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  • 🇨🇳 Why law firms are leaving China

🇨🇳 Why law firms are leaving China


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If you take just one thing from this email…

US law firms are leaving China because political tensions and strict new laws are changing how firms work there. There has been a decrease in deals and economic activity in China, making it tough for international law firms to justify their presence there. As a result, many are leaving China and turning their attention to other places in Asia instead.


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In last week’s newsletter, I asked if you thought law firms should be cancelling training contracts due to SQE exams failed on the first attempt.

Here are the results (we got a pretty clearly winner) 👇️ 

And here are some of the thing you had to say (we got LOADS of written answers, so I’ve cut down to my favourites):

❌ No — they should be more flexible:

  • “The SQE tests the standard of a day 1 NQ versus the LPC which tested a day 1 trainee. The exams are in completely different stratospheres of difficulty and technicality and firms need to appreciate this.”

  • “They should be more flexible considering it's a new qualification and there is a lack of past papers and additional content available to help candidates.”

  • “The SRA itself has decided to give everyone three tries, so why should companies not adhere to this model? I understand that it is money, time and resources but it is extremely unfair.”

  • “This is a new exam and students are expected to roll with the punches because of this i.e. four hour queues for booking exams, lack of mock tests and increasing fees. However students cannot be the only ones bearing the brunt of the newness of the SQE. Law firms should also understand that because the SQE is newer it means that it will be tougher to navigate and then pass the first time. Also, the legal industry keeps hammering home that they are committed to diversity and championing mental health, well here is a great opportunity to put words into actions.”

✅ Yes — they have a right to do that:

  • “The amount law firms provide in terms of tuition fee and maintenance grants is not nominal. They have the right to select their talent... The SQE is better to maintain some kind of standard for legal field.”

  • “I'd be understanding of the cancellation if it was for a Magic Circle or Silver Circle firm, simply because of how fierce the competition is - and to be frank, if you can't make the cut first round, there are plenty others waiting to take your place.”

  • “… It’s the same as it was before the SQE too. If you didn't perform on the LPC (failed or didn't achieve required grade) a firm could/would pull your TC. Just because the SQE is new, it doesn't change this. We're in a hyper-competitive industry and firms want the absolute best.”

- Idin

🇨🇳 Why law firms are leaving China

Schitts Creek Goodbye GIF by CBC


What's going on here?

Political tensions between the US and China have resulted in a bunch of Western law firms leaving the country.

What does this mean?

The US government and the Chinese government are both concerned about their own national security. So, over the past few years, they have introduced new rules to curb these perceived threats.

For example, China’s put in place new ‘anti-espionage’ laws which restrict information flows outside of the country.

This shift has meant that:

  • 📉 the number of US-China deals have dropped,

  • 🧊 initial public offerings (IPOs) have been put on the back-burner, and

  • 🐌 economic growth in China has slowed down.

👆️ All three of these things are bad for global law firms that operate there as they mean less business and, therefore, less revenue in that region.

How have these new rules affected law firms?

Well, they make it difficult to operate a global, cross-border law firm.

For example, since the new anti-espionage rules have been enacted, Latham & Watkins has had to cut off access to its international file management systems for its Hong Kong lawyers.

The Hong Kong lawyers will have full access to the company’s Chinese database, but not to anything outside the country without specific permission.

Which law firms have closed offices in China?

Okay, it’s a long list…

  • Last year, Dentons split from its Chinese partner, Dacheng, after eight years together (we covered that here)

  • Weil closed its Beijing office and is considering closing its Shanghai office

  • Orrick plans to close its offices in Shanghai and Taipei

  • Latham & Watkins, Proskauer and Akin Gump have closed offices in mainland China

  • Ropes & Gray cut its Shanghai head count

  • Kirkland & Ellis laid off at least nine of its capital markets lawyers in Greater China, citing “market conditions” as the reason

  • Linklaters is cutting its lawyer head count in all three of its offices in China because of the economic downturn.

How has China responded?

