China’s fastest-growing law firms in 2009
A slowdown in staple areas such as M&A, banking & finance, capital markets and projects work has caused many firms to lay off staff. But ALB China’s 10 fastest growing firms have stood tall above the rest. These ten firms, although inevitably affected by market conditions, have achieved good results by capitalising on China’s strong resilience to the GFC and further integration with the global economy.

The firms have credited the following factors towards the growth in annual turnover. The larger Beijing firms – such as Dacheng, Zhongyin and Longan – have been rapidly expanding their national presence by acquiring regional firms, and their strong growth in revenue was largely due to these acquisitions. Dacheng, for example, opened 14 branch offices in 2009, over half of which were established by acquiring local firms.

Longan’s founding and managing partner Xu Jiali sees acquisition of smaller regional firms as a quick and cost-effective way for national firms to expand. “Driven by client demands and our business development needs, we have decided to tap into new markets, extend our national coverage and seek new source of revenues,” says Xu.

He also sees the need for smaller regional firms moving up the value chain to access more high-end national and international clients by joining forces with bigger national firms. “We’ve received many proposals from regional firms to join our firm. They have recognised that they can fast-track the development process by leveraging large national firms’ established brands, know-how, resources and client bases,” he says.

Downsides to this kind of expansion exist. Xu points out that it requires a lot of time to fully integrate with merged firms, and the need to control quality can increase the overall cost of expansion. Yet even recognising the issues and challenges that come with merging, Longan will open new offices in Hangzhou, Ningbo, Tianjin, Chengdu and Hong Kong in coming years, according to the firm’s development roadmap.

For the smaller firms on the list – including Han Kun, Jade & Fountain and Broad & Bright – growth has been fuelled by a number of new partners joining from international firms and larger domestic rivals. As the market went through a quieter time, many of these lawyers had an opportunity to rethink their career goals and so were more willing to take a chance and move.

This mentality created a good opportunity for emerging firms to recruit top talent for further development. “The market went through a tough time, but it gave us a great opportunity to recruit quality mid-level associates and new partners, particularly these who have experience practicing in international firms and top-tier domestic firms,” says Jade & Fountain’s Scott Guan.

The tough commercial times have also created more opportunity for firms to be the first choice for clients who are seeking quality legal expertise, and are looking for a smart, lower-fee alternative to the mega-firms.

“Many clients have become much more cost-sensitive,” says Yuan Changchun, managing partner of Broad & Bright. “They are under pressure to reduce their legal spend and are more willing to make use of the lower rates and lengthening track records of the better mid-tier firms. So we have had the chance to grow.”

But mid-tier firms have more to offer than lower prices. They can be more nimble and responsive to client’s demands and they’re not burdened by large or heavy structures. Some mid-tier firms can also offer clients cutting-edge expertise and extensive experience in their specialised field.

A couple of established firms who are known for servicing higher end clientele – such as Global and Grandall – have also had a good year. They attribute their revenue growth to a solid stream of new instructions from mid-cap clients, who have been less exposed in the global market and remain active in deal making. “Due to the impact of the financial crisis, many large corporate clients who are more exposed in the global market have significantly reduced their budget for external counsel and have been slow making transactions,” says Global’s managing partner Liu Jinrong. “On the contrary, many small and midsized businesses remain active in the current market and we have received a solid stream of new mandates from these clients.”

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