spotty and unpredictable. Self-interest and political influence still remain embedded in the Chinese legal system. In rare instances, the rule of law gives way to the rule of man. Not long ago, my colleagues at the Shanghai law firm went to a rural area on behalf of an international client who was involved in a dispute with a local manufacturer. When they arrived, they were held captive in their hotel rooms and their identifications were taken from them. Complaints to local law enforcement officials fell on deaf ears. How have I managed to survive in this unpredictable legal landscape? To a large degree, I’ve done so by partnering with my wife, a native Chinese who possesses a deep understanding of the political, social and economic climate in China, along with an extensive network of contacts within the system. In other words, she is intimately familiar with the system, knows the people and has the credibility and political sense to achieve the goal at hand in an expedited and cost-effective manner. Beyond the benefits of having such a partner, there are other steps that companies can take when it comes to finding the right lawyer and working effectively with counsel on China-related business matters: � Determine your legal needs. Prepare a request for proposal for legal services. Ask for a detailed plan, including the time, cost and anticipated completion dates for each phase of the work and who will be performing the work. Solicit several proposals from both foreign and Chinese law firms. Carefully compare the approaches described in each plan. � Assign in-house counsel to interview the firms as to their experiences with similar matters. � Insist on references from prospective outside firms. In the course of selecting counsel, it might helpful to bear a few things in mind about U.S. or other non-Chinese law firms that offer assistance on China-related legal matters. In additions to firms who have had offices in China for several years, it seems as if foreign firms are increasingly rushing to China to stake out their claim on a scale that brings to mind the Oklahoma land rush. Well, at least the law firm rush into Silicon Valley in the heady 1990s. Each firm extols its size, capability, prestige and expertise. But if all those factors matter in the United States, they don’t necessarily add up to much in China, as far as I’ve observed over the years. Frankly, Chinese officials don’t know one foreign firm from another, let alone those that are regarded as more prestigious or with a better reputation. I once heard a Chinese official refer to foreign firms as “interchangeable alphabet firms.” As for the connection between size and capability, I recall hearing a western lawyer explain the virtues of having so many attorneys at his firm. To which another Chinese official replied, “How capable is that firm if they need so many people to figure out the problem?” An alternative is to focus on China-based law firms. Hiring local counsel has its advantages, similar to the benefits of retaining local lawyers for legal matters in the United States. Such firms and attorneys often have good connections, a knowledge of the local legal — and, in some cases, political — landscape and a good sense of the administrative process. Many Chinese law firms, led by partners who have received training in international law with firms in the United States, England and elsewhere, now provide a viable alternative to foreign firms. The drawback is that a foreign company is unlikely to know anything at all about local counsel. Here’s a case where flipping through the pages of Martindale-Hubbell won’t be of much use. Whether you select attorneys from a foreign or Chinese firm, the key to ensuring competent counsel in China will be found in the lead attorney overseeing the matter. Ideally, that lawyer should: � Know the institutional history of the political, social, economic and cultural system of China, including past and current government priorities, factions, rivalries and leadership succession at all levels. � Understand how business is conducted in China in order to successfully implement western-defined goals through a Chinese-oriented business strategy. � Be able to conduct business, Chinese-style, with a sensitivity for unique cultural nuances. It’s crucial to understand the differences between business dealings in mainland China as opposed to, say, those in Hong Kong or Taiwan. � Possess substantial local and central government connections and relationships. � Be willing to be flexible and adopt unorthodox strategies, if and when necessary. � Have a deep regard for patience as a virtue. Given the nature of Chinese society (which, in some ways, is no different than any other), it should come as no surprise that foreigners will often be at a disadvantage in a number of these areas. Building and maintaining a deep network of well-connected contacts, for example, depends on trust that often takes a lifetime — or at least much of a lifetime — to develop. As a foreigner, my network may be fairly large, but it is based more on respect than trust. As a result, I cannot necessarily approach one of my Chinese contacts and ask him to intercede on behalf of a client. On the other hand, having a native Chinese attorney handling a matter also provides no automatic guarantee of success. Has that lawyer been away from China for several years? If so, as a returning “sea turtle,” he or she may sometimes face a difficult reception in dealings with other Chinese officials. Chinese who leave the country for an extended period of time and then return are often viewed with suspicion and mistrust. This explains an old Chinese saying: “Don’t allow your tea leaves to grow cold because they will produce a bitter taste when you try to reheat the tea.” My wife, who happens to be one of those “sea turtles,” has encountered this phenomenon in business meetings involving other returning Chinese. “Oh, you are returning to make money for your foreign master,” some Chinese officials have been known to respond, only half-jokingly, if the sea turtle in question is now working for a non-Chinese company or law firm. Perhaps it’s also a case of jealousy and resentment toward those who have had an opportunity to live away from China and to better themselves personally, professionally or both. Ultimately, none of the choices that can be made when it comes to selecting China-related counsel is likely to be perfect. But if you recognize the need to devote extra time to monitoring counsel and asking lots of questions when things don’t appear to make much, if any sense, you’re almost certain to increase the chances of successful results. Bruce Quan, who divides his time between Beijing, Shanghai and San Francisco, has been representing clients in China since 1985. In addition to his private practice, he is an assistant professor at Beijing University Law School and serves as the executive director of the Beijing University Law School/Boalt Hall School of Law faculty exchange program

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