What's the experience of working in a top law firm in China?

Change 1: Financial data is becoming more and more transparent.

Although lawyer magazine devoted itself to collecting income and profit data of law firms for Asia Pacific 150 and China Elite Report in earlier years, some law firms refused to disclose their financial data.

Although the profit data of law firms are still strictly confidential, we can still observe a certain transparency trend in this year's survey. Of the 50 law firms surveyed, only 10% did not provide income data. However, with the assistance of most lawyers from these five law firms, China Top Law Firm Report has been able to roughly estimate and select 30 law firms with the highest income in China, and evaluate their strength, market performance and market position through two important indicators: annual income of law firms and annual income of each lawyer.

The further transparency of the financial data of law firms is the embodiment of the continuous maturity of China's lawyer industry. Law firms are not only more willing to disclose their income data, but also pay more attention to the income from their legal practice and how to manage it finely. More proficient clients are another key motivation to change the thinking mode of law firms. The managing partner of a top 30 law firm said, "When competing for business, law firms are increasingly asked about income and other financial data by customers."

By the end of 20 14, there were 18938 lawyers in the top 30 law firms this year, and the total annual income reached 654,380.58 billion RMB (654,380.6 billion RMB). In comparison, according to the data of Beijing Lawyers Association, as of 20 13, there were10.800 law firms in Beijing, with 23,776 lawyers. In 20 13, the total annual income of Beijing law firms was 9.8 billion RMB, less than that in 20 14.

Nevertheless, the income of 654.38+0.58 billion yuan is still lower than that of the four "magic circle firms" in the UK in fiscal year 2065.438+03/654.38+04.

In 20 14, the average annual income of lawyers in the top 30 law firms in China was 833,000 yuan, which was twice that of Beijing lawyers' 2010,000 yuan and four times that of national lawyers in that year.

With 3 1 13 lawyers and 45 firms, China Dacheng Law Firm won the highest annual turnover with a total turnover of 2.25 billion RMB. However, this law firm, which merged with Denton not long ago, ranks only 28th in per capita annual income of lawyers.

Yingke Law Firm, with the largest number of lawyers in China, ranked sixth in the list of law firms with the highest annual income last year with an annual income of 900 million yuan. However, in terms of the per capita annual income of lawyers, PCCW's ranking has fallen to the bottom of the list.

It is reported that the annual turnover of almost all the top 30 law firms increased in 20 14, except one. The annual income of Guofeng Law Firm, headquartered in Beijing, dropped sharply by 28%, mainly because a team of hundreds of people jumped to Zhonglun Law Firm last year. Although the annual income has declined, lawyer Zhang Liguo, the managing partner of Guofeng Law Firm, is still very optimistic about the development of the firm. He said that he would lead the slimmed-down law firm to catch up with the homogenization competition, and the future growth momentum should not be underestimated.

Among all the law firms surveyed, Han Kun Law Firm in Beijing achieved the largest annual growth, with its 20 14 revenue jumping by 78% to 200 million yuan. Taihetai Law Firm, located in Chengdu, ranked second in annual revenue growth, with an increase of 50% compared with the same period last year. In the "Red Circle" (the top law firm in China), Zhonglun ranked first with an annual income increase of 43%, from1300 million yuan in 2065438 to 147 million yuan in 20 14 years. The China law firm 10, with the biggest increase, has an average annual income of 25%, which is extremely rare in the global legal market.

However, among all the law firms that provide annual turnover data, about 1/3 said that it is difficult to collect data that can truly reflect the operation of law firms. There are two reasons, one is the change of tax rules, and the other is the loose branch management mode.

Generally speaking, law firms will produce two data, one is the real income statistics, and the other is for tax purposes. In some extreme cases, the difference between the two data is as high as 40%.

