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Beijing-based Jun He Law Offices, legal counsel in the recent $9.7 billion initial public offering of Bank of China Ltd., has become the latest Chinese law firm to cross the border and set up shop in Hong Kong, after the recent lifting of a long-standing ban by the Chinese government. Jun He is part of an elite group of Chinese law firms seeking to tap the exploding demand for Chinese legal services by bringing its expertise to the Hong Kong location of many of its clients. In doing so they are benefiting from a quiet change of heart among Chinese government officials, who had previously barred legal experts on the mainland from working offshore. Hong Kong, a former British colony, returned to Chinese rule in 1997 but still has a separate legal system. Jun He, one of China’s largest law firms and one of the few specialists in corporate finance, entered Hong Kong through a merger with Hong Kong law firm X.J. Wang & Co. That allowed the Chinese firm to start offering services in Hong Kong earlier this month under the Jun He name. In a recent interview, Xiao Wei, a 45-year-old founding partner at Jun He, said the firm had been lobbying for an office in Hong Kong for more than 10 years, but only this year did China’s Ministry of Justice lift its veto, without saying why. The government’s change of thinking has never, in fact, been articulated as policy. In addition to assisting cross-border transactions, Xiao said a Hong Kong base would help Jun He keep pace with its international rivals and perhaps attract Hong Kong legal talent to the firm in a reversal of the normal China-to-Hong Kong brain drain. “We can learn a lot from Hong Kong’s long experience in the legal services,” he said. “Our business volume is so heavy that we need to recruit good legal professionals from Hong Kong. We have many people in China, but there’s a shortage of good lawyers.” He estimated that as many as 20 Chinese law firms, including players of all sizes and specialties, may eventually establish a presence in Hong Kong. That would make Chinese law firms a formidable force in a market where there are only 40 officially registered foreign law firms, including Jun He and three earlier Chinese arrivals. Before this year, only one Chinese law firm, the government-run China Law Office, had permission to operate in Hong Kong and entered the market more than a decade ago. In March, King & Wood became the first private Chinese firm to make the move to Hong Kong and forged a strategic alliance with Hong Kong-based Arculli, Fong & Ng. In April, Shanghai-based Chen & Co. followed. Jun He was among the first private Chinese firms to begin offering legal services in the late 1980s. Previously, the entire industry was in the hands of state-owned agencies. Two decades later, almost all the law firms in China are private. “We did not expect to become such a big company,” Xiao said. Jun He has more than 50 partners, more than 200 associates, and a 150-plus administrative work force, serving four offices in China, including the new office in Hong Kong. The Hong Kong office is headed by managing partner Linfei Liu, whose team includes Hong Kong partner X.J. Wang and two associates. Jun He advised the Bank of China on last month’s Hong Kong IPO as well as the related stock listing in Shanghai. The work began two years ago with restructuring China’s second-largest bank from a state-owned entity into a commercial corporation. Jun He also advised the bank about $3.3 billion in strategic investment from overseas institutions, including Royal Bank of Scotland plc, Singapore state investment agency Temasek Holdings Pty. Ltd., UBS, and Asian Development Bank. Jun He acted as a legal counsel to Shenzhen Development Bank Co. Ltd. and its state-owned shareholders in the February 2005 sale of an 18 percent stake for $150 million to Newbridge Capital Group LLC. It also advised DP World in its $1.4 billion acquisition, in December 2004, of Charlotte, N.C.-based CSX World Terminals LLC, a global marine-terminal business with a substantial part of its assets in Hong Kong. The seller was Jacksonville, Fla.-based CSX Corp.
Shu-Ching Jean Chen is a reporter for The Deal , the ALM affiliate in which this article first appeared.

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