在“2023 ALB China 十五佳成长律所”榜单评选过程中，ALB对各家律所的观察区间为2022年4月至2023年4月。去年由春入夏，受新冠疫情影响，上海“停摆”两个月，其他城市也受到疫情不同程度的影响，这样的影响可以说一直延续到了今年初。
2023 ALB China Fastest Growing Firms
In the face of intense competition, both domestically and internationally, and complications within the partnership structure, Chinese companies face significant obstacles when it comes to achieving rapid growth. ALB highlights the top 15 companies that have overcome these challenges and achieved growth through improved service quality and efficiency, as well as by exploring new opportunities.
In June 2023, the Chinese Ministry of Justice released the ‘Statistical Analysis of Lawyers and Grassroots Legal Services in 2022,’ which showed that at the end of last year, there were more than 651,600 practicing lawyers in China, 76,800 more than the previous year, an increase of over 13 percent. China is home to more than 38,600 law firms, including more than 2,100 new entrants. Specifically, a total of 500 firms now have at least 100 lawyers, an increase of over 20 percent.
Although the legal services industry was not spared the substantial impact last year, given growing uncertainties of the domestic and international environment and slowing economic growth, the data above show that China’s legal services industry has managed to maintain its rapid growth seen in recent years, and that the market is still large enough to be explored and developed by Chinese firms.
In this ranking, we are highlighting those firms that have managed to overcome difficulties, stand out from competition and become industry leaders. The "15 Fastest Growing Firms" list in China is based on indicators such as increases in the number of fee-earners, new key partners, new offices, new key clients, new practice areas and revenue. Those 15 firms have not only delivered outstanding report cards in the said key indicators, but they also each rank among the best in the country thanks to their respective undisputed competitive advantages and comprehensive strength in several fields.
This year’s 15 winners include established firms headquartered in Beijing, Shanghai and Shenzhen, large firms in non-first-tier cities that are deeply involved in regional markets, as well as medium-sized firms that have just switched from the traditional boutique firm model to being full-service providers, with seven new entries. Each firm has different development strategies and plans given different size and market positioning. ALB has invited several winning firms to share their continuous growth journey and the challenges they face.
CHALLENGES AND OPPORTUNITIES
The period under review for the 2023 ALB China Top 15 Fastest Growing Firms is from April 2022 to April 2023. Affected by the pandemic, activities in Shanghai were paused for two months from spring to summer last year, while other cities were also affected by the pandemic to varying degrees. This impact can be said to have continued until the beginning of this year.
Against this backdrop, one commonality among the 15 winning firms this time is that they have all successfully withstood the shock of the external environment, and that their annual revenue has bucked the trend of declining to register growth.
Based on the epicentre of this storm, Ronly & Tenwen Partners saw a decline in business volume during the lockdown. However, once the lockdown was lifted, all lawyers made extra efforts to catch up, and business volume rebounded rapidly. Such a rebound is inseparable from the firm's rapid growth in recent times. "In recent years, we have maintained steady annual growth of 20 percent in our team," says Pan Dingchun, director of Ronly & Tenwen. With the increase in the number of offices and colleagues, the reputation of the firm has been continuously consolidated, and revenue has also increased significantly. "Expansion at this speed proves to be working for us and has achieved good results."
According to Pan, Ronly & Tenwen added six offices in Shanghai Lingang, Beijing, Guangzhou, Suzhou, Changzhou and South Korea over the past 12 months, Before this, the firm only had offices in Hangzhou, Haikou and Taicang apart from its Shanghai headquarters.
Beijing JAVY Law Firm is another firm that achieved growth in the number of lawyers, the number of offices and business turnover in the past 12 months. "The past three years saw our rapid development amid the outbreak and resurgence of the pandemic. JAVY created new opportunities despite the crisis, forged new grounds amid fluid situations, and achieved excellent results on multiple fronts," says Cao Chunfang, deputy director and founding partner of JAVY.
JAVY registered a year-on-year increase of 60 percent in its number of lawyers and staff to reach nearly 400, and added offices in Shanghai, Chongqing, Fuzhou, Nanning and Zaozhuang, with preparations ongoing for establishing presence in Tianjin, Taiyuan, Wuhan, Shenzhen and Hangzhou. In March this year, the firm rented a new building for its Beijing headquarters, doubling its office space to nearly 6,000 square meters in two detached buildings. "This has improved not only our work environment, but also our overall service capability and comprehensive strength."