The head of a law firm in Beijing said, "The tax reform in China has a great impact on the profit margin of the law firm. For example, the value-added tax has replaced the business tax, and the fixed tax rate is no longer adopted, but a floating tax based on self-audited financial statements. "

"Law firms usually take reasonable measures to avoid taxes, which will lead to the business data in the published financial statements often being lower than the actual income," he added. "Large national law firms are often more complicated and confused in this respect, because local firms adopt different statistical measures according to tax policies."

From the perspective of national fiscal and taxation management, the lack of national unified accounting standards, tax rules and behavioral norms is one of the reasons for the untrue turnover data of law firms. But Qiao Wenjun, senior managing partner of Zhonglun Law Firm, pointed out another more fundamental reason.

"The legal service industry in China has undergone profound changes, but the position of law firms is still very embarrassing," Mr. Qiao explained. "Law firms are currently unable to register as enterprises in the State Administration for Industry and Commerce, so they cannot obtain the legal qualification of enterprise legal persons. Law firms have been classified as wholly-owned enterprises or individual industrial and commercial households when collecting taxes. Now the main regulator of China Law Firm is the Ministry of Justice. "

"Compared with other professional service companies such as accounting firms, the lack of legal person status has brought more inconvenience to the development of law firms, even if they only engage in the most basic business activities, such as opening bank accounts, applying for loans, opening overseas branches or establishing other consulting subsidiaries."

"It's like someone who has a birth certificate but can't register an ID card. Too embarrassing. "

Finally, he concluded: "Only by solving this fundamental status problem can China Law Firm converge with international law firms, otherwise, China Law Firm will never be motivated to adopt a real corporate governance structure for corporatization reform."

Change 2: The demand for legal services has increased unprecedentedly.

Although the economic development in China is gradually slowing down, the demand for legal services in China market is growing at an unprecedented speed.

There are two driving forces for the development of legal market: one is the perfection of national legal supervision, and the other is the determination of the government to rely on domestic consumption and private enterprises to develop a balanced economy.

This year's report confirms this point, and the top law firms in China have benefited from this growing demand for legal services. Twenty-nine of the top 30 law firms have reached the highest point of revenue growth, among which the top 10 with the highest and fastest growth rate has achieved an average growth rate of 25%. Zhonglun became the leader with a revenue growth rate of 43%, from 65.438+003 billion yuan in 2065.438+03 years to 65.438+047 billion yuan today. The large-scale team acquired by Zhonglun from Guofeng and the new offices set up in Chongqing and Qingdao last year have made great contributions to the soaring turnover. Wu Peng, the managing partner, also admitted that 20 14 was a year in which Zhonglun achieved record-breaking development in many fields.

This is the fastest-growing year for China-Lun in recent ten years. Team Wu Peng donated more than 20 million RMB this year, tied for the highest in history. The average income of each shareholder and partner also exceeded RMB 7 million for the first time. Fangda, Tianyuan and Cube also had significant personnel and income growth in 20 14. In terms of horizontal recruitment, Fonda's most striking move is to hire Michael Han, China antitrust director of Freshfields Bruckhaus Deringer, to work in its Beijing office.

In addition to exploring new businesses from emerging fields, such as anti-monopoly, intellectual property, securities and taxation, the growth of many companies has seized the opportunity of the development of China's capital market. For example, the new third board market is a very critical opportunity at present.

In 20 14, there were 1232 SMEs listed on the New Third Board, and this market was shared by 279 law firms. Guo Hao Law Firm has always performed well in the financing legal services for SMEs. In 20 14, 77 companies were listed on the New Third Board, which is unparalleled in China. But only in the first half of 20 15, Dacheng achieved a new breakthrough with the business volume of 8 1 company successfully listed, which also made Dacheng the most active law firm in the new third board market.

Although the profit margin of the New Third Board business is low, it is a new way to increase revenue and customers, especially for law firms in Beijing and Shanghai.

Capital markets and M&A transactions have always been the main business of top law firms. The surge of corporate mergers and acquisitions in China is a positive indicator, and the development and complexity of corporate transactions have benefited domestic law firms a lot.

