In 2012 U.S. law firms continue to find China an alluring market for their services. Approximately eight new law offices were opened during the beginning of 2012 alone. The largest 250 U.S.-based law firms added 194 lawyers to their Chinese offices during 2011. So far, the number of those offices grew from 124 to 132 during 2012.
However, the picture is not entirely rosy. So far the Chinese market has not yielded significant profits for the firms. Foreign offices of U.S. firms in general need to invest a lot of money and time to earn a return in foreign markets, and China is no exception.
However, opening a foreign office in China presents unique challenges that the firms do not encounter in other parts of the world, say for example in the United Kingdom. Also, there is a fierce competition over the fees charged because so many firms are trying to gain a toehold in the market. Moreover, clients prefer to use Chinese law firms rather than branches of U.S. firms. The U.S. firms have a lot of hurdles to overcome in order to be a successful presence in the Chinese market.
Not surprisingly, Hong Kong and Beijing were the hottest markets for U.S. firms, with the number of attorneys increasing by approximately 12 percent in Hong Kong and 10 percent in Beijing. Shanghai is also a popular destination with the 25o biggest U.S. firms increasing their attorney presence there by three percent.
London and Paris branches of U.S. firms are still way ahead of the Hong Kong branches of firms, notwithstanding that Hong Kong is host to 1,333 attorneys from U.S. law firms.
The firm Baker & McKenzie contiues to have the biggest presence in China, followed by Mayer Brown, DLA Piper, Hogan Lovells and Reed Smith. Baker & McKenzie has the largest number of attorneys in Beijing and Shanghai, and it is tied with Mayer Brown for the largest Hong Kong office. Hogan Lovells had the second-largest Beijing office, and Orrick, Herrington & Sutcliffe had the second-largest Shanghai office.
Notwithstanding the gaudy numbers provided by large firms like Baker & McKenzie, most Chinese branches of U.S. firms are pretty small.