On the other hand, Jiang Qi, chairman of the National Board of Directors of Beijing Hylands Law Firm, shares that apart from the pandemic, complex international political and economic dynamics since last year, such as the global economic recession, the power play between China and the United States, and the Russia-Ukraine conflict, have collectively resulted in a period of relative stagnation for the Chinese legal services industry. As a result, China’s legal profession, already highly competitive, has experienced involution, or excessive internal competition, that is not conducive to development.
Already a full-service outfit, Hylands managed to maintain its growth momentum over the past 12 months, with fee-earners up by 530 to reach 2010, new offices established in Fuzhou, Nanchang, Xi'an, Suzhou, Zhengzhou, Shijiazhuang, Taiyuan, as well as Miyun District and Changping District of Beijing, and a significant increase in revenue.
Based on performance of the firm’s headquarters and more than 30 offices in the first half of this year, Jiang expects the growth of revenue to be maintained. These achievements are inseparable from the efforts made by the firm in recent years to build up middle office services and branding. "Hylands has presented itself with a brand new look in the world of Chinese law firms."
SYSTEM AND MANAGEMENT
The gains brought about by strength in numbers point to the driving role of scale in the development of Chinese firms. Faced with fierce competition, many firms are emphasizing the importance of staying prudent and pursuing moderate and high-quality upscaling. To this end, the 15 winning firms have all worked hard in terms of systems and management.
Switching from general partnership (GP) to special general partnership (SGP) is a clear path chosen by many of the winners, such as JAVY, Ronly & Tenwen, Beijing Celue Law Firm and Chance Bridge Law Firm. The biggest difference between GP and SGP lies in the debt liability of law firm partners, which improves a firm's ability to withstand risks.
Cao of JAVY says that the restructuring of the firm to a SGP in 2021 is a key milestone in the firm’s development and provides the institutional guarantee for its rapid growth. "SGP solves the worries of partners in terms of liability sharing, creating the basic conditions for all partners to build a business platform together." On this basis, JAVY has made it clear in its first "Five-year Plan" that it will transition from a specialized boutique firm to a large-scale, one-stop firm.
Although Hylands still adopts the GP model, Jiang concedes that the underpinning philosophy and basic logic of a partnership firm is that lawyers will work and do things for their own benefit, resulting in an inherent lack of organizational capabilities of the firm. "The tension between our lawyers' growing professional competence and creativity and our firm’s lack of organizational capabilities is something we need to address urgently."
When it comes to the organizational structure of law firms, Jiang hopes that China could introduce limited liability partnership or LLP which would contribute to the upgrading of law firm management. "The risk of unlimited joint liability is like the sword of Damocles, hanging over the heads of 650,000 Chinese lawyers. The LLP model, on the other hand, advances joint management through the proportionate system, which can improve management efficiency and strengthen organizational capabilities."
At the management level, both JAVY and Hylands have established a system comprising "discussion, decision-making, execution and supervision". JAVY’s Cao shares that "discussion" aims to reflect democracy in its broadest and most sufficient sense. The firm has set up an executive committee, an organizational strategy and development committee, an institutional development and coordination committee, and a partnership affairs committee, to study major issues that emerge out of the firm’s operations and management. Before decisions on major matters that affect the firm are made, all employees are organized to participate in internal consideration, communication, discussion and research. "Decision-making" is to improve the democratic decision-making mechanism featuring democratic discussion and voting. JAVY practices three-tier decision-making partner meetings, namely meeting of all partners, meeting of senior equity partners, and meeting of the partner management committee.
Further, "execution" is to step up implementation efforts. At JAVY, the partner management committee elects the managing partner upon discussion who is responsible for organizing and coordinating decision-making studies, managing the relationship among partners, performing executive functions, and reporting to partner meetings at all levels. Finally, "supervision" refers to the oversight of decision-making and implementation by partner meetings at all levels and special supervisory bodies.
