In a progressive, proactive and perspicacious manoeuvre, Lovells and nine leading Chinese law firms have formed the Sino-Global Legal Alliance (SGLA), a "non-exclusive cooperation of law firms" that will attempt to provide legal services to clients on a coordinated basis across practice areas, China's provinces and countries.

The nine local firms (with their home cities) are Allbright (Shanghai), China Commercial (Shenzhen), Deheng (Qingdao), Dewell (Wuhan), Guangda (Guangzhou), Join & High (Tianjin), Solton & Partners (Chongqing), T&C (Hangzhou) and Wang, Wu, Yang & Ma (Shenyang). Each member firm is the sole representative in the alliance from its home city. The alliance is leaving its door open to additional Chinese members in the future, but the likelihood of more international firms - perhaps those in places with no Lovells office - seems less.

The SGLA - launched as a brand in its own right, complete with logo and website - intends to go further than simply acting as a referral network. Instead, it is putting together cross-firm practice area groups to provide clients with a nationwide - and through Lovells, international - one-stop shop for any given transaction or matter. For regulatory reasons, if no other, profit-sharing will not be on the agenda, but the cooperation agreement will go as deep as to provide regular and structured collaboration on training, firm management and marketing.

The alliance will work on a non-exclusive basis to allow member firms to continue working with firms outside the alliance, but as its architect and Lovells Beijing managing partner Robert Lewis said: "The natural tendency will be for the member firms to work together because we know each other so well. If we [Lovells] have litigation work in Shanghai, for example, it'll be a no-brainer for us to use Allbright."

Consistency a challenge
In essence, the formation of the SGLA is a response to the exponential rise in the demand for legal services in the provinces and the need for firms to have nationwide capability. "It gives member firms the opportunity to go to SOEs and FIEs with operations all over the country and present themselves as a place to get a consistent quality of legal services," said Lewis, who is also chairman of the SGLA.

Of course, this is easy to say, but harder to deliver - just ask any of the large Beijing firms that are trying to do something similar under the umbrella of a single firm brand.

Lovells' approach in trying to achieve that consistency was based on existing relationships and six to eight months of research. Lewis knew lawyers from many potential SGLA members through involvement in All China Lawyers Association (ACLA) management training programs, and Lovells had already worked with several of the firms in question on transactions. From that starting point a team of up to 12 paralegals conducted phone interviews to get a clear consensus on which were the five or six leading firms in each of 15 cities; partners then visited the firms to get the shortlists down to two or three; and finally more detailed due diligence was conducted on the remaining firms. "In making the cut we wanted to understand a lot about management structures, and the degree of integration and specialisation that existed in the firms ... We wanted to avoid, at all costs, creating a conglomeration of sole practitioners," said Lewis.

In two-thirds of cases, he said, management strength correlated strongly with a firm's market share. In six of the 15 cities originally targeted, no firm made the cut - no one showed to a sufficiently high degree "the shared vision and the acceptance of the cooperation principle".

Marketing advantage
For Lovells, the hope is presumably twofold: that a tangible, branded framework for providing on-the-ground legal services to inbound clients and FIEs expanding into the provinces will become a clear distinguishing asset in a crowded and growing international firm market; and that a growing amount of outbound work from clients of the local firms will funnel through Lovells' China offices to its international network. And those familiar with the firm's China strategy since Lewis' 2001 arrival as head of the Beijing office may view this latest, most dramatic move as the zenith of a long-term policy of often subtle engagement and cooperation with rather than competition against local firms and lawyers.

For the nine local firms, having a formal alliance with a significant international firm will have obvious marketing advantages and can only help them assimilate the more advanced management structures and techniques they so openly strive for. Indeed, SGLA sub-committees will systematise this process. An additional potential advantage for them bears no relation to the Lovells ingredient of the alliance: if they can genuinely make cross-firm nationwide practice groups work effectively, many observers would say they will be the first to provide this capability on anything close to a national scale.

Their success in this regard will be a product of how happy they feel working with, and with the work of, the other members. In turn, this will be determined by how much they can rely on the conclusions of the Lovells research and due diligence process, and the extent of their existing relationships with other members.

