Recruiting in China

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While some of Philadelphia's largest firms are still looking for ways to navigate the onerous path to entering the Chinese legal market, two smaller firms have quietly found their place in the booming economy thousands of miles away.

White & Williams has had a China business practice group since 2003 and has had an informal alliance with the Chinese-based Xue Law Firm since the summer of 2006.

The two firms made official last month a strategic alliance, which White & Williams said it hopes will facilitate its existing work in the region and create opportunities for representation of Chinese companies.

"We have been assisting our U.S.-based clients with their China operations, and the Shanghai alliance will provide us with a vehicle to serve Chinese companies looking to the U.S," firm Chairman George J. Hartnett said in a statement. "We believe the Shanghai alliance will make the Chinese market a two-way street for us -- we and the Xue Law Firm can help companies coming and going."

Beyond the alliance option, one local firm is looking to be on the ground in China.

Benesch Friedlander Coplan & Aronoff, which expanded beyond its Ohio roots for the first time last month with the addition of Philadelphia and Wilmington, Del., offices, will have one of its attorneys in China in a few months. The firm received its license from the Chinese Ministry of Justice on Feb. 7, and is now set to open a Shanghai law office.

Partner Yanping Wang will serve as chief representative in the office and will move to Shanghai this summer, firm Managing Partner James M. Hill said.

Wang practices in the firm's corporate and securities practice group and is admitted to practice in both the United States and China. Her practice focuses on assisting clients who are entering the Chinese market through mergers, joint ventures and strategic alliances.

Hill said the firm started a subsidiary, Benesch Pacific, about two and half years ago to help clients with business needs in China. He said it was staffed by one person with a master's in business administration who handled nonlegal needs.

The firm began its application process for a license to practice in China about a year later, and Hill said it was tedious but not problematic.

Benesch Friedlander saw a gap in the market, and Hill said the firm thought it would be able to service its clients from Chicago to the East Coast through a Chinese office.

Most companies, regardless of size, are forced to use the largest of law firms when doing work in China, he said.

"You're not really important to them as a $350 million manufacturing company," he said.

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Despite how the manufacturing industry may be portrayed in the media, Hill said the industry becomes a larger part of the gross domestic product each year and those are the types of companies that abound in the Midwest.

Several of the firm's clients, such as the Eton Corp., have become globalized over the years, he said.

"We saw there was a big opportunity there," Hill said, adding that the firm's typical clients range from $50 million to $1 billion companies.

White & Williams' interest in the Chinese market started when partner Gary P. Biehn had a client who was looking to complete a joint venture there in 2003. The firm started to see a larger interest in the market from its existing regional and Pennsylvania-based clients, he said.

Many middle-market companies have larger customers who are working in China or are seeing their competitors move in that direction, Biehn said.

White & Williams is also representing Chinese companies who are involved with business and litigation matters in the United States, he said.

There are currently four attorneys within the firm who are dedicated to the China business practice. Biehn, associates Chunsheng Lu and Robert C. Maier and immigration group leader Robert C. Seiger III.

Thomas S. Clay of consulting firm Altman Weil said it would be unusual to find many firms the same size as White & Williams or Benesch Friedlander that had any sort of presence in China.

There are several firms with clients who have business opportunities in the country, but Clay said he applauds any who are even thinking about entering the market in some way.

Smaller firms need even more of a strategic reason to enter a new market than do larger firms, consultant Joel A. Rose said.

"Unless they had an opportunity to do work [within China], I cannot believe that they would just build the stadium and they will come," Rose said of White & Williams and Benesch Friedlander's decisions to enter the Chinese market.

When opening an office in a market like China, Clay said firms need to be sure they will "have enough oomph" with just one or two attorneys on the ground. In an alliance situation, he said firms have to work at making it successful and not just mention it on their Web sites.

White & Williams sent one of its associates, Chinese native Lu, to spend 10 weeks at the Xue Law Firm over the summer of 2006. Lu is a member of the Chinese National Bar and the Pennsylvania bar. Hartnett said Lu would spend part of his time working in the Xue firm.

According to the consultants who spoke to The Legal Intelligencer, the biggest concern for smaller firms entering China is whether the work is available.

"There's been probably more money lost in London than you can shake a stick at" by U.S. firms who figured they would open an office and hope the work follows, Clay said.

The Chinese market is even more difficult, and firms need to be sure they will have work to do before opening an office there, he said.

While the market has traditionally seen firms from the West Coast or with particularly strong Washington, D.C., offices looking to enter China, Sandra Mannix of Abelson Legal Search said there are a few reasons why China might make sense for White & Williams.

The firm's insurance defense work could mean it has clients who have coverage needs in China. And just by virtue of being an old, Philadelphia firm, White & Williams may have had clients who evolved into national or international companies with needs around the world, she said.

White & Williams' alliance formed out of a relationship Lu had with the Xue Law Firm and has been almost five years in the making, Biehn said.

"Like anything in China, you have to do your research, be patient," he said.

Hill said it would be helpful for the firm to have Wang in China because she can help recruit other attorneys. He said he hopes to build the office to about 10 or 15 attorneys.

Wang has family members in China who are in prominent political positions. In a country that is heavily based on relationships, Hill said that could help grow the firm's contacts in the area.

The influx of Chinese companies interested in business opportunities in the United States has also increased in just the last year, he said.

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