29 Asian Legal Business | November 2024 it announced the establishment of a foreign law firm office while simultaneously entering into a joint operation with local firm Iu, Lai & Li. Zhou Bo, one of the founders of SGLA’s Hong Kong office and chairman of the firm’s National Executive Committee, attributes this decision to both policy encouragement and the firm’s rapid internal growth. “By 2022, SGLA had over 1,000 lawyers, and as of October this year, we have 18 regional offices and 32 branches across Mainland China. With our domestic presence largely in place, overseas expansion became a natural choice to meet the firm’s strategic planning and client demands,” says Zhou. Since the end of the COVID pandemic, SGLA has started to see a gradual recovery in client demand for legal services related to investment, mergers and acquisitions, capital markets, and dispute resolution in the Hong Kong market. As it was initially uncertain about the volume of demand, SGLA opted for a collaborative strategy that fostered mutual referrals with local Hong Kong firms. “We’ve received a significant amount of business through referrals with our Hong Kong partners in the past two years,” says Zhou. “Therefore, we decided to take things a step further and form a joint operation. We hope that, with the partnership’s support over the next three years, we can eventually localise our presence.” A shifting market SGLA’s Zhou, drawing from extensive discussions with industry peers during the establishment of their Hong Kong office, observes a shifting landscape spearheaded by a surge in demand for dispute resolution offerings. “Starting from 2023, more PRC firms are opening offices in Hong Kong, and some of these firms are not focused on capital markets or transactional matters but are instead specialising in dispute resolution. The demand for Hong Kongrelated legal services in this area has been increasing, and I believe the practical business needs are driving everyone forward,” Zhou tells ALB. Despite Hong Kong’s capital markets experiencing a lull over the past two years, Zhou notes persistent client needs in this sector. Additionally, he has spotted burgeoning demand and business opportunities in areas including wealth inheritance and management. But dispute resolution, mainly related to previous cross-border investment and financing projects, is the one area these law firms are putting heavy bets on. “Mainland clients are increasingly seeking litigation in Hong Kong, arbitration at the Hong Kong International Arbitration Centre, or the mutual enforcement of judgments and arbitral awards between the two regions,” Zhou says. And with Beijing turbocharging its push for Chinese firms to “go global”, many companies making their first foray into international markets have favoured Hong Kong as a strategic gateway. Its familiar yet international business environment often makes it an ideal stepping stone, easy to navigate yet sufficient to launch these companies onto a path towards international investment. SGLA, with its newly minted Hong Kong office, is keen to capitalise on these evolving dynamics. The firm aims to swiftly address the emerging needs of its clientele while also exploring fresh business opportunities in this vibrant market. Yang of Wang Jing & GH shares a similarly ambitious vision for its Hong Kong operations. He tells ALB that in the future, its Hong Kong office will be “committed to providing Chinese legal advisory services to both domestic and international clients, focusing on meeting the diversified needs of Chinese enterprises going global, particularly in areas such as overseas investment and financing, maritime and admiralty law, data compliance, and dispute resolution.” Viable playbook This ongoing influx has not only awakened the curiosity of market watchers but also perked up legal recruiters following a relatively muted period. Hong Kong Brian Chan, head of legal and governance for Greater China at recruitment firm Ethos BeathChapman, confirms to ALB a recent surge in PRC law firms seeking guidance on entering the Hong Kong market and local recruitment strategies. “With increasing business activities between Hong Kong and mainland China, driven by initiatives like the development of the Greater Bay Area and the Closer Economic Partnership Arrangement (CEPA), there is a growing demand for PRC legal advice not only from large corporations but also from SMEs, startups, and individual clients in Hong Kong and overseas,” Chan notes. This evolving landscape presents an opportunity for newly arrived PRC law firms to carve out their niche. “They can differentiate themselves by offering tailored legal services to a broader client base at competitive rates,” he adds. According to him, medium-sized and regional PRC law firms even possess a unique advantage: Their in-depth understanding of regulations and court procedures across various mainland provinces. “This expertise in PRC law adds substantial value to clients requiring cross-border legal services, particularly corporations using Hong Kong as a corporate hub and regional headquarters while operating across different mainland cities or provinces,” says Chan. To achieve long-term success in the Hong Kong market, Chan believes PRC law firms must transition from their initial status as registered foreign firms towards localisation. This shift necessitates the recruitment of local legal professionals. Chan acknowledges the challenges in building brand awareness and credibility among Hong Kong peers. He suggests that newcomers might need to “offer enhanced financial incentives to attract partners with established client bases.” But not all hope is lost. With some international law firms downsizing, there’s a unique opportunity for these newcomers to recruit talented lawyers due to reduced competition for talent, he adds.
RkJQdWJsaXNoZXIy MjA0NzE4Mw==