No plain sailing
In a profession that by its own admission is having to work hard to move away from partner fiefdoms and towards fully integrated firms, any attempt to do this not within a single firm office but within nine firms and a total of 25 offices across 13 cities can only be seen as highly ambitious. Lewis for one, however, is optimistic: "If this was based on crass commercialism, you wouldn't have a solid foundation on which it could work. But the member firms have an admirable attitude ... They have a clear perception of where they stack up against international firms in terms of standards, and the genuineness of the shared interest is really there," he said.

Only time will tell whether the SGLA catches on like wildfire or disintegrates into the smouldering ashes of good intentions. If the former, other similar alliances will follow; if the latter, the single-brand national firm model will dominate.

International firms question SGLA's viability
Lovells' initiative in bringing the SGLA together is admirable, but has met with mixed reactions from some of its bigger international competitors in China, which question the intentions of the local Chinese firms more than their competitor Lovells.

The managing partner of one firm with a major China practice said that all the PRC firms are playing "best friends" to all the major international firms and that "I don't think this will give Lovells the kind of relationships they are hoping for". And perhaps this is where the SGLA might run into difficulty - it may just be seen by local firms as just another chance to buddy up with another international firm. The local firms do seem to see the value of the SGLA being more in what they can learn and gain from Lovells in the way of training, management techniques and work.

Orrick, Herrington & Sutcliffe managing partner Christopher Stephens said the more successful local firms are reluctant to enter into even informal alliances or publicise any formal relationship with a major international firm from fear of losing referral work from other international firms - often a major part of their practice. In such an environment, it is unlikely the local firms will view the SGLA and Lovells with any exclusivity. Stephens also said firms need to be cautious in their alliances with particular local firms. "International firms have to be aware of where the best talent can be found for specific types of engagements and should avoid being committed to using a firm that may not present a sufficient level of experience," he said.

It seems competitors also do not feel the arrangement would affect their own practices in terms of referrals. "We don't get much by way of referrals from PRC law firms so no change there," said Nick Seddon, DLA Piper managing director for Asia.

However, now that Lovells has set the ball rolling, will other international firms look to establish similar relationships with local Chinese firms? "The licence environment in China makes it likely that firms will look to some sort of similar arrangements," Seddon said. "We have no plans currently, but then we do have the second-largest China practice of the international firms so we already have good critical mass."

Zhu Linhai, managing partner of AllBright
"SGLA provides training in an international law firm for our young lawyers and opportunities to cooperate with top law firms from different regions"

Gao Shu, managing partner of China Commercial
"Being a member of SGLA can help uphold our firm's standards of practice, management and operation, and enable us to move closer towards international standards"

Luan Shaohu, managing partner of Deheng
"The greatest advantage of being a member of the SGLA is that we could gain good information about the experiences of other members of SGLA, and make our law firm more scientific in management and business development"

Cai Xueen, director of Dewell
"The core values of SGLA for our firm lie in the international allied firm's advanced management structures and techniques, as well as their well-established marketing knowledge and skills. Membership also creates a good opportunity to raise our profile in the international market"

Xue Yunhua, chairman and director of Guangda
"Being a member firm of SGLA - forged with the global resources and international legal expertise of a leading international firm, we can actually improve our firm's quality of services trough shared know-how development, training and business development initiatives amongst members, which is vastly different from being a member firm of a domestic alliance"

Ma Kewei, co-founder and executive director of Join & High
"Foreign investment in Tianjin, including Bin Hai New Area, will become the most attractive region after Shen Zhen and Pu Dong. Being a member of the SGLA, our firm is able to serve our clients the best with the strong support of other members of the SGLA"

Han Deyun, managing partner of Solton
"Through practice cooperation and information exchange between members firms, who are all market-leading business firms, we can enrich our expertise in providing commercialized and market-orientated corporate and commercial legal services to our clients, which remains a blanket area in the currently domestic legal education system"

Zhang Jingzhong, managing partner of T & C
"SGLA will be an excellent platform for members firms to cooperate on an increasing number of complex and sophisticated cross-region or cross-border projects and transactions"

Wang Li, managing partner of Wang, Wu, Yang & Ma
"Being a member of SGLA, we are expecting to be more involved in cross-border transactions and expand our practice areas through the alliance's cross-firm practice group. Given it the country's recently launched 'Revitalize the Northesat campaign, the region is seeing a rapidly growing demand for both inbound and outbound investment legal services"