The Chinese government has been aggressive in its pursuit of economic stability, with the nation reporting GDP growth of 8.9% in the third quarter of 2009. The flow-on effects of the stimulus package are starting to affect the legal industry as China marches towards an economic recovery. “We have seen that the markets are coming back, not strongly, but lay-offs have paused,” said Nick Zhang, a director of LawInn HR Consulting.
Zhang noted that even though some international firms in China are busier and looking for good candidates, they struggle with headcount restrictions from global headquarters – so legal positions are not created quickly and efficiently. However, this is not the case with all international law firms – DLA Piper, for example, has confirmed that it is currently looking to recruit more lawyers for its offices in China.
“The market sentiment has definitely picked up and we see lots more work to come. Although investors may not invest this year, I would say that they are preparing to invest next year,” said Janet Hui, a partner at Jun He. “In fact, we have built up new practice groups this year because we think there are new business opportunities being generated out of the GFC.”
Earlier in 2009 Jun He introduced cost-saving measures which included a reduction in salary packages to accompany a reduced working week. However, in an encouraging signal for legal recruitment, the firm has recently reversed the measures in response to an increase in legal work. “Starting from this month, all the lawyers resume a 100% salary package and also they are coming back to work as normal,” Hui said. “We are now recruiting but not as extensively as in the past – we would recruit, say, about 40 to 50 lawyers a year and two to three interns a month.”
Zhong Lun lawyers report a positive experience throughout the financial crisis. “We did not, in principle, lay off any lawyers or even reduce salaries. Our firm is as strong as before and we can handle peak levels of work,” said Anthony Zhao, a partner at the firm’s Shanghai offices. “The good thing is that through this financial crisis our lawyers have become more loyal. They appreciate the efforts we made.”
Career developments
LawInn’s Zhang has found that there has been an increase in demand for in-house counsel. “We have received requests from local companies for international practice lawyers as they are expanding overseas. It is a difficult task because most international lawyers have experience with inbound investment into China and not outbound. Also the salary packages offered by local companies still cannot match the salaries offered by the international law firms. There is still a huge gap,” he explained.
Lawyers who specialise in a particular area are also benefiting from increased opportunities. “The market is looking for lawyers in particular practice areas such as real estate, capital markets and IP. There are not that many corporate practice positions and there are still a lot of candidates available with this experience,” Zhang said.
He has also noticed that PRC law firms are luring lawyers who have international exposure with the promise of partnership. “There are two obstacles to this. First, is the lawyer willing to give up a high guaranteed salary? Top local law firms are willing to pay a salary partner around RMB500,000 to RMB800,000,” said Zhang. “Second, senior associates may be willing to move to a local firm for partnership, but can they bring clients with them? Local law firms will use partnership to attract lawyers but are not willing to pay if they do not have a practice.”
The salary gap may close fairly quickly, as more international lawyers are willing to accept a salary cut in order to progress their career with a PRC firm. However, these firms still require lawyers with PRC qualifications. “We are looking for more PRC-qualified lawyers, but we think international exposure is good [for lawyers] though,” Hui said. “Clients don’t come to us for US law advice or UK law advice – they want PRC law advice.”
Demanding outlook
Lawyers are also attracted by the great potential for career development in China’s nascent legal services industry. “Legal practice in China is still a new industry,” said LawInn’s Zhang. “So most young lawyers have great opportunities to become well-known in a certain practice area. It's not like in mature legal service markets where you have so many experts ahead of you. If you have fresh and current experience in a fast-growing practice area, you may actually be more valuable than some senior lawyers or partners that do not have on-the-ground experience,” he added.
Law firms of course compete with one another in two markets: for clients and for lawyers. “At the moment they are only focusing on finding clients and projects, but soon they will have to focus on legal talent as things are starting to pick up,” said Zhang. Although salary expectations are low at the moment, he believes that when salaries do rebound, they will do so very quickly.
Right now the legal recruitment market is still conservative but the outlook is positive. “The market is recovering but there are still uncertainties, so people would like to watch out for a few more months,” said Zhong Lun’s Zhao.
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