The 2012 China Fast 10 recognises the law firms that showed the strongest performances in this rapidly growing market with regards to physical expansion and revenue growth. Divided by the expansion approaches of volume or specialisation, or a combination of both, the fast 10 firms are strategically preparing themselves to take further advantage of China’s industrial upgrading and overseas investments. In particular, they are focusing on increasing network coverage, expanding practice areas and improving professional proficiency. In this age of intensified competition within the legal industry, those that have found the most suitable approach to their own unique development are taking the lead for the future.
Methodology
The ALB China editorial team received submissions from law firms that provided information on their hires, departures, percentages of revenue growth, newly opened offices and other elements contributing to a firm’s growth between May 11, 2011 and May 11, 2012. Only firms that made submissions were considered.
After the results were collated and the quantitative data analysed, a top 10 list was created that honoured
those firms that achieved the highest balance between increased headcount and office locations, and strong revenue growth. The list featured here is not a ranking, but rather a collection of China’s top 10 fastest growing firms, with one honourable mention.
BEIJING DHH LAW FIRM
Headquarters: Beijing
Branches: Shanghai, Nanjing, Handan, Hong Kong, Seoul, Berlin, Washington
New offices opened: Two
Headcount growth: 169 percent
Revenue growth: 60 percent
The nationalisation strategy brought Beijing DHH Law Firm (DHH) two new offices and 58 more lawyers this year, representing a 169 percent headcount increase. The firm also earned 60 percent more than the year before.
A dual brand with the Shandong Deheng Law Firm, DHH sets its home base in the capital city of Beijing because of its vision of nationalisation, says Jiang Qi, DHH’s managing partner. The year 2012 is going to be the “year of nationalisation” again. New offices are lined up, with two to be opened in the second half of the year in Henan, Tianjin, and Shanxi provinces that surround Beijing and Shandong. “Our nationalisation will expand further,” says Jiang. “Unlike others, our branches are tightly bound together as one brand, one management and one team.”
Between the two approaches of increasing volume or specialisation, DHH has chosen scaled development instead of the boutique strategy. By the end of 2013, the firm should have eight offices in mainland China and its headcount should double again to over 150. But the expansion should never be hasty or blind, notes Jiang. Following a clear road map, the opening of new offices will be step by step and pragmatic. “We will work hard to push the profile of the headquarters to cover all the branches nationwide with our brand, management and team; the three concepts we raised,” he says.
Meanwhile, DHH is part of leading national firm network Elite Chinese Legal Alliance (ECLA) that now has nine members across China. Another part of the DHH nationalisation plan is working through ECLA to enlarge the organisation to 20 firms with over 1,000 lawyers by the end of 2013. The target member firms are regional leaders, each sized at around 30 lawyers with about 10 million yuan in annual revenue. “We position this league as the combined fleet of the cruisers in the legal industry. By combined, we mean the firms are independent, and by cruisers, we mean they are medium-sized, not the super big aircraft carrier groups,” says Jiang. “Together in the fleet, the cruisers can fight the aircraft carriers.”
GRANDWAY LAW OFFICES
Headquarters: Beijing
Branches: Shanghai, Shenzhen, Guangzhou, Chongqing, Chengdu, Xi’an
New offices opened: Three
Headcount growth: 72 percent
Revenue growth: 120 percent
Grandway was created by one of the most noticeable mergers in the past year. In October 2011, two Beijing-based firms, Grandfield and Kaiwen, began talks of a merger and quickly reached an agreement in March this year. The combined new firm saw the number of partners rising from 22 to 48, and the overall headcount increasing by 72 percent. The number of offices also doubled to six. In the first two month after launching, it recorded magnificent growth, with 120 percent more revenue from the same period last year.
Zhang Liguo, former managing partner of Grandfield and chief executive partner of the new firm Grandway, says the merger was initiated by several partners of both firms who had long histories of cooperation, and who shared a common goal of creating a bigger and stronger firm. “The two firms had complementary advantages in terms of talent, practice areas and management,” he says.
