Baker & McKenzie and FenXun Partners: first to form a Joint Operation in China

In November 2014, the China (Shanghai) Pilot Free-Trade Zone sent a very positive sign of liberalizing the country’s legal services industry by officially launching a pilot scheme to encourage cooperation between Chinese and foreign law firms. Around six months after, Baker & McKenzie and FenXun Partners became the first movers.

Posted Thursday, April 16th 2015
Baker & McKenzie and FenXun Partners: first to form a Joint Operation in China
Two firms: a pioneering operation
This is a historic moment: on 15 April 2015, Baker & McKenzie and FenXun Partners became the first international and Chinese law firms approved by the PRC authorities to enter into a Joint Operation in the China (Shanghai) Pilot Free-Trade Zone. From now on, both firms can join forces to provide legal services to clients, based on Chinese and foreign laws in accordance with the rights and obligations stipulated in their agreement in their respective areas, while remaining separate and independent.
Baker & McKenzie was among the first international law firms in China when it opened in Beijing in 1993. Founded in 2009, FenXun Partners is notably known for its expertise in capital markets, investment funds, as well as banking & finance.
Baker & McKenzie’s Chief Representative in Shanghai, Danian Zhang, commented: “Our Firm has a long-term commitment to China and to excellence in serving our clients’ international legal needs. We welcome and look forward to the new opportunities that this Joint Operation affords.Yingzhe Wang, managing partner and co-founding partner of FenXun Partners, said: “We share with Baker & McKenzie common values and a common approach to our client relationships. The Joint Operation with Baker & McKenzie will better enable us to serve our PRC clients’ international legal needs.

The market: towards a better labialization?
Due to historical reasons, China has a tightly controlled legal services market. It is only after 1988 that private law firms were allowed to establish, and foreign law firms were not permitted to open a branch or a representative office (RO) in China until 1992. Currently, foreign law firms are still subject to a number of barriers in this country: they are unable to employ or be owned by qualified Chinese lawyers, and foreign lawyers cannot obtain a license to practice law and can only offer information on China’s legal environment. However, at its WTO accession in 2001, China was committed to further opening its legal services industry for international competition.
As the first free-trade zone in mainland China, the China (Shanghai) Pilot Free-Trade Zone (SFTZ) was set up in September 2013 with the aim to test the opening up of the city’s financial system, loosening control on the currency, as well as easing restrictions in foreign and private investments. It also explored cooperative mechanisms between Chinese and foreign law firms by introducing two new policies in late 2014: under certain conditions, a foreign law firm will be permitted to enter into an agreement with a Chinese law firm to mutually dispatch lawyers between firms, and it can also set up joint operations with a Chinese law firm. The conditions were clarified in the Implementing Measures for Association Between Chinese and Foreign Law Firms in the China (Shanghai) Pilot Free Trade Zone and the Implementing Measures for Mutual Secondment of Lawyers as Legal Consultants by Chinese and Foreign Law Firms in the China (Shanghai) Pilot Free Trade Zone, both issued on November 4, 2014.
China has a well-established tradition to trial both its reform and new policies in a few selected zones before generalizing them nationwide. Therefore, the measures taken in SFTZ last year are closely observed and widely considered as an encouraging sign of the long-awaited liberalization of China’s legal services market.

Read more insight regarding China's legal services markets in our next International Report of Top 100 Law Firms. Publication in September 2015.

Jeanne Yizhen YIN