Cable cars move in front of the Hong Kong-Zhuhai-Macau bridge off Lantau island in Hong Kong, China October 21, 2018, before its opening ceremony on October 23, 2018. Picture taken October 21, 2018. REUTERS/Bobby Yip - RC1E19B3D8C0
New links: cable cars near the Hong Kong-Zhuhai-Macau bridge © Bobby Yip/Reuters

When Australian law firm Mallesons Stephen Jaques merged with Chinese firm King & Wood in 2012, lawyers were sceptical. Any merger is challenging, but many thought combining organisations from two such different cultures was a risky move.

Seven years on, those running the first global law firm headquartered in the Asia-Pacific region believe the gamble paid off.

The merger positioned King & Wood Mallesons to capitalise on one of China’s signature policies, to connect Hong Kong, Macau and nine mainland Chinese cities into the “Greater Bay Area”. Beijing hopes the plan will turn the region into a megacity to rival San Francisco, New York and Tokyo when it comes to innovation and economic growth.

As trade and investment flows into the Greater Bay Area, demand for legal services is expected to increase.

International law firms are eyeing opportunities to help companies raise capital in Hong Kong before pushing across the border into mainland China. The mainland presents opportunities to invest in infrastructure, real estate development and telecommunications. For law firms, it brings the international arbitration and dispute work associated with those activities.

“Multinationals are coming into the area and want the business law that enables them to do business,” says Sue Kench, global chief executive at King & Wood Mallesons. “They want to know what their risk profiles are, they want everything documented, they want funding, they want to know their exit plan.”

But Hong Kong and mainland China have different legal systems, currencies and business cultures. Questions remain over how to facilitate the free movement of people between the two jurisdictions and how to reconcile Hong Kong’s maximum corporate tax rate of 16.5 per cent with mainland China’s 25 per cent. It is also unclear how companies will harmonise regulation on data privacy, intellectual property and cyber security.

Stephen Kitts, Asia managing partner at Eversheds Sutherland, says: “Principles of data privacy and cyber security are very different in the mainland compared to Hong Kong or elsewhere in the world.”

As Beijing’s influence strengthens in the former British colony, companies are wrestling with what this means for business. The Hong Kong government introduced legislation in February allowing the extradition of criminals to China for 46 offences including nine commercial crimes such as tax evasion.

Some commercial crimes were struck from the proposed legislation after a backlash from local business communities, worried the legislation could be used as a weapon against anyone passing through the hub. But extradition law continues to concern business leaders, lawyers and professional groups, as do other recent developments in Hong Kong that erode political and civil liberties in the territory, undermine business confidence and create an environment where companies and their employees feel less safe.

Yet the appeal of engaging with the world’s second-largest economy means law firms want to remain in Hong Kong, which is still viewed as a springboard for international corporations in the Greater Bay Area.

“These companies are going to want to be represented by international firms, they will not want to be represented by mainland law firms, or for that matter Hong Kong law firms,” says Henry Fan, a lawyer and former managing director of investment company Citic.

Law firms are experimenting with different structures in mainland China, where foreign lawyers are unable to obtain licences to practice law. International law firms are banned from giving legal advice and presenting before a Chinese court.

“All international firms are generally surveying the scene,” says Mr Kitts. “There isn’t one strategy that is necessarily right. Different firms have different strategies . . . because you can’t ignore the China market.”

Sue Kench
'The beauty of the local platform': Sue Kench, global chief executive, King & Wood Mallesons

Firms such as Baker McKenzie, Holman Fenwick Willan, Hogan Lovells, Ashurst and Linklaters have entered into joint agreements with local Chinese firms in the Shanghai Free Trade Zone, the only experimental zone of its kind in mainland China, in which international firms are able to deliver Chinese legal advice through a local law firm partner.

In contrast, King & Wood Mallesons has local offices in China, which means they can operate like a Chinese law firm. “That’s the beauty of the local platform,” says Ms Kench. “It is not available to the international firms. The way we have structured . . . the entire King & Wood Mallesons platform means we’ve got that depth and breadth in capability.”

She adds: “The universe has delivered the Greater Bay to the firm. It is literally the blueprint for how the firm capitalises on what it has already done, it’s extraordinary.”

The tables below rank law firms and in-house legal teams for the FT Innovative Lawyers Apac awards.