Former firm Grandfield focused on the capital markets, and was one of the key leading firms in China handling A-share initial public offerings. Meanwhile, the former Kaiwen was strong in banking and finance, as well as insurance and litigation. “After the smooth merger, our key task this year is to put together our strengths and bring out the chemistry of the combination to make one plus one greater than two,” says Zhang.
The new Grandway is aimed at increasing the standard of practice with upgraded management and training. While establishing an integrated system, the partners would also like to forge a new firm culture that is accepted by lawyers from both sides in order to pave a solid foundation for long-term growth, according to Zhang.
With deepening specialisation in the legal industry, Zhang believes that successful growth for a firm means expansion that can only be based on strengthened expertise. “Globally, outstanding firms do have significant size; but not all significantly sized firms are outstanding,” says Zhang. “Our dream is to make our firm an outstanding one.”
LLINKS LAW OFFICES
Headquarters: Shanghai
Branches: Beijing
New offices opened: Nil
Headcount growth: 17 percent
Revenue growth: 45 percent
Llinks Law Offices managed to obtain significant growth plus high average revenue per partner and per fee-earner figures without a large number of new hires. Its two offices in Shanghai and Beijing saw the exit of a few junior lawyers, but the firm substituted them by bringing experienced partners and senior counsels on board. The annual growth of 45 percent to reach over 110 million yuan with a total of 62 lawyers strongly proves Llinks’ philosophy of development with caution and quality.
“What I want is to build a firm that lasts for centuries. When evaluating from the scale of a hundred years, the short-term speed does not matter that much,” says Yu Weifeng, the founding partner of Llinks. “I always emphasise that we are taking a steady pace to grow. We have our long-term goals. We have our core values, which are specialisation and teamwork.”
Since being established in 1998, Llinks has been developing a distinct strategy by dividing up highly specialised services whereby each lawyer only focuses on his or her own specific area. According to Yu, Llinks’ lawyers have benefited from this strategy as their capabilities and competencies improved. Greater efficiency saves clients’ time and costs, and deeper understanding and knowledge strengthens clients’ confidence. Llinks’ reputation of being professional and specialized has been well recognised and welcomed by the market.
After effectively homing in on practice areas such as M&A, equity, banking and finance, asset management, tax and customs, and real estate, Yu says his firm has now set its eyes on three new areas: dispute resolution, debt markets and intellectual property.
With Llinks’ strategy, Yu says he would look for a few really outstanding partners in the industry to join and lead the practices towards growth. He set the partner target number over the next couple of years to reach more than 20 partners with a mild two-year growth of 50 percent, given the uncertainty of the economy. “We are not seeking a merger with other firms in the near future, and we will not increase our size dramatically. We value the quality of growth over quantity,” he says.
TIAN YUAN LAW FIRM
Headquarters: Beijing
Branches: Shanghai
New offices opened: Nil
Headcount growth: 49 percent
Revenue growth: 25 percent
Thanks to a strategy of stable development, Tian Yuan Law Firm reached the 200 million yuan revenue mark with a 25 percent annual growth last year. Managing partner Zhu Xiaohui describes the firm’s key word as “balanced”. Traditionally specialising in securities, M&A and dispute resolution, Tian Yuan has managed to find the perfect point where the different combinations of practices can grow through different stages of the economic cycle. It has also delicately balanced the domestic and overseas markets. “We only pursue steady growth,” says Zhu. “Service quality control comes first.”
In Tian Yuan’s plans for the future, defending and increasing its market share in three traditional practices ranks first. But it does not mean that the firm would not seek an entry into new areas like funds, which is naturally derived from existing practices. Apart from its two existing offices in Beijing and Shanghai, Tian Yuan partners are deliberating opening new offices elsewhere. But there will never be an explosive increase of branches or headcount, according to Zhu. Tian Yuan’s third office will likely be somewhere in South China, and a setup in the Southwest region could follow.
