Chinese firms are poaching top talent from their global counterparts, and this time they’re coming after your partners.
Since early 2017, leading domestic players such as Fangda Partners and Han Kun Law Offices have been moving aggressively, hiring away partners from the likes of Linklaters, Clifford Chance, White & Case and Morgan, Lewis & Bockius.
“Domestic Chinese firms have become increasingly active in recruiting from international firms,” said Jason Ji, managing director of Singapore-based legal recruiter JC Consulting.
In January of this year, Shanghai-based Fangda Partners—a firm that reported $136.5 million in revenue in 2016—announced that it had hired longtime Linklaters partner and China head Fang Jian. Fang was the second former China management partner to be snapped up by Fangda from Linklaters in less than a year; six months earlier, Zili Shao, the Magic Circle firm’s former Asia head, joined the Chinese firm as a non-executive chairman.
Beijing-based Han Kun also has been notably active in the Asia lateral market. Last year it convinced former Clifford Chance financial regulatory partner Yang Tiecheng to make a move and join the Chinese firm with most of his team in Beijing and Shanghai. And that was after the firm’s earlier recruitment of former White & Case China chief Li Xiaoming.
For Fangda Partners, Han Kun and other Chinese firms, the hiring of experienced partners from international firms is a logical next step in their quest to become major players in the global legal market. Not only do those lawyers give them more access to large, multinational clients, but they also help them serve their existing Chinese clients, many of which have become technology giants in their own right and have new and increasingly complex needs.
“Some of our clients have a very different status in the market today compared to 15 years ago,” said Dafei Chen, a Hong Kong-based partner with Han Kun. “As their law firm, how can we stay unchanged?”
Indeed, when Han Kun was founded in 2004, the firm focused almost exclusively on venture capital and private equity. But many of its Chinese startup clients—companies like Shenzhen-based Tencent Holdings Ltd.—have prospered over the past decade, growing into technology giants worth hundreds of billions of dollars.
The fundamental driver behind this rapid growth was the high-speed economic development that occurred in China over the past two decades. And that growth is now making domestic firms such as Han Kun more attractive to Chinese lawyers working at global firms, Chen said.
Regulatory restrictions that prevent international firms from practicing Chinese law, combined with the relatively small size of global firms’ Asia outposts, means lawyers at global firms with Chinese client connections are gradually encountering more and more roadblocks.
“Clients have various needs for legal services, and a domestic firm may better be able to handle some of those services,” said Chen, noting that Chinese firms usually have a full-service offering, making it easier for them to keep a client’s business within the firm.
To be sure, elite Chinese law firms started poaching from global firms more than a decade ago, as they sought experience in cross-border matters as well as knowledge in law firm management. Most of those hires consisted of mid- to-senior-level lawyers who spent years training and practicing with global firms but for various reasons were never made partner.
Shanghai-based Fangda and Beijing-based Haiwen & Partners have both expanded over the years with such hires. In 2007, for example, as part of Fangda’s efforts to build its Beijing office, the firm recruited intellectual property litigator Gordon Gao from Paul, Hastings, Janofsky & Walker, where he was of counsel. Gao has since led a successful IP disputes practice at Fangda and became one of the firm’s top billers.
And more recently, in 2016, Haiwen recruited former Latham & Watkins counsel Lu Guiping, a Hong Kong- and U.S.-qualified capital markets specialist, and eventually launched a Hong Kong office in 2017.
Even at the partner level, Chinese firms have occasionally lured away top lawyers with Western experience, filling a need as more and more of their work involved cross-border transactions. In 2004, for example, legacy King & Wood Mallesons made one of the earliest such moves by convincing longtime Vinson & Elkins Beijing chief representative Handel Lee to join as chairman. In the next few years, King & Wood continued with high-profile hires, including such notable partners as former Clifford Chance Beijing chief representative Rupert Li and former Pillsbury Winthrop Shaw Pittman Shanghai managing partner Meg Utterback.
In addition, Robert Lewis left legacy Lovells, where he was Beijing managing partner, to join Shanghai-based Allbright Law Offices in 2010. He then moved on to Beijing-based Zhong Lun Law Firm in 2011.
Over the past five years, the trend quieted down as China’s domestic firms matured and grew stronger financially. However, there were still some exceptions—Fangda, for example, nabbed Freshfields Bruckhaus Deringer’s former China antitrust head Michael Han in 2014.
“The Chinese firms are much pickier now in making lateral hires,” said one lawyer who has seen the changes firsthand. ”[They] are less likely to hire people without a solid book of business.”
Top domestic Chinese firms have seen substantial financial growth. Han Kun, for instance, reported profits per partner of $1.44 million among 30 equity partners in 2016. But recruiters and lawyers alike said money is not the biggest selling point for Chinese firms.
“Money is not what draws partners from foreign firms to Chinese firms, despite their growing financial capability,” said Shawn Chen, who leads the China business for London-based legal recruiter SSQ.
In fact, global firm partners may make less money immediately after making a move to a Chinese firm, he said. But the value they get in experience and reputation could help them build another career at a domestic firm.
“Eventually [the financial return] will catch up if you bring in enough revenue,” he said.
Meanwhile, the Chinese firms see the investment made to lure global firm partners paying off in terms of what the new partners bring in reputation and experience, he said.
Indeed, JC Consulting’s Ji said Chinese firms that have made recent hires from global firms were not driven to do so by the promise of instantly adding to their firm’s overall wealth. After more than two decades of steady growth, many domestic firms are in a phase of regeneration. “Everyone needs new blood to improve,” he said.
“Top Chinese firms no longer market themselves with low prices; they want to be known for service quality,” Ji added. “Having these heavyweight partners will be helpful in that sense.”
Recruiters said more moves by global partners to Chinese firms are in the pipeline. Han Kun, which hired three global firm partners in 2017, admits it is currently in active discussions with several.
“We are expecting more people to join us from international firms in the coming months,” Chen said.