In 2010, the GDP in Jiangsu and Zhejiang rose to RMB 4.09 trillion and RMB 2.09 trillion respectively. These figures allow Jiangsu and Zhejiang to maintain the status of being the wealthiest provinces in the YRD region. Last year, they were ranked second and fourth respectively in China GDP rankings.

This active economic development brings enormous opportunities and vitality to the legal service market. Like neighbouring Shanghai, 2010 was a harvest year for most law firms in Jiangsu and Zhejiang. They enjoyed growth in various practice areas such as capital market, PE, real estate, IP litigation and maritime. However, the prosperous economy has also highlighted that the legal service sector is lagging behind and there is a desperate need for high-end legal talent.

“The legal service in Zhejiang is still running behind the rapid economic development, especially the scarcity of talented lawyers in the high-end legal market is one of obstacles for legal industry further growth,” said Zheng Jindu, the vice president of Zhejiang Bar Association.

“The total annual revenues of Jiangsu Law firms in 2010 were RMB 2.78bn, only accounting for 0.07% of Zhejiang’s GDP, while the one of Shanghai’s law firms accounts for 0.7%. It can be seen there is still rooms for improvement in Suzhou,” said Wangfan, the president of Jiangsu Bar Association.

Wang continues, “The legal service in Jiangsu needs to expand its depth and width. In 2011, we will strengthen our training programs related to high-end legal service, and build a better platform to get lawyers more involved in new economic projects such as energy and ocean environment.”

Nanjing

The ancient capital of the Six Dynasties, Nanjing is the city that connects the east and west in the Yangtze River Delta. Its rich history and significant geographical location have attracted a huge amount of investment from other Chinese provinces and overseas. One of the notable changes is in the real estate market. In 2010, the investment in real estate from January to October has surprisely increased by 29.4% year on year, according to the Nanjing Bureau of Statistics. The aggressive growth has profited the real estate law firms.

Jiangsu Dongheng Lawyer, a specialist real estate law firm, saw a growth rate of 30% in its annual revenues last year. It also promoted two lawyers to partnership last year. Dongheng will continue to recruit more lawyers, and focus on real estate practice.

“Yangtze River Delta is one of the most active economic areas in China, and attracts many investors and talented people who need to be settled, so the real estate market will remain positive in the next few years,” says Wang Lijun, the senior partner of Jiangsu Dongheng. “In addition, many countryside areas will become valuable developed piece.”

In addition, securities, M&A, PE, foreign related IP litigation, investment and government projects also performed well in the past 12 months. The total revenue of Nanjing law firms is RMB 400m, with a 28% increase year on year.

However, the growth has not satisfied Wang, also the vice president of Nanjing Bar Association.

“The legal service is far behind in the highly developed economy of Nanjing, especially in high-end legal market. Currently, not many law firms are qualified to provide IPO listing projects except a few securities specialist law firms,” says Wang. “The talented lawyers prefer to work for Shanghai and Beijing.”

According to Zhang, there is not a law firm whose annual revenue exceed RMB 100m, and is not also a firm that has a national famous brand.

“The brand and scale of Nanjing law firms are not as outstanding as its economic development. The highend legal service market is occupied by Shanghai and Beijing,” said Li Lei, partner of Yingke Nanjing, “most Nanjing companies who are planning to list or have a big project will prefer Shanghai or Beijing law firms. Meanwhile, the more legal work and better platform attract more lawyers to switch to Shanghai or Beijing firms. It is a kind of circle, which causes further the more loss of talented lawyers in Nanjing.”

In addition, Shanghai and Beijing firms are optimistic about the potential growth in Nanjing. As of 2010, Nanjing has welcomed 15 Shanghai and Beijing law firms that have launched brand offices via alliance, merger or direct investment. The addition of those firms has put more pressure on the legal talent market.

“Those Beijing and Shanghai law firms have used their advantages of brand and scale to recruit many local legal talents,” says Wang, “but, on the other hand, the Nanjing local law firms can also absorb the excellent management from non-local firms, which can benefit clients and the Nanjing legal service.”

Suzhou

Suzhou sets an example that successfully developed its economy by using foreign direct investment. In 2010, foreign direct investment slowly picked up after it dramatically decreased during Global Financial Crisis of 2008, but its proportion in Suzhou’s economy has declined, while the investment from private enterprises has gone up, with a 30% of increase compared to 2009, according to the Statistic Bureau of Suzhou.

Like neighbouring Nanjing, the investment in Suzhou’s real estate was thriving in 2010, with a 29% increase year on year, which profited many law firms. Suzhou Legal, specialising in real estate, has enjoyed 40% growth in annual income. According to Zhang Sihua, partner of Suzhou Legal, at least 80% of the largest real estate companies have launched offices in Suzhou such as Beijing Vanke, Bejing Crland, and Dalian Wanda.

