Chinese Law Firms Move Strongly On Hong Kong

China’s top law firms are making moves that are turning heads in Hong Kong as the so-called “red circle” firms (think Magic Circle, but with a dash of communist flair) are snatching up partners from their American counterparts who are leaving the island.

As Western law firms pack up their briefcases and bid adieu to Beijing and Shanghai, as we have reported on several occasions with firms like Cleary Gottlieb and Millbanks recently leaving, Chinese firms are spreading their wings and eyeing the lucrative Hong Kong market for their expansion away from the mainland.

The Financial Times report this week that of the 70 new listings in Hong Kong last year, Chinese mainland law firms were the lead adviser for issuers on 20 per cent of them, which is up from 15 percent in 2018.

The Red Circle’s Secret Weapon

So, what’s the ace up the sleeve of these Chinese firms? It’s a combination of star power and wallet-friendly fees that would make even the most frugal client smile.

They’re offering rates that are often more than 50 percent lower than their Western competitors.

In the past year alone, at least 14 senior lawyers and partners have jumped ship from US and UK firms to join Chinese firms. It’s not just individuals either; entire teams are making the leap.

Hong Kong’s legal scene is changing rapidly with Chinese companies increasingly favoring secondary listings in the territory, and mainland law firms are capitalizing on this trend.

But it’s not game over for international law firms in Hong Kong. They’ve got the experience, the infrastructure, and the know-how to handle complex IPOs involving US law and regulators.