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A potential merger between two of China’s top law firms—Jun He Law Offices and Zhong Lun Law Firm—has launched a flurry of speculation in the region about what such a combination would mean, both for the two firms involved and the still-developing Chinese legal profession.

The Asian Lawyer first reported last Tuesday that the two Beijing-based firms, widely considered among China’s top three with King & Wood Mallesons, were discussing a potential merger that would create a firm with almost 1,300 lawyers.

Partners at both firms declined to be interviewed, but a number of lawyers at other Chinese firms said they were surprised that the two were contemplating a merger, given their different reputations in the market.

“They are both top-tier firms, but the two have entirely different cultures,” says Lin Wei, a Shanghai partner with Zhong Lun W&D, a firm that split off from Zhong Lun in 2003. He says Zhong Lun is largely seen as a firm where partners are encouraged to compete with one another, while Jun He is thought of as having a more collegial environment.

Liu Hongchuan, a partner at Beijing’s Broad & Bright, views the two firms similarly. “Zhong Lun focuses more on the individual ability of lawyers, and core partners have more influence on the firm, while Jun He has a more equal partnership, the culture stresses more on cooperation among partners,” he says.

So why would these two firms want to merge? A number of Chinese lawyers expressed the view that size does matter, and that two firms regarded as being at the top of the market might be able to consolidate a position of strength.

“The important thing is to create synergy,” says Victor Wang, a Shanghai partner with Allbright Law Offices. “The union between two already very strong brands would enhance the coverage of quality legal service.”

A Beijing partner with a Chinese firm says the firms’ practice could be seen as complementary. “Traditionally Jun He has focused almost exclusively on cross-border practice,” he says. “But lately, the growth of cross-border transactions has slowed down. That could be a bottleneck for Jun He, and it may feel the need to work on developing domestic practice.”

Zhong Lun’s reputation, on the other hand, is based on domestic work, especially in the real estate sector, says the partner. “It has recently started to get involved in more international transactions, but still not to the extent of King & Wood [Mallesons], Jun He or Fangda [Partners, another leading firm].”

A Hong Kong partner with an international firm who frequently works with lawyers at both Jun He and Zhong Lun says she thinks Zhong Lun and Jun He might be tempted to combine in response to the merger that created King & Wood Mallesons. The result of the 2012 Swiss verein merger of China’s King & Wood and Australia’s Mallesons Stephen Jaques, the firm, which went on to absorb London’s SJ Berwin as well last year, has been widely hailed as the first “Chinese” international law firm. Though Jun He, at least, has been vocal about not wanting to expand overseas, the Hong Kong partner says the firm might see a domestic merger as a way to similarly raise its profile.

“The Mallesons merger has given King & Wood so much attention and press coverage, so No. 2 and No. 3 were kind of left out,” she says. “If the merger goes through, it will reaffirm that [Jun He and Zhong Lun] have two of the strongest brands in China’s legal market.”

The Beijing partner also thinks King & Wood Mallesons may be factoring in the thinking at Jun He and Zhong Lun. “This could be a defensive response to King & Wood’s Mallesons merger,” he says. “The three of them used to be at a more equal position, but then King & Wood merged and created this ‘superpower.’ The other two might want to strike a balance.”

The Hong Kong partner says a merger will probably not affect the Chinese firms’ relationships with international firms, which tend to be based on ties to individual partners. “We will continue to use the key individuals we use even if the merger goes through,” she says.

Lawyers in the market seem divided, however, on whether a combination between Jun He and Zhong Lun would spur a wave of similar moves. Many point out that the past few years have also seen the launch of a number of boutique firms, with some former Jun He and Zhong Lun partners behind them. In October 2012, four of the dozen partners who banded together to form AnJie Law Firm, an antitrust boutique, hailed from Zhong Lun. Last year, three partners and several other lawyers left Jun He to help start the disputes-focused Huizhong Law Firm.

Zhong Lun W&D’s Lin says larger Chinese companies like state-owned enterprises tend to prefer big law firms, both domestic and international, because they think they have a more stable track record. But he thinks privately owned small and medium-sized companies are more open to working with smaller firms and boutiques.

“Both will find their place in the market,” Lin says of boutiques and large firms.

Even if Zhong Lun and Jun He merge, it will not be the largest firm in China. Dacheng Law Offices and Yingke Law Firm already count 3,000 and 2,400 lawyers, respectively. Yu Xugang, a Beijing partner at Dacheng, says large firms generally are better, even at providing specialized advice. The smaller size of boutiques, he says, means that partners have to take on more and different types of matters, hampering their ability to focus on one practice area.

“I think this is good news to China’s legal profession if they merge,” says Yu of the talks between Zhong Lun and Jun He. “The combination will create a stronger individual firm, which means within the firm, particularly in the noncontentious area, each practice group will be strengthened by more lawyers. For the industry as a whole, we will see more specialists.”

Zhong Lun Shanghai partner Anthony Qiao said last week he expected a wave of mergers among Chinese firms over the next decade as the country’s legal market becomes one of the largest in the world and its domestic law firms emerge as major international players. He pointed out that, even if Zhong Lun merged with Jun He, the combined firm would still be considerably smaller than Western firms such as Skadden, Arps, Slate, Meagher & Flom, which has over 1,700 lawyers.

“Compared to them, we are only midsize firms,” he said.

But Broad & Bright’s Liu says most Chinese firms lag behind their Western counterparts in terms of management and infrastructure, making it hard for them to reap benefits from greater scale. “Firms like Skadden and Clifford Chance have a very different expansion approach than some of the Chinese firms,” he says. “They have a more centralized management, so even with 2,000 lawyers they are able to cooperate smoothly within the firm.”

Liu says many Chinese firms who have engaged in mergers, often with firms in other cities, haven’t done much to integrate. “Many times it’s just a change of brand name on the door,” he says.

Email: azhang@alm.com.