While the global financial crisis has wreaked havoc on many large-scale law firms, a window of opportunity opened for mid-sized law firms to expand their client lists. Mid-tier firms are also seizing the chance to broaden their horizons to more international matters.

Corporate restructuring lawyer Malhar Pagay works for one such mid-sized US firm – Pachulski Stang Ziehl & Jones LLP. Pagay, who will present on the continuing risks to Chinese companies doing business in the US and the Chinese outbound and inbound investment pipeline in the US at the forthcoming ALB In-house Legal Summit Beijing says: “The US market should remain challenging through 2010.  Consequently, Chinese companies may find their US business and trading partners in financial distress or teetering on the verge of bankruptcy.  At the same time, the transitioning economy in China could renew foreign direct investment activity as investors look favourably on those Chinese companies who were able to weather the economic storm,” he said. “Also, these Chinese companies can now look abroad to pursue M&A and other transactions that give them greater control or ownership of overseas supply and distribution chains, as well as ownership of valuable brand names. All of this should be good news for the legal industry.”

The firm was established more than 25 years ago and has grown to become the largest corporate restructuring specialty law firm in the US. It focuses mainly on four practices areas: bankruptcy reorganisations, business litigation, business transactions and bankruptcy litigation.

Anticipation is high that access to US capital markets and other sources of foreign investment will increase for Chinese business. With an eye on the business pipelines that might emerge in 2010, Pagay advises companies to be more proactive. “Chinese companies should take advantage of continued economic distress in the US to acquire similar or competing businesses, distribution chains and brand names,” he said. “They should also examine their relationships with their current trading partners in the US as possible acquisition opportunities may exist.  It is very important for PRC businesses to be proactive and seek advice when starting a relationship or continuing to do business with US companies.”

Even without having a presence in China, Pachulski Stang Ziehl & Jones has represented Chinese companies in their endeavours. The firm has established a strong relationship with China Export & Credit Insurance Corporation (SINOSURE) and has represented it and many of its policy-holders and clients located throughout China, in bankruptcy, out-of-court restructuring, litigation, and transactional matters arising between businesses in China and the US.

Mid-sized firms have been increasingly recognised as the more cost-effective option for companies seeking legal advice, especially during the GFC.  These firms are usually not leveraged on large numbers of associates, which as a result provides cost-effective representation. “The typical large firm (and in some cases, mid-sized firm) model depends on multiple tiers of lawyers to deliver legal services.  Consequently, the client pays for all of these attorneys, including for associates with little or no experience,” said Pagay.

“By contrast, we find that staffing most matters with a limited number of experienced lawyers, involving others only if a particular task so requires, is more cost-effective for the client.  Unlike many large-scale firms, we are not dependant upon institutional clients.  As a result, we can aggressively pursue our clients’ positions against any adversary, no matter how large or small, without concerns about these types of relationships.”

The ALB In-house Legal Summit Beijing 2009 on 26 November will give valuable insight into Chinese companies doing business with distressed US companies, providing as well as a full discussion of how Chinese companies can maximise opportunities. The summit will also highlight strategies to most effectively take advantage of M&A and capital-raising opportunities in the current environment.

If you would like to know more about the summit, please visit http://beijing.theinhousesummit.com/