Having a panel of law firms to complement a well-established in-house legal department has been normal for foreign multinational companies for many years. However, now this model is being increasingly endorsed by domestic companies, particularly large SOEs, heralding another major phase in the evolution of the PRC legal market.

Beijing-headquartered China Aerospace Science & Industry Corporation (CASIC) has manifestly embraced the idea. The group recently established its first external legal panel (for its headquarters and eight Beijing-based subsidiaries) in a bid to streamline the legal outsourcing process and ensure cost-effective provision of services.

The procurement process was co-led by CASIC's associate general counsel Wang Yaoguo. He said: "As a large conglomerate, we need to work with law firms on a very regular basis. In the past, we experienced many problems without a formal outsourcing procedure.  Establishing the panel is our solution to these problems."

Before the panel was set up, CASIC, which consists of seven research academies, two R&D and manufacturing bases, six listed companies and over 600 subsidiaries and affiliated companies, had dealt with a significant number of law firms through individual business units. Wang found the service quality, fee levels, professional standards, skill sets and technical competencies vary greatly from firm to firm.

"Forming a panel of external legal service providers enables us to centralise the management and assessment of the firms working for the group. Therefore, we can ensure all our business units and companies receive timely and high-quality services at the best rate," Wang said.

During a detailed tender process, initiated last October, around 50 Beijing firms competed to advise on a range of areas, including IP, finance, corporate and securities, real estate and construction, investment and M&A, international trade and employment.

The firms were reviewed rigorously on a wide range of criteria, including past performance, technical excellence, expertise in relevant areas, social networks, reputation and the ability to deliver sustainable cost-effective legal services. The size of the firms, in terms of number of lawyers and geographical coverage, was also an important consideration. Firms with less than 20 qualified lawyers were not eligible to bid for the tender.

Grandall Beijing office, Dacheng, Yingke and V&T are among the 11 successful appointees on the new panel. The panel firms, which are appointed for three years, will provide legal services to the group on a needs basis.

"Most firms on the panel are large, full-service firms, which not only have strong expertise and resources in the areas concerning our group but also have wider knowledge of the economy and legal system," Wang added. "Often a case or a project involves complicated legal issues and only a multi-disciplinary team of lawyers drawn from a firm's different practices can come up with the best solution." ALB

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