Ashurst and Chinese “best friend” Guantao Law Firm have launched a joint operation office in the Shanghai Free Trade Zone, making the Anglo-Australian firm the fourth global player to gain Chinese law access through the four-year-old scheme.
Through the FTZ joint office with 750-lawyer Guantao, Ashurst is now able to offer its clients one-stop legal services, including Chinese law capability. The deal demonstrates Ashurst’s full commitment to further growth in the Greater China region, said managing partner Paul Jenkins.
“We are seeing increased flow of work from China,” Jenkins said. “Guantao’s extensive network [in China] will complement our global coverage in offering a seamless client service, strengthening our market position to capitalize domestic and international business opportunities,” he said.
The joint operation office will also help Ashurst deepen relationships with Chinese clients, Jenkins said. Chinese clients such as China General Nuclear Power Corp., whose investment in the U.K.’s Hinkley Point C project was advised by Ashurst through Guantao’s relationship, will now be able to engage the joint office on work other than outbound deals with full Chinese law capacity.
The Chinese Ministry of Justice launched the Free Trade Zone joint operation program in 2014 to allow foreign firms to gain Chinese law capability through cooperation with a domestic firm. The program is one of the few officially endorsed by the Chinese government. Under Chinese law, foreign firms, which are barred from practicing Chinese law, are not allowed to financially merge with domestic firms or hire Chinese lawyers.
In 2015, Baker McKenzie was issued the first such license when it formed a joint operation office with Beijing-based FenXun Partners. In 2016, U.K. firm Holman Fenwick Willan and Hogan Lovells entered a similar arrangement with Chinese shipping firm Wintell & Co and Xiamen-based Fidelity Law Firm, respectively.
With 13 mainland Chinese offices, Beijing-based Guantao is the largest among the four Chinese firms having foreign FTZ alliances. The firm has had a non-exclusive referral relationship with Ashurst since 2008; the two firms announced a six-year renewal of a strategic alliance in May 2017.
According to the latest China 40 survey, Guantao reported $68 million in revenue in 2016, making it the 14th highest grossing domestic firm. The firm ranked 27th among the 40 with $100,000 in revenue per lawyer the same year, and reported $470,000 in profit per equity partner. It expanded significantly in Shanghai in 2016 by adding 100 lawyers through two mergers with local firms.
In 2017, Guantao managing partner Cui Liguo told The Asian Lawyer his firm benefited greatly from its alliance with Ashurst, as partners were able to closely observe how a leading global law firm managed its operations.
In addition to China, Ashurst has a formal law alliance in Singapore with local boutique ADTLaw.