X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Alibaba.com Corp.‘s headquarters in Hangzhou, China, looks like it was imported straight from Silicon Valley. Caf� tables and comfy sofas dot the reception area, just like at a Starbucks. Slabs of concrete and exposed pipes line the hallways. And twentysomethings in jeans and T-shirts fill every nook and cranny, looking like they’ve stepped out of a Gap ad. It’s all so hip and high-tech — except for the tea ladies: elderly women in blue pajamas, armed with big metal kettles. Every few minutes they mill about the computer stations, filling teacups with a fresh supply of hot water. These days, China is full of Silicon Valley wannabes, but Alibaba is way ahead of the pack. In a headline-grabbing deal last August, the company acquired Yahoo Inc.’s China business (it now operates the Yahoo brand in China), plus a $1 billion investment from the venerable Internet company. Now a $4 billion, privately held concern, Alibaba is best known for its business auction site (the company claims to be the leading Web site for business-to-business trade in the world) and Taobao.com, a consumer auction site that’s giving eBay a run for its money in China. ALIBABA IN-HOUSE Alibaba has another measure of success: It now has 14 lawyers among its 2,000-plus employees. And the company plans to add at least another six in-house counsel, including a new chief legal officer, in the next year or so. Most of the new hires are Chinese bred and educated. Although a dozen-plus lawyers for a company with $200 million in revenue is hardly startling, consider this: About a decade ago, in-house lawyers in China were almost nonexistent; most legal needs were outsourced to firms. Alibaba’s burgeoning legal department is an example of how much has changed in the in-house bar in just a few years. It also underscores the point that companies in China — both domestic and multinational — are no longer rushing to costly international law firms for help every time a question comes up. Increasingly, they’re grooming their own legal teams to compete in the heated China market. “We literally review thousands of contracts a year,” says Peter Schloss, the chief legal officer of TOM Online Inc., a Beijing-based wireless-Internet provider, which has 10 in-house lawyers. “We could double our legal department.” What’s igniting this phenomenon is China’s business boom. In 2005, the country’s gross domestic product was $1.79 trillion, making it the sixth-largest economy in the world. In 2006, China is expected to land in fourth place, surpassing the economies of the United Kingdom and France. What’s more, China is cranking out more laws and regulations to govern all that business activity, especially in the media and Internet sector. “We spend a lot of time just answering inquiries from governmental authorities,” says Joseph Tsai, Alibaba’s CFO and acting general counsel. The result is an unprecedented demand for talent. “We see a huge increase in in-house jobs,” says Hong Kong-based recruiter Andrew Pringle of Major, Lindsey & Africa. Pringle reports at least 15 to 20 openings in China at any given time. Besides the manufacturing and financial sectors, Pringle sees demand for in-house lawyers in banking, private equity, hedge funds, and distressed debt. “Everyone — law firms and companies — is looking for a Mandarin-speaking securities lawyer,” Pringle says. “It’s a headhunter’s nightmare.” But even though multinationals and elite Chinese companies are eager to fill these jobs, many businesses are trying to decide which skill set best fits their needs. The legal-talent pool in China has never been stronger: Bilingual lawyers with top law firm experience, particularly those Westerners who landed in China or Hong Kong in the early �90s, are now seasoned deal makers, ripe for top in-house legal jobs. At the same time, there’s a whole new generation of China-educated lawyers versed in the ways of capitalism. But there are pros and cons to hiring from each group. Although bilingual Western lawyers often have the requisite communication skills and international experience, few can claim to have the real inside track to Chinese bureaucracy. And although the Chinese bar is young, many of these lawyers already know how to talk their way through the bureaucracy and how to obtain the myriad licenses necessary for businesses to operate in the country. However, some of the Chinese-educated lawyers lack international experience — a drawback for companies with headquarters in Europe and the United States. For now, bilingual American lawyers with international law firm experience are the hot tickets for U.S. companies, according to interviews with more than a dozen in-house lawyers in China. St. Louis-based Emerson Electric Co.’s Asia Pacific division in Hong Kong is headed by American lawyer Sara Yang Bosco. A former partner at Baker & McKenzie’s Hong Kong office, Bosco left the firm for a partnership at Perkins Coie before landing at Emerson, a longtime client, last year. Born, raised, and schooled in Indiana, Bosco is a Midwesterner of Chinese descent. And though she speaks and writes Chinese, Bosco says, “Culturally, my perspective is 100 percent American.” Another American lawyer, Kenneth Tung, a Coudert Brothers alum, is the legal affairs director of Pacific Asia for the Goodyear Tire & Rubber Co. in Shanghai. Two months ago, Tung was the assistant general counsel of Honeywell International Inc.’s transportation and specialty-materials division in the region; before that, he was general counsel of Eastman Kodak Co.’s China operation. Big U.S. corporations favor these lawyers because they speak the same language — literally and figuratively. But it’s not just American corporations that are seeking American talent, especially for top legal jobs. Peter Schloss of TOM Online, for