“In 2011, residential real estate development may slow down due to the policy and limited resource, but commercial real estate market will be positive, which would generate more legal work for us,” said Zhang.

As a real estate specialist firm, the emerging areas like M&A and PE are hard to ignore for Suzhou Legal.

“Zhejiang private enterprises have started aggressive expansion through many ways like M&A, listing or financing, ” said Zhang. “We participated in some M&A and PE projects last year, and also are planning to strengthen those areas in the near future.”

With the increasing legal services from different areas, Suzhou law firms are busy recruiting talented lawyers, but it seems they have experienced more difficulty than Nanjing.

“Apparently, high-end lawyers prefer to work for Beijing and Shanghai firms because of more opportunities and better working platform,” said Zhang. “But I believe that some talented lawyers will be interested in Suzhou where there is a low living cost and better living environment.”

Hangzhou

Hangzhou‘s GDP rose 12 percent to 594.5bn Yuan (US$88.7bn), ranking the eighth among cities on the Chinese mainland and maintaining doubledigit growth for the past 20 years and running. The prosperous economy may be one of the reasons for the emerging of Zhejiang T&C Law Firm, the only firm that enjoyed the annual revenue of RMB 130m in the Zhejiang and Jiangsu province. The firm’s annual income rose 20%, compared to 2009.

“The main work was from the areas of real estate and finance and securities,” said Wang Lixin, partner of T&C. “ Zhejiang’s economic activity focused on the those above areas in the past 12 months.” Last year, T&C had successfully advised on two company IPOs, and is currently working on eight IPO.

Wang noted that because the Hangzhou real estate market was saturated, Zhejiang real estate companies turned to the second-tier cities and third-tier cities such as Zhoushan and Jiaxing, which brought even more legal work to the firms.

Apart from real estate, Zhejiang law firms have seen the increasing legal demand from new practice areas like financing and  M&A due to Zhejiang private companies’ continued expansion.

Zheng Jindu, partner of Zhejiang L&H Law Firm, shares the same view, “Zhejiang private enterprises are not only interested in Zhejiang cities, but also other provinces. Their footsteps nearly spread across in the whole country.”

Regarding the increasing investment overseas by Zhejiang private enterprises, Zheng said few law firms would benefit from that because firstly, those companies often hire local lawyers who are familiar with the local market. Secondly, not many Zhejiang lawyers are proficient in English and qualified to act on matters involving foreign laws.

The vice president of Zhejiang Bar Association, shares the same worries as the president of Jiangsu Bar Association, Zheng, “one of our main tasks now is to help lawyers improve their capability on foreign-related issues.”

Not only that, Zheng believes that Zhejiang needs to train a large number of lawyers who are qualified in shipping, maritime and ocean environment and other ocean economy related legal issues.

“Since The State Council, China’s Cabinet, approved the plan of establishing an ocean economic development zone in Zhejiang   Zhejiang local government has made ocean economy the highest priority. It obviously will generate numerous legal services, how we are going to cope with that will be the most significant issue for Zhejiang’s legal industry.”

Ningbo

Ningbo, a port that recorded the greatest growth in container business in the world in 2010, has seen its GDP exceed RMB 500bn for the first time, reaching RMB 512.58bn, an increase of 12.4% year on year. The impressive economic growth in 2010, however, did not bring many new types of work for Ningbo law firms. The traditional practice areas – shipping and maritime, IP litigation and legal services as a perennial legal adviser are still the main annual income contributor.

In the area of IP litigation, Fei Zhenyu, partner of Zhejiang Dos law firm, identified a slight difference from the past years, “We used to represent the defendants on the IP litigation, but with the rising awareness of IP issues in relation to Ningbo, we represent more plaintiffs.” Fei said Ningbo’s economic and regional features have decided the types of Ningbo’s legal service. “Ningbo had some big projects in recent years, like the listing of Ningbo Port and Risen Energy, but those companies often turned to Shanghai or Beijing firms. That is because the majority of law firms in Ningbo are small-sized and individual, which are not capable of completing a big project by itself,” said Fei Zhenyu, partner of Zhejiang Dos law firm, which is the only firm that seized a place amongst the top 10 Zhejiang law firms by total annual avenue. Dos currently has 10 partners, and 21 lawyers.

According to Fei, the growth rate of individual law firms has outstripped the number of lawyers in Ningbo in the last 12 months, and only two firms were able to achieve RMB 20m in total income. The Ningbo Bureau of Justice has also noticed the issue and encouraged the development of largerscale firms. However, this is not easily achieved.

“Generally, Ningbo people are very entrepreneurial. Most lawyers prefer having their own law firm, and also are satisfied with what they are doing,” said Fei. “There is not a big push for mergers or forming larger firms. There are more than 21,000 enterprises in Ningbo, which generates enough work for individual firms.”

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