Hylands adopts a similar management model, although there are slight differences in organizational set-up. The firm has established four organizational bodies, namely the National Congress of Partner Representatives, the National Board of Directors, the Beijing Management Committee and the National Board of Supervisors, which respectively shoulder the responsibilities of discussion, decision-making, execution and supervision. Jiang believes that the current management model is working well, though there is room for further improving management efficiency in terms of integrating "decision-making" and "execution".
The development strategies of different firms vary, and it is not possible to summarize all strategies in a few sentences. However, so that upscaling no longer only focuses on size but also on quality, every firm is expected to go through the transformation of internal systems and management. Pan of Ronly & Tenwen believes that the management capabilities of a firm include not only soft capabilities such as the vision, experience and attitude of the management team, but also hard capabilities such as information technology level and office environment, as well as the sense of responsibility, dedication and work experiences of the professional managerial team. All of these areas are what Ronly & Tenwen will be focusing its efforts on.
INTEGRATION AND SYNERGY
"Growing pains are unavoidable. They are also different at different stages of growth." Pan of Ronly & Tenwen hits the nail on its head. As developments such as merger, new recruits and expansion are inevitable during rapid growth, Pan views integration as the biggest challenge.
"Most law firms are partnerships, and partnerships are based on the harmony between individuals. The management and services of a partnership are thus different from public agencies as well as private businesses. Law firms are therefore a rather special type of market entity. I think there is a window period for the post-merger integration of law firms, which is generally three years. If smooth integration cannot be achieved in three years, the patience of partners usually would have become thin, and they are likely to feel integration fatigue and show emotional swings."
To overcome such difficulties, Ronly & Tenwen, which was born out of the merger and reorganization of Shanghai Ronly Law Firm and Shanghai Tenwen Shidai Law Firm in January 2019, has always adhered to the partnership concept of loyalty, equality, democracy and inclusiveness. All partners follow the philosophy of "choosing big over small, choosing long-term over short-term and choosing collective benefit over individual interest”, and "persist in refining and strengthening our practice, making the cake bigger and better, and working together to build a platform for common benefit.” According to Pan, “the firm has navigated the transition from development amid integration to integration while developing, and has now been smoothly integrated as one."
In addition, how to ensure that the headquarters and local offices of a firm are progressing together is another challenge during the scale-up process of law firms. "The rapid growth of Hylands’ Beijing headquarters is not balanced with that of our offices in different places. Revenue from the headquarters accounts for half of total national revenue, while the revenue and the number of headcount in each office are small and uneven. This easily leads to conflicts in the development and management of the headquarters and local offices." Jiang shares that to address this issue, Hylands issued the Implementing Opinions on Common Development in 2022, in an effort to align everyone on the same page and "build a 'fleet' that maintains formation."
On the other hand, JAVY focuses on business complementarity, market demand and cultural compatibility before deciding to open a new branch. "In terms of business complementarity, the firm to be merged have expertise in different practice areas or different client resources to achieve more comprehensive service coverage; in terms of market demand, the firm to be merged share a common understanding and similar strategic thinking so as to better jointly grow market share; and in terms of cultural compatibility, the firm to be merged have values, teamwork culture and management style that are consistent with JAVY to ensure synergies and a good working atmosphere after the merger,” says Cao.
"In addition, in some firms, partners of a branch office will not be able to become partners of the headquarters. As a result, they have neither decision-making power nor voting rights. JAVY, on the other hand, requires branch office partners to be registered as headquarters partners. After being promoted to senior equity partners, they can not only participate in decision-making, but also share the distribution of the surplus of common revenue and expenditure.”
Furthermore, partners of a JAVY office who have participated in its establishment preparation are free to choose to practice with the headquarters or the branch office. "In addition, we have achieved integration between the headquarters and local offices in terms of branding, training and business leads. The headquarters and local offices share brand reputation and training resources. The former will pass down some business leads to the latter, while the latter can also choose to work with the former according to business needs."
PERSEVERANCE AND PROGRESS
While all the firms interviewed are delighted to make it onto this year’s list, they all say that this is just one small step on the road to growth, and they have set many goals for themselves for the future.
