The evolving Chinese legal system, and increasing skills of Chinese lawyers, are narrowing the role that U.S. firms can play there.
But the good news for Seattle firms is that their location on the Pacific Rim and knowledge of Asian culture continues to give them an edge over other U.S. firms.
China has been rapidly rebuilding its entire legal and court system since the end of the Cultural Revolution and its aftermath, said Norm Page, co-chair of Davis Wright Tremaine LLP’s China practice group, who was speaking by phone from Shanghai.
Chinese educational institutions also are pumping out smart attorneys eager to get into the international law arena.
“The gradual increase in the professionalism of the court system is something that has been a very striking change in the last 15 years since we’ve been here,” Page said. “There are many, many more lawyers, and the standard of practice and professionalism is vastly higher than it was 15 years ago, or five years ago.”
Attorney David Tang, who manages the Greater China Group for Seattle law firm K&L Gates, said the increasing strength of Chinese law firms suggests that Chinese values, and doing it the Chinese way, are becoming more prevalent there.
Under Chinese law, non-Chinese firms cannot practice law in China.
So, while Seattle law firms can counsel Western companies on operating or opening in China, as well as advising Chinese companies on their own aspirations in the West, those same law firms can’t go to court in China, and can’t directly represent clients in legal proceedings with Chinese governmental entities.
The competition among firms within China to land big contracts is fierce.
In fact, any Chinese-born and trained lawyer who joins a Western law firm operating in China instantly loses his or her right to go to court while working for a foreign firm. This is not the case in Hong Kong, which operates with a much more open system than mainland China.
All of this, however, doesn’t mean that U.S. law firms will shutter their China offices anytime soon.
Despite the limitations, Seattle-area law firms operating in China are capitalizing on the rapid evolution of the economic relationship between the U.S. and China. While just a few years ago this consisted primarily of finding ways to bring cheap Chinese goods into the U.S. market, the relationship has become much more complex.
“China represents incredible opportunities for American companies, environmental cleanup engineers, software, coffee, research and development, medical services, medical technology, education,” said former Gov. Gary Locke, now a partner in Davis Wright Tremaine.
“Just as U.S. companies are finding it much more advantageous to set up representative offices in China to market their goods and services, so too are the Chinese finding it advantageous to establish a presence in the United States, whether they’re importing or exporting,” Locke said.
The Chinese are welcoming foreign legal firms to open offices in mainland China, said George Yates, chair of the international practice for Perkins Coie LLC in Seattle.
“They are really regarded as a conduit to bring work into China, to be done by Chinese law firms,” he said.
Nelson Dong, a partner with Dorsey & Whitney LLP, said firms are reporting an increasing clientele of Chinese-based business people needing legal advice about how to open a facility in the West, or how to go public on a Western stock exchange.
In many ways, U.S. lawyers operating in the Chinese market act as legal translators and guides; they set the stage for American companies’ legal work and contracts in China, even if Chinese attorneys must complete the final work.
“Because of longer history, and familiarity, I think in some ways it’s easier for Washington companies to know how to do business with the Chinese businesses there,” he said. “From the perspective of our companies over there, I don’t think they view China as exotic or mysterious or anything like that, I think they view China as a good marketplace. From the East Coast, they approach it much more as entering into a mysterious and exotic place.”
Despite that fact that China is evolving into what Locke calls “more of a nation ruled by law,” the fact is that much business in China is still done the old way — according to who knows whom. In Chinese, this is called Quanxi.
Courtesy of Puget Sound Business Journal
