Tianjin may have lived in the shadow of its neighbour, Beijing, for as long as anyone can remember but recent economic developments are guaranteed to catapult the city, and its quickly-maturing legal services market, into the national spotlight. From the development of Tianjin Binhai New Area, Eco-City and rocket industrial base to the Tianjin Equity Exchange and Binhai Intellectual Property Exchange International, Tianjin is drawing in investors from all over the world.

According to Tianjin Bureau of Statistics, the amount of direct foreign investment in Tianjin topped ten billion U.S. dollars in 2010. During this period, investment from elsewhere in China reached an astounding US$25 billion in 2010. These factors, coupled with a year which yielded the commencement of over 900 major projects pushed the city’s GDP up by an impressive 17.4 percent in 2010, coming in at just under RMB1 trillion.

Just as Tianjin’s rise has brought with it new opportunities for international and domestic investors, so too has it proved a catalyst for the development of the Tianjin’s law firms and lawyers. Yang Zhongkai, managing partner at Join & High Law office, the largest law firm in Tianjin by headcount, said his firm was so busy that there was “no time to rest”, while his counterpart at  Tianjin Goldenland Law Firm, Shang Ligang, said his firm had been so busy in 2010 that revenues for that year were up 100 percent on 2009.

Shang’s law firm is not the only to have witnessed a spike in revenues. According to the Tianjin Bar Association, the total annual revenues of Tianjin law firms in 2010 was RMB 890 million, a year-on-year increase of 16.5 percent – a figure that could well increase in the year ahead as the city’s lawyers focus on their attention on fee-fat emerging areas of practice such as private  equity, banking and finance and regulatory work.

Private Equity: A level playing field?

PE is one of few areas of practice where Tianjin lawyers feel they have an edge over their national counterparts. Over the past 12 months, the PE industry in the city has taken off, thanks largely to the Tianjin municipal government’s preferential policies on the registration duties and tax. There are now more than 1,000 PE funds registered in the city clamouring for legal advice from the city’s law firms.

Tianjin’s Winners Law Firm is widely regarded as one of the leading PE law firms in Tianjin and counts a number of these funds as regular clients. Li Haibo, the firm’s managing partner, believes that because PE is a relatively new area of practice in Tianjin, local law firms have, for now, a competitive edge over their counterparts from elsewhere in the country.

“Unlike IPO work which is monopolized by Beijing and Shanghai law firms, PE is a new area and we are running from the same starting lines as others,” he said. “Tianjin law firms should seize the opportunity and strengthen their PE practices.”

Chen Ximing, managing partner of Ximing Law Firm, believes that this is possible and most corporate lawyers working in  Tianjin possess the skills and industry knowledge to become the trusted counsel of the city’s growing suite of PE houses—but they need the support of their firms to do so. “Tianjin’s lawyers are capable of advising PE clients, but often lack support from the law firms,” he said. “Law firms that have not developed a PE capability will not be able to provide this support, and without a   team behind them these PE lawyers will find it hard to compete with legal teams from cities like Beijing. Since establishing Ximing Law Firm last year, Chen has built an impressive PE team which counts PE houses such as Gaosheng Linghang as regular clients.

Guo Weifeng, a PE specialist with Winners, concurs with Chen and urges corporate lawyers in Tianjin to obtain a better understanding of the key drivers moving PE in Tianjin if they want to build a successful practice in the area. “Lawyers can advise across the entire spectrum of PE from initial fund establishment and registration to investment projects and exits,” said Guo. “Any corporate lawyer can advise PE houses as well—but Tianjin lawyers need to engage more with the industry. To meet more fund managers, attend more functions and meetings about PE, learn more about the PE industry so they can offer more complete services to PE clients.”

Piggy-backing on innovation

With the establishment of the Tianjin Binhai New Area as the beacon for financial innovation in the city, a number of public and private-sector financial institutions have established operations there. The fact that the city’s financial sector is one of the most active in the country has also served as a pull factor. Tianjin now boasts 10 exchanges in total after the launch of the Tianjin Equity Exchange and the Tianjin Emissions Exchange in 2010.