“We insist that any branch has to been established and run directly by ourselves,” says Zhu. The expansion has to be based on the market demand and the clients’ needs, he emphasises. Speed does not matter; practice quality and risk control do. In spite of its quickly growing international-related business, Tian Yuan has still not yet thought about having branches abroad. “However, a partnership with a foreign firm is definitely worth doing. Leveraging the networks of foreign local firms to serve the needs of clients is a good option,” says Zhu. “Each firm has its own strategy and we welcome all kinds of attempts by other firms, which might provide good examples for the entire industry’s future development. However, we have our own situation and choices.”
YINGKE LAW FIRM
Headquarters: Beijing
Branches: Shanghai, Guangzhou, Shenyang, Tianjin, Kunming, Xiamen, Wuhan, Nanjing, Qingdao, Suzhou, Changsha, Chengdu, Hohhot, Jinan, Shenzhen, Changchun, Dalian, Taiwan, New York, London, Verona, Budapest, Sao Paolo, Seoul, Warsaw, Istanbul
New offices opened: 10
Headcount growth: 31 percent
Revenue growth: 100 percent
Yet again, Yankee recorded a 100 percent revenue growth this year with four domestic and six international office openings. Sao Paolo, Seoul, London, New York, Warsaw and Istanbul were added to Yankee’s international map over the past 12 months. There are now 1,698 lawyers working for Yankee; a figure which is 31 percent more than last year.
The continuous high speed of growth is a result of market demand and client recognition, according to Mei Xiangrong, the managing partner of Yingke. The wide-ranging network of Yingke means it is able to offer a one-stop service with access to large amounts of integrated business resources and opportunities. “More Chinese companies are going out. They need an international law firm to escort them, and Yingke is capable of serving high end clients with our international network,” says Mei.
Yingke’s internal management and talent have also contributed to the quick growth. A combination of professional lawyers, managers and marketing experts has coordinated together on many projects. Since talent has always been a basic concern, the firm is planning the “Yingke 300” scheme which aims to produce its own famous lawyers in the next two years.
For the upcoming year, Yingke has identified eight domestic spots and several foreign locations it wishes to have a footprint in, including Los Angeles, Chicago, Johannesburg, Mexico, Tokyo and Moscow. “Globalisation is an irresistible trend of law firm development…those who manage to put themselves in position first will occupy the future market,” says Mei. “The expansion and merger of firms is the necessary path to that goal.” Citing that the top 50 largest firms in terms of size now earn 70 percent of the fees in the Beijing market, Mei suggest that the degree of concentration is increasing in the industry.
“Sustainable development can only be achieved through expansion and merger,” says Mei.
SHANDONG ZHONGCHENG RENHE LAW FIRM
Headquarters: Jinan
Branches: Beijing, Dezhou, Zibo, Laiwu, Binzhou, Dongying
New offices opened: One
Headcount growth: 13 percent
Revenue growth: 54 percent
Following an average growth of over 30 percent since 2008, Zhongcheng Renhe (Zhongcheng) enters the Fast 10 with a 54 percent increase in revenue growth compared to a year ago. The Shandong-based firm also opened its fifth branch in the province, and subsequently hired 30 more lawyers. In terms of practice areas, Zhongcheng also registered at the Tianjin Equity Exchange and kicked off its IP-related services over the past year. “The firm concentrates on key regions, authorities, companies, projects and practices, and lifts practice standards, service quality and profits,” says Wang Guangren, managing partner of Zhongcheng.
This year is expected to be Zhongcheng’s “year of expansion and leveling up”. Things to be levelled up include internal management, the firm brand, and its standard of service. Expansion refers to practices areas and new offices. The firm’s Qingdao and Yantai offices are currently in a preparatory period prior to opening. Moreover, Zhongcheng’s goal of “stepping out from the state border” has strategically been raised. It is sending lawyers for training in the U.S. and in Hong Kong, and building partnerships with overseas firms, according to Wang.