Similar to the situation in the capital market, corporate mergers and acquisitions are still the most important business income of the top 30 law firms. More and more M&A activities make these law firms' business in this field more and more mature, and the increasingly complex transactions between China companies are also greatly beneficial to the established domestic legal consultant market.

According to the data report of Reuters 20 14, the capital and M&A market of China law firm with the highest RPL rating is very active. In terms of business volume, Fangda ranked first with 72 transactions, Zhonglun ranked second with 56 transactions, and Guo Hao ranked third with 52 transactions. In terms of total business target, Beijing jiayuan ranked first with the target amount of 66.8 billion US dollars for 28 businesses, followed by Wenhai and Fangda.

The capital and M&A market of domestic law firms have surpassed those of foreign law firms, such as Freshfields, which has 14 M&A business in China market, totaling $50 billion.

The biggest M&A transaction in China market in 20 14 was that Sinopec sold its domestic retail business worth 175 billion dollars to a large investment group composed of 25 Chinese and foreign enterprises. These retail businesses include a wholesale chain store, more than 30,000 gas stations and convenience stores, as well as refined oil pipelines and storage facilities.

Transactions of this scale only come from the privatization of state-owned enterprises promoted by the state, which is the so-called "mixed ownership reform".

Beijing-based Wenhai Law Firm provided the most important legal services in the Sinopec transaction, covering the whole process of the transaction, including bidding for investors, negotiating and drafting and executing all documents related to potential investors. The legal services of the investor team are provided by Cheng Jintian, Fonda and Tianyuan.

General situation of 30 top law firms

Change 3: A more reasonable partner system.

Top law firms in China focus on establishing their own business fields and expanding their business coverage nationwide, and some law firms quickly achieve their goals through mergers and acquisitions.

Among these top law firms, an obvious trend is to attach importance to the profitability of partners and a more reasonable partner system. Among them, He Jun and Wen Hai, for example, have begun to reform the partner compensation system. In addition, such as Zhonglun and Universal, they provide higher preferential treatment for the managing partners of law firms.

Hejun started a three-year renovation plan at the beginning of this year, which is the biggest internal adjustment since the establishment of 1989. Prior to this, its salary system was almost entirely based on performance.

Hua Xiaojun, one of Hejun's managing partners, said that Hejun has made long-term preparations for the reform of the new system, including learning from international law firms such as thuratts and May and Mayer Brown.

Global law firms have always been based on performance-based salary structure, and now they are also feeling the pressure and are trying to reform a more efficient and high-quality financial management structure.

In contrast, in 2009, Wenhai has established a western-style salary distribution structure, and its recent reform is to add performance evaluation elements. Partners will be rated according to their business performance, and seniority is also an important evaluation factor.

At the beginning of this year, Wenhai adjusted measures to encourage and stabilize outstanding young partners and actively recruited horizontally. In the past, this structure had certain advantages in maintaining coordination and consistency among partners and management quality, but Wenhai needs to be constantly adjusted to adapt to the rapid changes in the market and maintain its leading position.

Liu Su, the managing partner, said, "One of the factors that contributed to our profit growth last year was to emphasize the concentration and professionalism of partners and teams in advantageous areas, so as to improve the charging standards and competitiveness. Although the operating costs of law firms are soaring due to rising rents and wages, we can still achieve high profit margins by improving the efficiency and fees of each business. "

"Our profits increased last year. This is mainly because we require all partners and lawyers to give full play to their abilities in their professional fields, so that they can increase their agency fees even in the fierce competition, "Liu Su said.

"Because the rent and salary are increasing, the cost of running a big office in China is increasing, but we can charge higher agency fees by improving our practice ability and complete every transaction and project efficiently, so we can still make good profits," he said.

Change 4: Rapid expansion in merger.

For the large national law firms and top 30 inspirational law firms, if they have realized that the merger of law firms is the highlight of the domestic legal market, then they should see that 20 14 is still a year of law firm expansion.

