Recently, a lunch panel of attorneys experienced in working in Asia discussed the nature of corporate Chinese law practices and the professional climate that associates can expect to encounter.
“Before all else,” began Shengqiang Liao, a China Associate in the Shanghai office of a large U.S. based international law firm, “Foreign firms just represent foreign interests in China.” Still, while foreign firms are generally unable to litigate, there is currently an active debate over the role of foreign firms, in spite of the fact that existing law bars them from direct and individual practice with Chinese interests. “Local Chinese firms feel a tremendous threat to their business and it has been a fierce battle that made it all the way to the Foreign Ministry.” Interestingly, many believe the government has been prudent about taking action because they don’t want to discourage foreign investment.
Furthermore, local firms are unable to provide crucial standard international services. Thus, foreign law firms officially work with government-sponsored agencies to submit work on behalf of their clients. However, in practice, the situation is quite different. “The reality is that there are over 100 firms operating offices in large cities like Beijing and Shanghai… that conduct business with local clients, negotiate contracts, issue due diligence reports… everything short of appearing in PRC court,” said Liao. These firms are able to sustain such success in the face of technical governmental patrol by issuing disclaimers in their correspondence with clients that detach their direct involvement as counsel. “The notable exception to this law are cases that involve U.S. interests… for example, if a local Chinese business is filing as an IPO is the U.S., then it would need a U.S. lawyer to sign off on the deal,” Liao added.
When asked about the possible language barrier, the panelists assured students that while English isn’t necessary, a basic working knowledge of Chinese is extremely helpful. “Fluency with Chinese is by and large not necessary given the multinational nature of the deals… it will definitely be a big plus, especially for younger lawyers as more business is being conducted in China,” emphasized Liao. Further, the panelists agreed, associates will inevitably carry more responsibility with their effort toward language acquisition.