Addressing the firm’s strategy of “expansion” more specifically, Wang predicts that the time has come when the gap between big and small firms is enlarging dramatically. “It is for sure that the next 10 years will be a decade of industry consolidation,” says Wang. “Law firms should quickly react to this trend, speeding up the development of its size, brand and professionalisation to build the ‘air craft carrier’ of the industry.”
He also stresses that in order to match the clients’ geographical or business expansions, such as international investment or entry into sectors like finance, IT, property, energy, etc., law firms should upgrade their own capabilities to be able to provide a full-service practice cross regionally. “The Chinese market has great potential. Only the big and strong ones can take the most market opportunities,” he says. “The best sized, most specialised, strongest branded and internationalized firms need to be created by mergers.”
ZHONGLUN W&D LAW FIRM
Headquarters: Beijing
Branches: Shanghai, Guangzhou, Shenzhen, Taiyuan, Tianjin, Shijiazhuang, Jinan, Chengdu, Wuhan, London, Berlin, Hamburg, Paris, Riyadh, Lyon, Hong Kong
New offices opened: Five
Headcount growth: 52 percent
Revenue growth: 50 percent
With three of its five new offices located in Berlin, Hamburg and London, Zhonglun W&D has, over the past year, kept pioneering the international adventures of Chinese firms. The Beijing-based firm now has seven offices outside mainland China in addition to its 11 domestic ones, with a total of over 400 lawyers globally – more than one-fifth of whom are located overseas. Its synchronised high speed growth of headcount and revenue has given Chen Wen, the firm’s managing partner, more confidence in international development.
“Wherever the Chinese companies go, we go,” says Chen. “In the future, we will open more new branches in other countries, according to Chinese companies’ overseas development.” That China is stretching its economic power globally has created a surging need for international law services. Chen reckons that the overseas investments and acquisitions by Chinese companies have offered Chinese law firms unprecedented growth opportunities.
The dominance of the major international law firms and accounting agencies is the result of their previous development accompanying the expansion of Western multinationals, says Chen.“Chinese firms have to go international just as the Western firms did. It is inevitable and necessary,” he says. Chinese firms should never miss this historical opportunity, according to Chen. A few major Chinese firms have opened overseas, but the number is still far from enough, especially in contrast to how many foreign forms are operating in China. “The biggest challenges for a Chinese firm in going abroad are the cultural and language differences. Becoming localised is crucial, but first of all, there has to be market demand for your services, as well as available talent,” he says. However, Zhonglun W&D has been doing well. Although the domestic market will remain the firm’s core market, Germany, the UK, Middle East and Southeast Asia are all promising lands.
Over the past year, Zhonglun W&D has added private equity as its 16th practice area. The widening of practices reduces risk in an economic downturn, enhances its ability to resist cycles, and enables a stable growth of the revenue. As more and more branches open up, a good internal mechanism with effective interaction in practice and efficient management is the next task for Zhonglun W&D. “Our goal is to become a big, full-service, international, and first class firm,” says Chen.
DACHENG LAW OFFICES
Headquarters: Beijing
Branches: Changchun, Changsha, Changzhou, Chongqing, Fuzhou, Guangzhou, Harbin, Haikou, Hangzhou, Hefei, Jilin, Jinan, Kunming, Nanchang, Nanjing, Nanning, Nantong, Inner Mongolia, Qingdao, Shanghai, Shenyang, Shenzhen, Sichuan, Suzhou, Taiyuan, Tianjin, Wuhan, Urumqi, Wuxi, Xiamen, Xi’an, Xining, Yinchuan, Zhengzhou, Zhoushan, Huangshi; Chicago, France, Hong Kong, Los Angeles, New York, Singapore, Taiwan
New offices opened: Eight
Headcount growth: 80 percent
Revenue growth: 19 percent
Dacheng’s comfortable stay for another year on the Fast 10 list is guaranteed by its 949 new hires and the launch of its eight new offices in the past year. There was more than just an increase in headcount by 80 percent - the firm’s increasingly developed network building also brought in a 19 percent income growth.