In Beijing, the merger of Tianda Law Firm and * * * and Law Firm is one of many noteworthy merger cases, and their merger has made Tianda * * and Law Firm. At the time of this investigation, the firm has a capital of 65.438+400 billion, 220 lawyers and 63 partners, and has an office in China. Li Dajin, managing partner of Tianda Law Firm, called the recent merger "a combination of two law firms with foresight and complementary advantages".

"The merged law firm can provide all-round legal services around the needs of clients, and through this key change, it makes up for the lack of breadth and depth of the business fields of the original two law firms," Li Dajin said.

"Because the expanded partner team has improved our ability to resist risks in the market and withstood the test of increasingly fierce industry competition, the clients of the original two law firms will benefit from this merger," he said, hoping that this merger will make this new law firm among the top universities.

A recent merger case is the merger of Beijing Juntai Law Firm and Tianchi Hongfan Law Firm. Tianchi Juntai Law Firm, born from the merger completed in July, has 400 employees and 9 offices.

In Shanghai, the merger of local Bangxinyang Law Firm and Zhong Jian Zhonghui Law Firm at the beginning of 20 14 is another noteworthy case in the legal market.

In addition to the merger of law firms in the same city, there are also cases where regional law firms join the business chain of national law firms.

In 2065,438+03, Guo Hao Law Firm had more than 65,438+000 lawyers and 65,438+05 law firms. Last year, it opened two more offices in China, both of which were added with the help of merging with local law firms. Guo Hao's new office in Chongqing was established on the basis of the acquisition of Tianzhihe Law Firm and Hualisheng Law Firm Chongqing Branch. Deyi Junda Law Firm joined Guo Hao Law Firm as its new office in Jinan. In Nanjing, after Guo Hao absorbed 40 lawyers from Jiangsu Jinding Yingjie Law Firm, the number of the firms doubled.

Guan Jianjun, managing partner of Guo Hao Law Firm's Shanghai office, said: "Our strategy is to establish a broad and powerful business network in every important city in China and core locations abroad."

Guan Jianjun said that it is very necessary to set up an office in the southwest except Chengdu, taking Chongqing as an example. Due to the limitation of geographical location and market demand, Chengdu alone cannot fully carry out the business of law firms, while Chongqing, as a provincial legal service market, has advantages in this respect.

"National law firms provide an attractive platform for regional law firms located in Beijing and overseas. By joining its business chain, regional law firms can provide clients with more comprehensive legal services, and they can also gain many resources, knowledge and experience shared by other partners, "Guan Jianjun added.

Change 5: Outstanding performance in overseas markets

Now more and more customers have a global perspective, and foreign-related factors in domestic trade have gradually become the norm. In this case, law firms must meet the internationalization needs of clients by proposing global development strategies.

The change of China's role from a capital importing country to a capital exporting country is a symbol of China's economic development. According to data from the Ministry of Commerce of China, compared with the past decade, the scale of foreign direct investment in China has increased in an all-round way. In 20 14, China's overseas investment reached a record high, reaching 1029 billion USD. Under the influence of RMB depreciation and many government intervention policies, the process of China's overseas investment will be further accelerated. It is predicted that overseas investment will eventually surpass domestic investment, and China will gradually become a pure capital exporter.

Europe has become an important region to receive capital inflows from China. According to the survey data of Rongding Consulting Company, in 20 14 years, 153 investments with a total value of1800 million US dollars in China flowed to Europe, which was double that of last year.

Law firms engaged in overseas business have been rewarded. In 20 13, Jindu Law Firm merged with British SJ Berwin Law Firm and became the top legal service provider in the field of overseas enterprise mergers and acquisitions. According to the transaction data of Thomson Reuters 20 14, King & Wood provided legal services for China enterprises in the merger and acquisition of 18 overseas enterprises, and its transaction volume made King & Wood the most active legal service provider in this field. This also enabled it to beat its competitor Ou Hua Law Firm (Ou Hua Law Firm) in this competition, which completed legal services for 65,438+07 cases.