example, says he is the only non-Asian among the telecom company’s 1,300 employees. An old China hand — he is also a former general counsel of IBM China/Hong Kong Ltd. and Satellite Television Asian Region Ltd. (Star TV) — Schloss calls himself one of the legal pioneers of China. Though he’s lived in China for 20 years and speaks Mandarin, Schloss says, “I’m [at TOM Online] because of my American perspective.” Some Chinese companies prefer the rigor of American legal training, as opposed to the more informal Chinese way of approaching a problem, explains Alibaba’s Tsai, who is himself a graduate of Yale Law School: “A U.S. lawyer would think about the source of a law and the logic behind a legal position, whereas a Chinese [educated] lawyer might just call up a government official to see what the law is.” The problem with Chinese lawyers, says Goodyear’s Tung, is that they tend to be “overly respectful” of Chinese authority. AMERICAN SOX American-trained lawyers also tend to have a greater familiarity with the Sarbanes-Oxley corporate-governance reforms. That’s a skill that Chinese companies — with an eye to an overseas stock-market listing — need. “Sarbanes-Oxley occupies a tremendous amount of my time,” says Schloss, adding that TOM Online, a Nasdaq-listed company, “must be in compliance by year-end.” He’s had a tough time teaching employees about the merits of SOX, he adds, because SOX is “uniquely American; there’s nothing like it in China.” But even for corporations that are not required to comply with Sarbanes-Oxley, American governance rules reign as the gold standard. That’s especially true for local businesses with bigger ambitions. “Someday we’ll do an IPO in the States, so we use U.S. standards in accounting and governance,” says Guangjie Yang Hopton, Alibaba’s corporate counsel in Hong Kong. “We want to be a good Internet company, not just a good Chinese Internet company.” American lawyers may be sitting in the regional general counsel chairs in China, but indigenous Chinese lawyers are also gaining in status and responsibility in corporate legal departments throughout the country. In fact, Chinese lawyers fill the majority of the legal-staff positions in American and Chinese corporations in China, according to Goodyear’s Tung. He heads up the Shanghai In-House Counsel Forum, an informal group of in-house lawyers in that city. Chinese lawyers provide two key functions, he explains: They maintain the day-to-day contact with local bureaucrats, who can make a big difference in the company’s everyday operations, and they field and interpret the endless stream of regulations from Beijing and local authorities. In fact, American in-house counsel in China are the first to admit that local lawyers possess a skill they can never achieve, no matter how long they live in China: being Chinese. “Even after 20 years [in China], I’m still dealing with a different culture,” says Schloss. He says the company wouldn’t be able to function without his Chinese counterpart, Fu Tong, and her team: “She deals with regulators, government relations people, and peculiar Chinese licensing requirements. She can navigate the Chinese system; I can’t.” Local officials govern almost all aspects of business in China, explains Dell’s Wang, noting that their authority extends to everything from real estate sales to hiring and firing employees to intellectual property. More often than not, compliance in China comes down to getting barrels of licenses. “The Chinese government has more regulations over the Internet than most businesses,” says Yahoo China general counsel Jayne Zhang, who now reports to Tsai. But as the in-house scene grows, the bright line between U.S. lawyers leading the department and Chinese lawyers working at the staff-attorney level will blur. Until then many companies will keep trying to find a perfect blend of skills. The ideal general counsel is “someone from China, but with U.S. law firm knowledge,” says Tsai. A former Sullivan & Cromwell associate, he’s been the acting chief legal officer since Alibaba’s founding seven years ago. It’s a role that Tsai seems anxious to shed. Although Tsai says he’s been searching for a new general counsel, and expects to hire one by year’s end, the ideal candidate has so far proven elusive. Maybe Tsai is just very picky. But he isn’t alone. Tung, who’s been in China since 1994, says it’s still difficult to find a Chinese attorney with significant international experience. “The Chinese bar is still young,” notes Tung. “The most senior lawyer has no more than 20 years of experience.” But this state of affairs is probably only temporary, predicts Schloss. “The skill sets on the local side are better than ever,” he says. His colleague at TOM Online, Fu, might be a case in point: A Chinese-trained lawyer who’s never set foot in the United States, Fu says her lack of on-the-ground Western experience has not held her back. “We are valued because of our local expertise,” she says in Mandarin, adding that she gets calls from headhunters “every two months” for senior attorney positions in American companies. She adds, “I am very happy here. I prefer working for a Chinese company because I don’t have to spend a lot of time explaining things to American executives.” Home-grown or not, what’s clear is that the in-house lawyer has finally arrived in China. The bet is that the ranks of the in-house bar will only continue to swell. Having lawyers on staff has even become a sort of status symbol. “The Chinese see that the American and the British companies bring their lawyers to the negotiation table, so now there’s the perception that they need their own lawyer too,” says Emerson’s Bosco.
Vivia Chen is a reporter for Corporate Counsel , the ALM publication in which this article first appeared.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.