These developments have, of course, created new opportunities for law firms in the city and Chen believes this is in part because many of the newer financial services players in Tianjin have not yet had the opportunity to build dedicated in-house legal departments.

The boom in this area has also spread to sectors aligned with the city’s financial services industry. Lawyers ALB China interviewed for this report cite an upturn in areas such as logistics finance, leasing finance, real estate finance, hospitality, and IP— some of which are entirely new areas of practice.

“We have noticed new and novel types of demand from our clients in the logistics sectors. Our clients have started to adopt new business models, so our legal services should be tailored to fit these changes,” said Wen Zhisheng, managing partner of Zhonglun W&D’s Tianjin office. “In the next few years, we are planning to beef up the area of leasing finance to meet the increasing demand from our clients,” he added.

Goldenland’s Shang said the new and novel work for his work is arising out of existing client matters, and through the firm’s cross selling and up-selling clients. “Over the past year, we have found many new practice areas in the course of working with our clients. For example, we may start working for a client in the real estate sector regarding establishing a hotel, but as the matter progresses we begin to work in other areas such as brand protection and management,” said Goldenland’s Shang, who claims to have seen a 50 percent increase in workloads across his real estate practice.

Shang believes that branching into these new areas is not only a sound means by which firms can broaden their practices but avoid the cut-throat competition that is taking place in traditional areas of practice.

Li, who has been promoting Winners’ recently-established environmental law practice, believes that the future will present all Tianjin law firms with countless opportunities to break into new and emerging areas of practice but cautions lawyers to be patient when seeking to expand. “There are indeed so many new opportunities for Tianjin law firms, but lawyers must be patient, research the emerging area of business thoroughly and accumulate knowledge and experience. The process may be painful for some, and all will not see a profit coming in straight away, but once you are ready, you will achieve more.”

Earning respect

The city’s rapid economic development has not only benefitted the bottom lines of many Tianjin laws, it has also contributed to both the standardization of legal procurement and an increased awareness of the value that legal advisors can add to commercial transactions.

“Several large institutions have selected the law firms through public tender which shows an increased demand for legal services,” argued Li.

Yang of Join & High agreed and said that it is not only easier to collect fees when matters are put out to tender, but “we feel our legal service is getting more respect from our clients.”

Tianjin Bar Association

Tianjin law firms have, in their Bar Association, a strong advocate for the further development of the market. The Bar Association, unlike many others across the country, often helps firms with pitches to major companies and government departments. Earlier this year, it convened a special panel composed of members from various city law firms to advise the Binhai New Area Government. It is in the process of organising a similar panel for the forthcoming East Asian Games, and recently concluded an agreement with the National Sports Council to offer legal services. But even with the help, Han Gang, the president of the Tianjin Bar Association, believes Tianjin law firms still have a long way to go if they are to catch up with their Beijing rivals.

For one, Han believes most Tianjin law firms do not have headcounts sufficient enough to work on the largest and most lucrative projects. It’s worth noting that not one Tianjin law firm has more than 100 lawyers, and only a small handful law firms have more than 50 lawyers. “Most companies investing in Tianjin have their headquarters in other cities, so they bring their own lawyers with them rather than hiring local lawyers,” he said. “Additionally, the support from the government is not ideal. Tianjin has enough huge projects, but Tianjin lawyers don’t have much opportunity to get involved.”

Han hopes that through the initiatives described above the Tianjin Bar Association can play a role in the development of the city’s legal industry. “Some lawyers in the financial legal team for the Binhai New Area Government have grown the backbone of Tianjin law industry,” he said. But Han is nothing if not pragmatic. He realises that such initiatives are shortterm fixes. In the long-term, he argues, lawyers themselves and the market will play the most important roles.

“What we can do is help lead the lawyers. A lawyer’s development still relies on their professional ability, but the development of the Tianjin legal industry will be determined by the market and the lawyers themselves,” he said.

To read the entire report, please click here. ALB

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