Last week, China's President Xi Jinping, had a meeting in Beijing with leaders from big-name companies (like Blackstone, Qualcomm, Chubb, Cargill and Corning) promising them that China's still a hot spot for growth.

If he’s done enough to get them investing in China again, then Western law firms could see an uptick in work in China.

(but that’s a big ‘if’).

Why should law firms care?

This shows how geopolitical factors can impact a law firm’s global strategy.

Factors outside your control can force your hand and make you change your direction completely.

Since this China-US shift has grown, some law firms are targeting different geographies in Asia.

For example, Japan has had good economic growth recently and dealmaking in the region is on the up.

A bunch of US firms (like Goodwin, Gibson Dunn, Ropes & Gray and McDermott Will & Emery) have opened offices in Singapore recently.

Law firms are not all completely out of the Chinese market — Linklaters, Kirkland & Ellis, Ropes & Gray (and loads of others) still have offices there.

But it’s impossible to ignore the political divide between the US and China.

And the real winners could be the other Asian markets.


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  • 💡 Luminance, a London-based AI firm, has secured $40m (£32m) in funding to expand its presence in the US. The investment aims to strengthen Luminance's global footprint and grow its AI model that automates legal document negotiations. This development reflects the trend of AI integration into legal processes, with Luminance boasting 600 clients across 70 countries. The company's made recent innovations, like 'Auto Mark-Up' and tools enabling non-legal teams to negotiate contracts.

  • 🤝 On Monday, the US and UK joined forces in a deal focusing on developing AI safety. It's a groundbreaking move - the first of its kind, promising to tackle the enormous challenges and potentials of AI together. With companies like OpenAI and Google DeepMind already involved, it's a significant step toward taming the wild west of AI technology, where chatbots like ChatGPT and Claude dominate the market.

  • 💳 Visa and Mastercard have agreed to slightly lower their fees which will save merchants an estimated $30bn (£23.7bn) over five years. This is as a result of a nearly two-decade long legal dispute in the US over "interchange fees" that merchants pay for card transactions. Currently, these fees can take about 2% per sale, summing up to over $100bn (£79bn) in the US alone last year. The slight fee reduction of 0.07 percentage points may seem small but is significant in the grand scheme, allowing merchants more freedom to direct customers towards cheaper payment options.

  • 🔒 Google will delete data from millions of users to settle a privacy lawsuit that claimed Chrome's Incognito mode tracked users without consent. This move is part of a larger agreement to improve privacy and allow Incognito users to block third-party cookies. While the settlement doesn't offer direct compensation to users, it opens the door for individual lawsuits, potentially valuing this decision at up to £6bn.

  • 🏎️ Bahrain's sovereign wealth fund has fully acquired McLaren Group, the iconic Formula 1 team and supercar manufacturer. This move aims to simplify governance and boost the company's future growth. Freshfields and Ashurst were the legal advisors on this deal.

  • 🍫 Cocoa prices have reached a new peak, crossing $10k (£7.9k) per metric tonne for the first time. This record high is attributed to a combination of bad weather and disease affecting crops in Ghana, a major cocoa producer. This has created the biggest supply-demand mismatch in over 60 years. As chocolate firms like Hershey, Mondelez, and Nestlé face rising costs, they're in a sticky situation of needing to balance increased prices with consumer affordability (which is why Easter eggs were more expensive this year).

  • 🔒 Sam Bankman-Fried, once celebrated as a cryptocurrency prodigy and CEO of FTX, has been sentenced to 25 years in prison for fraud. The conviction followed period for FTX, which saw $10bn (£7.9bn) in customer deposits vanish. Despite Sam’s plea for a lighter six-year sentence, the court pointed to his perjury, lack of remorse, and risk of reoffending as the key factors for the 25-year term. As Bankman-Fried prepares to appeal, the saga continues with former FTX investors launching class-action lawsuits against those associated with FTX's downfall. This sentence places his sentence in the mid-range of high-profile fraud cases, compared to Elizabeth Holmes' 11 years and Bernie Madoff's 150-year sentence.


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