There are now 37 Dacheng offices that cover most of China’s provinces after the recent openings in Jilin, Nanchang, Zhoushan, Hefei, Nanning, Suzhou and Huangshi. Chicago became the seventh overseas base of the Chinese firm. “Dacheng believes that a global legal service network is the necessary path of making a firm big and strong,” says Dacheng managing partner Wang Zhongde. He believes in the necessity of mergers and consolidations of firms. “A merger can solve the conflicts between specialisation and full-practice,” he says.
The diverse client needs, unpredictable market, scaled projects, complicated cases, and specialised practices have made it difficult for any single law firm to perform alone. However, whenever a firm merges, the combined entity has to be under a standardised management system, Wang adds. “We gradually improved our network platform by make our management and resources consolidation better between headquarters and branches, and among the branches,” he says.
Dacheng has had a successful year in terms of its specialised practice team building and proactive market development. In 2012, the firm celebrated its 20th anniversary. After the completion of its three strategic goals over the previous decade, namely size expansion, market occupation, and international entry, Dacheng would like to work out a new growth plan for the next five years.“We will change our working style, target becoming an international big, strong and good firm, and push forward all reform and development measures,” says Wang.
JIA YUAN LAW OFFICES
Headquarters: Beijing
Branches: Shanghai, Shenzhen, Xi’an, Hong Kong
New offices opened: One
Headcount growth: 22 percent
Revenue growth: 27 percent
Thanks to its skillful and efficient teamwork and loyal clients, capital market specialist firm Jia Yuan Law Offices, entered its fifth straight year of around 30 percent growth and recorded over a doubling figure of its revenue from 2007 in 2012. “In our previous development, there has been no sudden increase. But we have always experienced continuous and sustainable growth,” says Yan Yu, the founding partner of Jia Yuan. “We do not prioritise the size, but take consolidated steps of development.”
“The real challenge for a firm’s long-term development is not about the size. Whether the standard of management and the structure of personnel can match the need of the market is the very test of our development,” she says.
Since its establishment, the firm has focused on capital markets and developed vertically throughout the entire chain of the industry. Each step of its expansion was in accordance with the geographical or cross business development of existing clients, most of which are large state-owned enterprises (SOEs) or other industry-leading companies.
According to Yan, by the end of last year, about 70 percent of Jia Yuan’s revenue was derived from long-time clients, which shows a virtuous circle of good services and a high level of trust. But she was also aware of the risk of excessive reliance on these clients. “As a result, we have diversified our businesses in different regional markets with
extended practices,” she says.
Sensing the SOEs’ increasing demands for transactions in overseas markets, Jia Yuan has also set a goal of international development. The first step was the setting up of a Hong Kong office in April. “We are changing our image of being just a domestic financing firm...The Hong Kong office demonstrates to our clients that we do have an international plan. We hope that a significant part of our future growth comes from the international practice.”
Jia Yuan has partnered with over 30 foreign firms to share resources, and exchange talent and information. However, it has no precise plan of opening an overseas branch yet because of its prudent hesitation to engage in a “leapfrog” strategy.
Another key source of growth lies in finance practices, particularly, the bank-related services, which Jia Yuan has not fully exploited in the past, according to Yan. She says the firm’s main task now would be to maintain its client base with an in-depth exploration of business potential. “I believe that specialised firms like us will always have an important role to play in the future. The market is still maturing. The room for growth is so huge that we have enormous opportunities,” she says.