The overseas legal service transaction records of King & Wood Law Firm include the case that Guangdong Guangsheng Investment Group Co., Ltd., the state-owned enterprise represented by King & Wood Law Firm, wanted to acquire PanAust, an Australian listed copper and gold miner, at an offer price of11000000, and the case that Weichai Power acquired part of the equity of Kaio Group, a German listed company, at187000 (13600000), as well as

However, adding up the income of Kindu Institute, the situation is not optimistic. Its completed 18 transaction amounted to $4.2 billion, and the agency fee for each transaction was $233 million. In contrast, Freshfields completed 13 transactions worth $20.2 billion-each transaction amounted to1500 million.

"The international expansion plan of Chinese companies is based on the actual needs of customers," said Zhang, a lawyer of King & Wood Law Firm. He said that more and more cases handled by King & Wood Law Firm involve foreign factors, which requires him to provide legal advice involving multiple jurisdictions. "An overseas M&A case of a China company can easily involve three or four jurisdictional issues. Nowadays, it is very common for China companies to acquire the assets of British listed companies in Africa through their Hong Kong branches, because their capital composition covers the British capital component.

"It is very important for us to have a member in Europe. In the remaining market of this global legal service network, the opportunity of two-way investment between China and Europe has given us strong indicative information. " Lawyer Zhang said. Wang, a partner in the Shanghai office, recently went to London to help deal with many affairs of China customers in Britain and Europe.

The merger of Dacheng Law Firm and Denton Baker &: Mckinsey and Fenxun, a small law firm, set up a joint office in Shanghai Free Trade Zone (SFTZ), which were two headline events that were widely reported last year. Although the two merger cases are quite different in combination structure and scale type, they both show the determination of China law firms to expand overseas markets and the strong interest of foreign law firms to further explore the China market.

Just recently, Jing Tian Gongcheng Law Firm made a new exploration in a unique mode. In August, it opened an office in Hong Kong and merged with Meiyabo International Law Firm.

"We hope to learn advanced management experience from our international partners after the merger, and expand our business scope to new areas through their advanced scientific and technological knowledge," said Gao Xiang, the managing partner of Jing Tian Chenggong, who also realized the importance of providing foreign-related services to China customers by taking advantage of the international advantages of Meiyabo.

The merger of four exemplary international law firms has opened up a new road for the international expansion of China law firms. The managing partners of several top law firms said that they were open to the merger of international law firms, but they didn't meet the right partners or attend any enlightening talks.

Although there are many reasons for China enterprises to merge with international enterprises, some enterprises firmly defend their independence. For example, Deheng Law Firm has rich experience in overseas projects of state-owned holding enterprises and energy companies, especially its legal services in emerging markets.

Currently, it is providing legal services for China Three Gorges South Asia Investment Plan to jointly develop Pakistani carlot Hydropower Station, which is one of the first projects implemented under the guidance of China's "Belt and Road" policy. At the same time, it also involves several M&A projects of China Hydropower in Southeast Asia. In these cases, Deheng undoubtedly plays a leading role among many legal service providers, which will guide those regional law firms to practice according to the interests of their clients.

"Merging with international law firms is not the only way for China law firms to expand their international business. Chinese companies that maintain independence have higher flexibility in the future direction and can also cast their own brands. Compared with their counterparts who merged with international law firms, China companies that remain independent are different, "said Sun, managing partner of Deheng Law Firm.

Law firms in China are facing an era of change. Transparency, organizational leadership, good profitability and stable foreign trade growth have become the main factors for law firms to maintain their dominant position in the competition.

Change 6: China, the seat of international law: the power is reduced and the challenge is intensified.

Just like the signal that the World Fund (IMF) listed China as the world's largest economic power in 20 14, China has a far-reaching and lasting impact on the growth of the world economy. Undoubtedly, it is very important to become the core market for international law firms. In the past 18 months, new law firms have successively entered the China market-Alston &; Byrd, Curtis marlett-prevost Colt & Moser, Duane Morris Selvam and fenwick &; The west is just a few examples. At the same time, Quinn Emmanuel urquhart &; Sullivan initiated the merger and entered the Shanghai market.

