JunHe: How to Build a Tier-One Firm in China? From Zero to Five Hundred lawyers, in Less than Thirty Years
Wei Xiao (JunHe): “If we were a bunch of rabbits, could we scare anyone simply by dressing in the skin of a tiger? What really matters is that we need to be the tiger ourselves!”
A law firm’s name reveals its origin, value and roots. In Chinese, Jun (?) means men of good virtue, and He (?) means cohesion and harmony. Such is the vision of JunHe: a group of virtuous men cohered to uphold the value of the law.
Since 1989, JunHe has developed into a leading full-service Chinese law firm with a team of over 600 lawyers. Independent and innovative, JunHe has never ceased in its pursuit of quality, and its performance was recently rewarded as Best Chinese Firm at the 2015 International Legal Alliance Summit & Awards (ILASA).
How does it balance excellence in performance and the pressures of growth? What is its commitment to organic growth? What is its vision towards mergers? Insights from Managing Partner Wei Xiao.
Leaders League. How did you manage to grow into one of the largest and best law firms in China within only 26 years?
Wei Xiao. Different from many other law firms, we have been committed to organic growth. There is rationale behind this. Historically speaking, China’s is a young legal profession, as Chinese law firms specialized in transactions didn’t see the light until three decades ago. Although there were lawyers in China in the 30s and ’40s, most of them were in civil and criminal law and practiced on their own rather than being attached to a firm. Therefore, we have nothing from which to draw lessons in terms of the management of law firms: no experience, no precedence, no knowledge-base or teachers…
In the last thirty years of JunHe’s development, we have been concentrating our efforts and energy on building our own strength, learning by ourselves and studying the best practices of other firms, including premier firms like Slaughter & May and many others with whom we have deep ties.
For an independent firm like us, quality has been our life stream since we founded. Admittedly, the meaning of quality varies relative to different times and different people, and likewise our understanding of quality has evolved over time. For example, twenty years ago, the concept of capital markets didn’t even exist in China and we didn’t have any experience in this domain.
Naturally, the quality of our work wasn’t up to today’s level. Indeed, our knowledge has evolved in stages and we have progressed step-by-step, in line with China’s economic development. Today, I’m proud to say we have attained the basic standards of international legal services, although our levels of professionalism, efficiency and internationalization still need to improve.
Leaders League. The quality of work depends partly on the quality of the people who work…
W. X. I agree! That’s why we consider quality and culture as criteria of priority when we recruit partners and lawyers.
In our early days, our main targets were multinationals and inbound investment, so we tried to attract talent that had access to such targets and could meet their requirements of quality. Such talent was a rare resource in China back then, so we mainly relied on our personal network by inviting classmates and friends who studied or worked overseas to join us.
We also recruited a small number of foreigners who didn’t have work experience but were seeking to develop their personal careers in China. In this way, we reinforced the capacity of communication, met the quality requirement of multinationals, and gained a relative advantage in the market.
Later on, when our business became better established, we recruited talent in a more systematic manner. Our doors were always open, and we kept recruiting outstanding legal talent with international background and experience. Meanwhile, we also built our own training system to prepare our young lawyers and partners.
One of the most natural ways of training for most of our lawyers was participating in the deals, as each deal is an opportunity to learn and grow. We also developed ourselves in the market by communicating with leading international law firms and learning from their best practices, and participated actively in international conferences and exchanges. So our success and growth relied on a combination of external recruitment and internal training.
Just as China’s economy, our firm is improving in the process of its work. Rome wasn't built in a day, so has our training system developed gradually with the expansion of our business. Looking back now, some of our attempts may seem naïve, but they gave us a huge advantage at that time. Today, I wouldn’t pretend that our training system is very comprehensive or sophisticated, but it is advanced relative to our Chinese peers.
Leaders League. What is your geographic footprint in China and overseas?
W. X. We have been expanding our network of branch offices according to concrete plans and targets, and our development is sustained by the satisfaction of certain parameters.
I do agree that a certain size does matter in some cases, but in contrast to the general view that big is beautiful, I think size is not the most important element, and we cannot pursue greater size just for its own sake. We have been holding to one principle: as a genuine partnership firm, our branch offices have to be an integrated part of our platform and we have only one profit center.
We are among the first Chinese law firms to build branch offices by establishing an office in Haikou, Hainan in 1992. At that time, due to legal regulations, we came up with a local firm to create the brand of “Hainan JunHe Law Firm,” which is an entity independent from us, in spite of the fact that internally we worked together. Moreover, we are the first Chinese law firm to build an office outside of China by setting up an offshore office in New York in 1993, and the first Chinese firm to set up a branch office in Shanghai. Thereafter, we entered gradually into Shenzhen, Dalian, Hong Kong, Silicon Valley and Guangzhou.
When choosing office locations, we look for strategic locations where our clients need our services and where the local market is relatively mature. But we are also learning lessons. For example, Dalian and Haikou are not very deep local markets, so the size of our offices over there is small. All in all, we are prudent in opening branch offices, as it really has to provide a strategic advantage and respond to strong client demand.
Leaders League. Have you considered merger to achieve regional leadership in Asia?
W. X. After rounds and rounds of internal debates on potential of mergers, we’ve reached the consensus that no matter with whom, a merger has to achieve the effect of “1+1>2” and create more value to the merged firms, otherwise it makes no sense.
The recent combinations of Chinese firms with foreign firms are, as far as we know, mostly relying upon Swiss Verein or similar structures, and without a single platform and profit center. While such structures may bring certain benefits to the merging parties and at this stage more to the Chinese firms’ sides, such as escalation of team size, improvement of management skills and rebuilding of corporate image, they do not fit us as we require full integration in our operation.
In our firm’s culture, we don't value size per se, and therefore we don't see the attraction of a merger for the sole purpose of expansion. We believe quality trumps size. Within our firm, we ask ourselves: if we were a bunch of rabbits, could we scare anyone simply by dressing in the skin of a tiger? We draw a conclusion that we need to be the tiger ourselves. To achieve this goal, we must operate the entire firm as a team, with partners tightly glued to each other, financially and spiritually, so as to ensure high quality of work and maintain competitive edge. We made great efforts in integrating our team, management and resources in the past, and will continue to stay fully integrated in the future. In this context, Swiss Verein is not an option for us.
In China, we have gradually and organically gained a competitive position, so we don’t need to merge with local or international firms in order to develop our Chinese client-base. As for international work, if we merge with any international firm, we would lose referrals from many other foreign firms.
In fact, two elements are important for the development of our international platform and service: a strong partnership with leading local firms that have sufficient local legal resources, and influence on regulators and government. For this purpose, we work with our best friends in-depth and even build tightly bonded teams with them without merger pains and risks.
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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