‘Operation Trident’ is officially no more at Linklaters as it reaches the culmination of a two-year plan to find a merger partner in China.
Following a partner vote at its conference in Berlin earlier this month, Linklaters will see a number of its PRC lawyers split off from its Shanghai office to launch a new firm.
Around three lawyers will launch the firm initially but are expected to recruit at least seven further PRC lawyers from Linklaters’ Shanghai and Beijing offices in the coming months.
The firm, which will be able to practise local law, will enter into a ‘best friends’ arrangement with Linklaters with the ambition to tie-up in a joint venture in the next three or four years.
Such a deal would have to follow the rules of the Shanghai Free Trade Zone, which was established in late 2013.
The trade agreement rules the firm must sit completely independently of a foreign firm for at least three years. The new firm could choose not to partner with Linklaters when the time limit is up and could opt to merge with another firm or remain independent.
The exits will significantly affect Linklaters’ Shanghai practice, though none of the three partners will exit in the move. The firm said it will continue to operate in both Beijing and Shanghai, from which offices it currently offers foreign law advice.
Linklaters had previously planned to merge with a well established Chinese firm. Talks fell through with both Shanghai Capital Law & Partners and Shanghai Kai-Rong Law Firm at the end of last year.
A source in Hong Kong previously told The Lawyer: “Linklaters has spent a lot of time thinking how to face China. The general feeling is that it missed the boat for the US market and now it is a good chance to crack the second largest market in the world, China.”
To Linklaters’ closest rivals, its plan to launch a PRC law offering may not signal a game-changer for the firm or the market.
“For top-end cross-border deals PRC law is not that important,” a source added. “If it’s important everyone will be looking at it. But it is a nice capability to have. The sense in the market is that Linklaters’ China ambition is not going to be a huge game-changer but a nice complement to its present offering.”
Asia managing partner Marc Harvey, who ran against Gideon Moore to be global managing partner of the firm, had been leading the plans. It is understood he had overseen discussions with around 10 Chinese firms.
It could become the first magic circle law firm to practise Chinese law if the deal with the new PRC firm goes well. Baker & McKenzie became the first international firm to gain permission to practise local law in China when it entered into a joint venture with FenXun in the Shangai Free Trade Zone last April.