Clifford Chance is understood to be seeking a China merger and has held talks with some of the country’s top-tier firms.
The Lawyer understands that the magic circle firm has explored the possibility of a merger with a number of top-tier Chinese firms, with one being identified as Zhong Lun. The discussions with Zhong Lun, China’s third highest-earning law firm, took place last year and are understood to have ended with both sides deciding not to pursue further.
In September 2015, following a long period of consultation and internal discussion, Zhong Lun’s partners agreed on a clear international strategy to remain independent and build up its own international reach as opposed to merging with a global firm.
Clifford Chance has been looking at a possible tie-up in China for some years. In December 2011, The Lawyer reported that Clifford Chance engaged in unsuccessful talks with one of China’s fastest-growing firms Broad & Bright regarding a strategic alliance.
Clifford Chance Beijing and Shanghai managing partner Stephen Harder, who is retiring from the firm on 1 May after 14 years at the role, has led the efforts. Harder will be succeeded by Beijing-based corporate partners Terence Foo and Tim Wang as co-heads of the firm’s mainland China offices in a shake-up of the firm’s Asia Pacific management.
Wang is native PRC Chinese, and is the first Chinese national appointed as office managing partner at Clifford Chance. He is also a member of its global partnership council.
The firm’s global management, led by managing partner Matthew Layton, is thought to be keen on a deal in China.
“Matthew Layton would do a deal in China tomorrow if he could,” said one source.
Other sources indicated that combining with a top-tier Chinese firm would be almost “mission impossible” and “too risky”, and Clifford Chance was also contemplating different models such as establishing an alliance or a deal with a boutique firm.
“The elite Chinese firms are still enjoying strong revenue growth. The idea of being taken over by a global firm and surrender its autonomy is not very appealing,” said a managing partner of a Chinese firm. He added that his firm would only consider a deal in which the Chinese partners could be in the driving seat, similar to that of King & Wood Mallesons.
Linklaters is another magic circle firm seeking to tap into PRC law. But following a two-year search for a Chinese merger, the firm has recently decided to pursue an alternative route.
Following a partner vote at its conference in Berlin earlier this month, Linklaters will see a number of its PRC qualified lawyers split off from its Shanghai office to launch a new firm.
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.
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.
Clifford Chance declined to comment.