New Products and Services:

RankLaw firmDescriptionOriginalityLeadershipImpactTotal
STANDOUTCorrs Chambers WestgarthEstablished Corrs Cyber, a comprehensive cyber security and data breach offering, in response to new national and global laws. Alliances with cyber security consultancies Mandiant, SecureWorks and reputational risk consultancy GRA Cosway, as well as a team of forensic technology experts, lawyers and hackers enabled a full-service offering for institutional and government clients with flexible fee arrangements.78823
HIGHLY COMMENDEDBae, Kim & LeeThe firm's global alternative investment task force of lawyers and certified public accountants combines economic trend analysis with tax, regulatory and due diligence work for investment clients. Formed in response to a saturated domestic investment market, clients include leading asset management firms and the South Korean national pension scheme. The pension fund is the fourth largest in the world, and the firm is seeking global investment opportunities for an ageing population.78722
HIGHLY COMMENDEDNorton Rose FulbrightCreated online platform Deliver&Capture to help clients navigate infrastructure projects. Working with technology provider Bourne Digital, the firm automated workflows, using online contracting and an app to track on-site risk and reporting. The platform is used in big infrastructure projects in Australia and abroad, including the Melbourne Metro.87722
HIGHLY COMMENDEDTrilegalIn collaboration with Nasscom, an Indian IT trade body, and Parity Consulting, the firm designed a programme to address sexual harassment in the workplace after ambiguous legislation was introduced following a gang rape. The programme helps to identify potential problems and advises on best practice on subjects such as addressing anonymous complaints. The firm also hosted conferences across India on the topic.78722
COMMENDEDGilbert + TobinLaunched G+T Innovate in 2018, offering consultancy work on strategic direction, legal project management, and legal technology. Clients include businesses, NGOs and other law firms with flexible fee arrangements. Includes an “at risk” component where 15 per cent of the total fee was left up to the client to pay in line with its satisfaction.77721
COMMENDEDKPMG LawLaunched consulting service, LOTS, to offer operational advice to in-house legal and compliance teams that draws on the broader KPMG business expertise. Among the service offerings are technology consultancy, legal project management and process improvements.68721
COMMENDEDYulchonLaunched a technology protection practice to advise on cases. Supported by a proprietary digital analytics platform that enables forensic analysis and evidence gathering, the multidisciplinary team comprises intellectual property, technology, antitrust and information security experts.77721
COMMENDEDLander & RogersThe firm's innovation team, iHub, worked with a third-party provider to help design and implement a new process for retrieving subpoenaed records by courts in Australia. The move was in response to new rules allowing plaintiff firms to obtain a copy of records at the time of inspection. Electronic transfer and cloud storage of subpoenaed documents reduces time and cost for all parties.77620
COMMENDEDNorton Rose FulbrightBuilding on the firm's new global risk and compliance advisory service, the Australian arm of the firm laterally recruited a team of 11 experts to advise on anti-money laundering and terrorism financing, as well as provide a holistic risk assessment service to clients that still have legal privilege.57719
COMMENDEDAssegaf Hamzah & PartnersLaunched Competition Audit, a service to advise clients on risks and strategies in response to new Indonesian competition law. Combining economic and legal analysis, the firm performs an audit of the client and prepares a report detailing market position, potential risk of competition law breaches and recommended steps.66618
COMMENDEDAtsumi & SakaiAt a time of high-profile Japanese corporate scandals, the firm offered clients a rounded risk management service from a team that includes ex-prosecutors and accountants. In a recent matter, involving data falsification, the team deployed an internal policy of leniency to reduce potential repercussions for employees who had formerly been unwilling to come forward with relevant information.56718
COMMENDEDCMSWith a variety of fee models and a multidisciplinary team, the firms digital risk advisory service enables in-house lawyers to drive change in their companies. 66618
COMMENDEDHogan LovellsIncreased scrutiny of countries subject to trade sanctions led the firm to identify shortfalls for companies conducting international trade and acquisitions. Lawyers approach companies in the early stages of an initial public offering or M&A deal to help them identify potential sanction violation risks and conduct due diligence.66618

New Products and Services (In-house):

STANDOUTBank of China (Hong Kong)To promote cross-border services between Hong Kong and mainland China, the legal team worked closely with Chinese regulators to gain approval for customers to use Bank of China's pay app in both jurisdictions without requiring a mainland bank account. This gives the bank a competitive edge against rival payment apps such as Alipay and WeChat, which have not yet been able to bridge this gap.88723
HIGHLY COMMENDEDLazadaLaunched Shake It and Wonderland, new applications that improve the user experience of online shopping using game design principles to drive customer engagement. Lawyers navigated old gambling and lottery laws across six jurisdictions to enable the launch.77721
COMMENDEDAvivaHelped conceptualise, design and launch online platform Blue, for direct sale of insurance products in Hong Kong, which removes the need for insurance brokers and associated fees. Lawyers mapped the customer journey and resolved data privacy and consent challenges to enable the launch.77620
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