After unveiling a merger aimed at grabbing more of China’s legal work, King & Wood Mallesons has accused the world’s leading law firms of offering “shallow” services to Chinese clients.
Global managing partner Stuart Fuller said King & Wood Mallesons was seeking to reverse the practice of foreign firms entering the China market “with fairly shallow capability”.
He said his firm’s depth of capability in China was a challenge to the existing foreign firms and the planned merger with Britain’s S.J. Berwin was aimed at adding to that depth.
“We are looking to reverse the trend of what has happened in markets to date,” he said.
“We are something very different, not only a newly created firm but one that is headquartered in the region and very focused on the Asia-Pacific region.”
When the merger with S.J. Berwin takes effect on November 1, Mr Fuller said King & Wood Mallesons would be one of the world’s 10 largest law firms when measured by headcount.
When measured by revenue – of about $1.1 billion – it would be one of the top 25.
The merger is the latest in a series of moves in which British and American firms have entered the Asia-Pacific market. British firm Herbert Smith negotiated a full financial merger with Australia’s Freehills. And by the end of this year, another full financial merger is expected to link the Australian and British arms of Ashurst.
But Mr Fuller said his firm’s deal with S.J. Berwin would make King & Wood Mallesons a gateway for cross-border flows of business that would be unlike any other firm.
Unlike foreign firms that had entered the Asia-Pacific region, he said King & Wood Mallesons was seeking to build a global practice from a base within the region.
He hinted that the firm might eventually move into the US – the home market for many of the firms that have entered the China market.
“We have always said that our vision and our aspiration was to become a leading global law firm based in Asia,” he said. “US capability would need to be part of that to be a global firm.”
But there was no timetable for that move. It would depend on the views of clients.
When asked about the firm’s exposure to the slowing economy of China, Mr Fuller said he expected continued strong flows of work. “I totally understand the point about China’s slowdown, but I am far more comfortable having a significant exposure to a 7.5 per cent growth market than some other larger economies in the world,” he said.
S.J. Berwin, which was established in 1982, will change its name in November to King & Wood Mallesons but will trade for a transitional period in Britain, Europe and the Middle East under the brand King & Wood Mallesons S.J. Berwin.
The British firm will become the fourth member firm of the King & Wood Mallesons Swiss verein that now links financially independent partnerships in Australia, Hong Kong and China.
Once the deal is finalised, Mr Fuller said the governance structure of the firm would be changed to give equal representation to the British, Australian and Chinese practices. Decisions would be made by consensus.
Rob Day, who is managing partner of S.J. Berwin, will join the firm’s executive committee which is responsible for the day-to-day operations. Other members of that committee are Wang Ling, managing partner of the China practice; Sue Kench, managing partner of the Australian practice; and Mr Fuller.
The overall governing body, the international management committee, will consist of S.J. Berwin’s senior partner, Stephen Kon, who will become a co-deputy chairman along with Stephen Minns, who is chairman of the Australian practice.
Wang Junfeng, the founding partner of King & Wood, will remain global chairman.
The integration of the British firm will mean the London staff of King & Wood Mallesons will move to S.J. Berwin’s offices. In Hong Kong and Shanghai, S.J. Berwin’s staff will move to the offices of King & Wood Mallesons. Mr Kon told Wednesday’s press conference his firm recognised that “the centre of gravity” in the market for legal services was shifting.
“Just as about 15 years ago we saw the development of our UK client base essentially move into Europe, and we developed our own practice into Europe, so we see our clients looking to Asia and to the world generally now,” Mr Kon said.
“Ultimately, the centre of gravity is shifting.”
Mr Fuller said he did not often quote his competitors, “but one of those major firms said to me, ‘King & Wood Mallesons is well positioned for the clients of the next 50 years whereas we are well positioned for the clients of the last 50 years’.”
Over the next 50 to 60 years, he believed Chinese clients would drive more cross-border investment, increasing flows or trade and capital.
“That is the sweet spot for King & Wood Mallesons,” Mr Fuller said.
“Clients generally like to deal with people who understand them and who are like them. So if you are a Wall Street bank, Wall Street firms make perfect sense.
“If you are a Chinese entity, a Chinese international firm makes perfect sense.
“This will play out over the next five to 10 years in ways that none of us can contemplate.”
He said talks with S.J. Berwin started “some months ago, but not as many months ago as some of you may think”.Source: The Australian – Get real on China: King & Wood Mallesons takes aim at leading law firms
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