ZHONG YIN LAW FIRM
Headquarters: Beijing
Branches: Guiyang, Sichuan, Shanghai, Guangxi, Shenzhen,
Xiamen, Jinan, Jixi, Fuzhou, Taizhou, Yinchuan, Changsha, Nanjing,
Suzhou, Hangzhou, Tianjin, Qingdao, Quanzhou, Shenyang
New offices opened: Three
Headcount growth: 175 percent
Revenue growth: 7 percent
Appearing for the fourth year straight in the Fast 10 list, the Zhong Yin Law Firm continues its impressive expansion with 526 more hires - a 175 percent growth - and three new office launches in Qingdao, Quanzhou and Shenyang. Although its revenue growth rate sputtered to 7 percent, the overall turnover remained more than 100 million yuan.
The development strategy of Zhong Yin, says Li Ju, the chairman of the firm’s managing committee, has for a long time been “scale, brand, internationalisation, and professionalisation”. Of these, “scale” comes first as the foundation of everything else, and is the most manageable and achievable approach, according to Li. “We believe size is an indicator of a firm’s practice competence and comprehensive capability, and demonstrates the ability of internal management and cooperativeness,” he says. “But excessively fast speed without a proper support system will definitely go wrong.”
Having noticed the risks in such rapid growth, after an explosive expansion in 2010 when nine offices were opened across eight provinces, the firm intentionally slowed down in 2011, notes Li. “It was a bit too fast, and some problems of management and risk control emerged,” he says. “As a result, we reinforce the management system construction at the same time of expansion to ensure healthy development.”
The headquarters strengthens control over its branches by administrative and financial management, firm culture building, and sending partners to connect the offices. It also works to upgrade the practice standard, and promote its brand in second and third tier cities by organising trainings and marketing campaigns.
In the next couple of years, Zhong Yin plans to continue to develop steadily and soundly in size. It will be more prudent, however, as its partners have reached an agreement of reaching out to foreign shores, either by partnering with foreign firms or opening up overseas. “The size increase is not just being huge, but for the purpose of offering a more professional and specialised practice. What we want is to raise the power of our hard skills, not vanity,” says Li.
CHONGQING SOLTON & PARTNERS
Headquarters: Central Chongqing
Branches: Yongchuan District of Chongqing
New offices opened: One
Headcount growth: Nil
Revenue growth: 32 percent
Solton & Partners (Solton) managed to obtain an annual revenue growth of 32 percent with the same number of staff as last year, though there are 10 more partners now. The only departure was that of an associate, but this was quickly balanced by the lateral hiring of a partner and nine additional internal promotions to partnership. This has greatly improved the seniority and capacity of the Solton squad.
The Chongqing-based firm occupies a high market share in the southwestern city, and it recently extended its availability by opening a branch office in one of the suburban districts. It also enjoys a strong average revenue per partner and fee-earner. With such an achievement, Solton has been awarded an “Honourable” mention in ALB’s China Fast 10. “We will continue maintaining our high profile of being a regional leading firm,” says Han Deyun, the managing partner of Solton.
Solton is planning to set up more branches in other districts of Chongqing in the next year, in order to fully cover the fast growing businesses taking place in the largest municipality of China. In addition, it will proactively leverage the network of the Sino-Global Legal Alliance (SGLA), a national firm association of which it is a member and representative of Chongqing to satisfy the demand of Chongqing clients in other provinces.
Han predicts a trend in the legal market - that the high-end commercial businesses would increasingly flock to the national brands, which are mainly located in the East of the country. The nationwide expansions of those magnates seem inevitable. However, such a story is likely to only take place in the Middle and the West (of the country) much later due to the imbalanced development of the market economy in China, according to Han. “Regional firms in the Middle and West still have space for development,” he says. “Thus, a West-based firm can keep an advantage in its own region as long as it finds out its market position and points of competitiveness, and innovatively improves service modes to play to its strengths and avoid its weaknesses.”
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