Ronly & Tenwen Partners believes that internal and external goals should be progressed together. According to Pan, internally, for one, the firm must first strengthen cultural building. "Cultural building sounds vague, but it is actually the soul of the development of a firm. It is often the culture of a firm that plays an important role in key moments of the firm. The culture of a firm represents the values formed by partners and all lawyers over a long period of time, and subtly influences the behavior of each lawyer. Therefore, going forward, we need to continue to build up the cultural core of Ronly & Tenwen and enhance the cohesion of the firm."
Second, the firm needs to improve professionalism. "Professionalism lays the foundation for the development of both a firm and a lawyer. Ronly & Tenwen helps lawyers specialize in one core practice area and two supporting practice areas, and actively builds an internal secondary market to benefit lawyers and create a virtuous circle."
"Externally, we will first pursue moderate expansion and continue to attract professional teams to reach 500 practicing lawyers in our Shanghai headquarters in the next three years. Apart from Beijing, Shanghai, Guangzhou and other first-tier cities, we will focus on establishing presence in capital cities in the Yangtze River Delta region, and important prefecture-level cities in Jiangsu, Zhejiang and other provinces, so as to reach 20 domestic offices and five overseas offices, thus creating a nationally renowned brand that is capable of serving clients both at home and abroad. Second, we will work on brand building, including branding of the firm as a whole, branding of practice teams and branding of individual lawyers. They should complement and support each other,” says Pan of Ronly & Tenwen.
Cao says that JAVY will always remain clearheaded and keep its original vision in mind. "In the next step, we will spare no effort to achieve the strategic goal of becoming a large national firm in accordance with the goals set in our first Five-year Plan. Specifically, we will spend three years to further innovate work ideas and management measures, and improve the construction of the national legal services network, to make JAVY a well-known national firm where the number of lawyers and the number of elite lawyers both rank among the highest across the country. Further, in five years, we will establish a service network with global coverage and become a global firm.”
According to Jiang of Hylands: "In the face of the global economic recession, China's legal services industry will become a jungle society where only the fittest survive. Hylands must remain firm in our development direction, and focus on risk control, especially criminal, administrative and civil legal risks. In addition, while attracting top talents, we must further enhance organizational capabilities."
"Hylands aims to join the $200 million revenue club by the end of 2023, achieve the fee target of 2 billion yuan in three years, and reach 3 billion yuan in five years before Hylands’ 30th anniversary. We should be among the top ten in China for the three indicators of number of practitioners, total revenue and revenue per lawyer, and become a leading firm," shares Jiang when it comes to specific targets.
To achieve these goals, Hylands will rely on the dual drivers of R&D and organization. On the one hand, to become a R&D-oriented firm, Hylands has set up a research institute this year, and will gradually unveil industry-leading legal service products, publish business articles combining theory and practice, nurture the growth of partners with more academic activities, so as to create the image of lawyers with deep professional expertise. On the other hand, Hylands will increase investment in information technology transformation and upgrading to enhance organizational capabilities.
"Looking ahead, I hope China's legal services industry can avoid vicious competition. Instead, all industry players should build up capacity, grow together, create an environment for healthy competition, and finally enter the ‘hall of fame’ of the global legal industry," says Jiang.
2023 ALB China Fastest Growing Firms
Beijing Celue Law Firm 北京策略律师事务所
Beijing Docvit Law Firm 北京市道可特律师事务所
Beijing Hylands Law Firm 北京浩天律师事务所
Beijing JAVY Law Firm 北京嘉维律师事务所
Chance Bridge Law Firm 卓纬律师事务所
China Commercial Law Firm 华商律师事务所
Glinks Law Firm 上海格联律师事务所
Hai Run Law Firm 海润天睿律师事务所
Hunan Tiandiren Law Firm 湖南天地人律师事务所
Leaqual Law Firm 两高律师事务所
Merits & Tree Law Offices 植德律师事务所
Ronly & Tenwen Partners 上海融力天闻律师事务所
SGLA Law Firm 中联律师事务所
Wincon Law Firm 文康律师事务所
Zhi Heng Law Firm 广东知恒律师事务所
Law firms were selected on the basis of fee-earners growth, new offices launched, additions of key partners and important clients, revenue growth and other kinds of expansion.
The ranking was open to law firms with physical offices in mainland China.