Adamas: Pioneering in China's Legal Services Market
Among the first four international law firms to obtain the authorization to practice in China in 1992, Adamas is the only French firm and the only independent firm. Denis Santy, partner in charge of coordinating the Chinese Desk, reveals the behind-the-scenes story of this pioneering move and decodes the global reach of this pragmatic, flexible firm.
Leaders League. Why did Adamas choose to be a pioneer in China’s legal services market?
Denis Santy. Created in 1969 in Lyon, Adamas has an established international experience, and early in the 1980s we started operating in the Middle East and North Africa, complex areas where the legal systems are very different from occidental society. During a study trip to China in 1976, one of our founding partners was impressed by the ongoing transformations and the emerging dynamic developments in this country. Our firm started to welcome Chinese students in the 1980s, who then returned to their country to become influential figures in law and politics. In 1992 we were able to benefit from such local knowledge and networks to establish our presence in China.
Leaders League. Being the first mover has its advantages coupled with challenges…
D. S. True! Being the first mover in China allows us to understand the local needs and nurture trust and loyalty with local authorities, clients and business partners, which are determining factors for success in China. For example, our experience in assisting in the elaboration of Chinese legal system helped us to gain a profound understanding of the Chinese market and to give pertinent advice to international investors. If we had not been on the spot in the 1990s, we would not have been able to grasp the nature of transformations in China.
Of course, challenges exist too. Recruiting high-quality talent, for example, was a big challenge in early days of our establishment, as we did not have international networks as some giant Anglo-Saxon firms. Therefore, we spent a lot of energy to get in touch directly with Chinese law school students and lawyers. Fortunately, we have been in good relationships with partners like French institutions and Chinese authorities, so the local network is really helpful.
Leaders League. Five offices of your own, five partner offices plus four international desks across France, Germany, Belgium, China, India, Tunisia, Morocco and Turkey… such an international presence is quite impressive considering the size of your firm. What is your expansion strategy?
D. S. First, we only start expanding when our know-how and expertise in a certain practice is mature. For example, we are traditionally strong in international arbitration, energy, infrastructure, transportation and intellectual property, and our IP practice in China therefore has a good reputation, especially in anti-counterfeiting.
Second, the advantage of being a medium-sized firm is to be flexible and reactive, so we can adapt ourselves very quickly and go where our clients need us. In China, we have been witnessing a reversion of the situation as outbound work will probably soon equal inbound work. Our strategy is thus to accompany Chinese companies in their expansions in Europe, especially in France and Germany, as well as in Africa. Another example is India, whose pharmaceutical industry is prosperous and complementary with that in Lyon (where our head office is situated), so these are our zones of focus.
Last but not least, we have neither the energy nor the ambition to open offices everywhere, so we are very selective and active in forming local partnerships. In China, for instance, depending on practice areas and geographic zones, we are in non-exclusive partnerships with several Chinese law firms that share the same values and standards of quality as us, and we cooperate closely with each other.
Leaders League. How do you view the economic slowdown of China and the emergence of its neighboring countries?
D. S. Indeed, Singapore is becoming an even more attractive place for headquarters, and all of South-Eastern Asia is also developing very fast, but China remains a vital base for the region thanks in particular to its excellent infrastructure. Shanghai is an important international financial center, and Beijing has powerful administration. Another rising trend is the internationalization of Chinese SMEs, which represents a real opportunity to firms like us that are strong in middle market and understand the needs of medium-sized clients. More generally, I believe the temporary difficulties of certain emerging countries cannot disguise their future potential.
Leaders League. What advice would you give to foreign investors in China and to Chinese companies going abroad?
D. S. Advice applicable to both is to study and prepare a real project thoroughly before going abroad, instead of rushing out of peer pressure. More specifically, foreign investors must understand the importance of patience when doing business in China, as it usually takes more time and money than expected. As to Chinese companies, it is essential for them to find assistance from local experts. Although networks and relationships already exist in Europe, this is not sufficient to understand numerous local practices and customs specific to investments in Europe.
Leaders League. How do you view the current situation of international law firms in China?
D. S. Heavily hit by the financial crisis, many international firms have learned their lesson and adjusted themselves. Gone are the days when firms could afford expensive expatriates and infrastructure, and now they are trying to be more local and expand into new practices such as fundraising, financing, transport and energy.
A true challenge for international firms is attracting and retaining talent. Chinese lawyers need to see the possibility of a professional project, to take on responsibility and work together with other lawyers… In a word, they need to feel part of the firm. In addition, international law firms are usually more integrated than Chinese firms and have higher structure charges, so partners usually have a lower ratio of commission than their peers at Chinese firms.
At Adamas, for instance, we try hard to build a bi-cultural team and make sure our lawyers feel well: we have more than a dozen Chinese and French lawyers based in China, as well as Chinese lawyers in France, and we are in frequent contact every day; English is our work language, and many of our partners speak Chinese and live in a Chinese way. Cultural integration is becoming easier to handle, thanks to the increasing number of Chinese-born and receiving education abroad.
Leaders League. What do you think of the joint operation between Chinese and foreign law firms under the initiative of Shanghai Free Trade Zone?
D. S. This initiative marked a turning point in the liberalization of Chinese legal market and could serve as a showcase for large international firms. It is another issue to have daily cooperation between firms, and this is something that we have already been doing for years. Personally, I do think that the restrictions to foreign law firms in China could be less tight. It was normal that China wanted to protect its legal system during its phase of construction. This said, now the Chinese legal system exists and the Chinese government could now facilitate the administrative procedures and visa issues for international law firms and lawyers to work in the country.
Jeanne Yizhen Yin
Read more insight regarding international legal services markets in our next International Report of Top 100 Law Firms. Publication in September 2015.
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