According to the data recently released by the Ministry of Justice of China, there were 170 overseas offices and 225 offices in China in 20 14 (see the figure below). Shanghai is still the most concentrated place of foreign capital inflow, as can be seen from its 124 offices, while Beijing has only 87. Of these 170 overseas offices, 54 have two offices in Beijing and Shanghai, and 1 15 has 1 offices in China. Only the Paris-based DS Avocats law firm has three offices in Beijing, Shanghai and Guangzhou.

American law firms are the largest part of foreign-funded firms in China, and these 87 American law firms account for 5 1% of 170 foreign-funded firms. All 365,438+0 European law firms have settled in China, ranking second. All UK 19 companies ranked third.

However, since China opened its doors to foreign investment in 1990s, the number of foreign investment offices has decreased for the first time. Compared with the 232 offices recorded in 20 13, it has been reduced to 178 by 20 14.

These figures have declined slightly, partly because of global mergers and the closure of some multinational companies in recent years. For example, Australian Allens and Legacy Mallesons Stephen Jaquesduo both closed their offices in China because they formed alliances with Nilida and Kindu respectively. Now, the Beijing office of Bingham McCutchen, which no longer exists, was closed last year.

However, other foreign countries decided to withdraw from China, such as Fried Frank Harris River &; Jacobson and Chadbourne Parke, Duarte Garcia Caselli Guimar from Brazil? This is Swedish land, Advogados and Advokatfirman Vinge.

Some law firms decided to reduce their "presence" in China. Stephenson Harwood, a British law firm, recently closed its office in Guangzhou and turned to an alliance with Weitu Law Firm in Guangzhou to continue to provide services to their clients there. Before it closed, it was one of the few foreign offices with three offices in Chinese mainland.

Although the China market is becoming more and more important, it is recognized that it is difficult for foreign law firms to make money in China. One of the main reasons is the many restrictions on its practical scope. In addition, foreign companies are often unaware of the cultural adaptation problems they may face, and their large corporate customers in Britain or the United States may not automatically adapt to the reality of becoming their customers in China.

All these challenges, coupled with fierce competition from fast-growing top companies, mean that multinational companies have to reconsider their strategies in China, lay off employees in some areas, expand in other areas, and make comprehensive adjustments in order to be more streamlined and profitable in such a highly competitive market.

Although some multinational companies have completely withdrawn from the China market because of higher profits in the domestic market, more and more foreign companies have decided to solve this problem by cooperating with domestic companies.

Kennedys, a British law firm engaged in insurance business, is a good example. 20 15 1, the firm reached a cooperation agreement with Anjie, a China firm mainly engaged in insurance business, but did not open its own office in Chinese mainland.

In April this year, Ghianni Orignoni Grippo Capelli &; In a similar way, the partners formed a formal alliance with China's Han Kun, and Han Kun became the fastest-growing research institute in China with its high income.

Some multinational companies that have entered the China market for a long time also decided to contact a domestic ally to enhance their influence in the China market. Baker & Mackenzie's joint venture with Fenxun, a local company in Shanghai Free Trade Zone, is a good example.

On a larger scale, Denton and Dacheng adopted the model of "one Swiss Verein model" to form an alliance, which reflected similar motives. Chairman Joe Andrew explained that Dentons wanted to find a big office focusing on second-tier cities in China, not a "red circle" partner. The reason is that although these firms do not focus on international business, they maintain good relations with domestic clients, and most of these clients are located outside Beijing and Shanghai, although Beijing and Shanghai are the places where many multinational firms gather so far.

In addition to giving more resources to law firms in Beijing and Shanghai, Denton is considering a merger that will enable it to occupy the market share of these cities, which are largely unknown to multinational companies and are expected to become a global super city in 2025.