What do corporate legal departments in China want in a law firm?

by Rory Webber on January 21, 2011 · 1 comment

in Corporate counsel issues,Large law firm issues,Legal marketing,Legal News and Trends

An interesting question, especially in the current times with China’s economic ascendancy steering the business development plans of many corporations.

A recent Martindale Hubbell survey is critical reading for local and international law firms hunting for business in China. According to the survey, 76% of polled companies only hire between one and four law firms, while 5% hire more than 16 law firms.

“The data suggests that law firms need to build reputations for themselves, demonstrate an understanding of their clients’ needs and be able to deliver results on time,” said Aley Chang, Managing Director of LexisNexis Greater China. “However, it is a matter of getting on the radar of those people who make the decisions on hiring law firms.”

When asked how they found and selected external legal counsel, 74% said they maintained formal or informal lists of preferred law firms. And while they may use a number of sources to locate law firms, the preferred list is the number one factor in the final selection. The survey also found that in-house legal departments figured prominently in such selection decisions, meaning that law firms should concentrate their efforts on wooing this narrowly defined target and getting on their preferred lists. This contrasts with other parts of the world such as Central and Eastern Europe, where the procurement department is increasingly involved in such decisions and just 56% of legal departments maintain lists of preferred law firms.

The market in China for corporate legal services shows a high degree of segmentation between local and foreign law firms, and boutique and full-service firms. More companies (26%) expected to increase their spending on external legal counsel in the forthcoming year than decrease it (9%). The main reasons for decreased spending are reining in costs and taking more work in-house, while the primary reason for higher costs is greater complexity in cases. The survey demonstrates that many companies need expertise that may be possessed only by foreign or boutique law firms, and for legal departments the challenge is locating the right law firm.

“The survey shows that for local Chinese firms, promoting their local knowledge is key to winning new business and for foreign firms, highlighting how their expertise differs, as well as the capacity and resources that local firms might not have, is crucial.” said Derek Benton, Director, International Operations at LexisNexis Martindale-Hubbell.

To download the free report visit: http://www.inhouse-china.com/

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