Largest Chinese law firm plans Swiss link-up

By Raphael Minder in Hong Kong

Published: December 30 2008 23:35 | Last updated: December 30 2008 23:35

King & Wood, China’s largest law firm, is set to announce the first merger between a mainland Chinese and a foreign law firm, underlining the growing international ambitions of Chinese legal practices.

King & Wood plans to integrate SG Fafalen, a Swiss law firm registered in Hong Kong.

The Swiss firm’s founder and owner, Serge Fafalen, could facilitate access to “petrodollar” clients, particularly in Russia, where he has spent much of his professional life, King & Wood believes.

“In the Russian bloc of influence, we definitely have a missing piece,” said Ching-Wo Ng, a King & Wood partner.

“Because of China’s interest in oil and other resources, we believe that we need to take a closer look at that region.”

With more than 1,200 employees, including about 700 lawyers, King & Wood has developed over 15 years into China’s largest law firm by headcount and has been advising many multinationals active in the Chinese market.

It has also already established a joint venture with a Japanese law firm, an alliance with an Australian counterpart, as well as opening a New York office in September this year. SG Fafalen has 100 employees and Mr Fafalen will become a partner in the Chinese firm.

Some other leading Chinese firms have also set up representative offices in the US in what Mr Ng described as the start of an overseas drive by Chinese firms.

Until now, co-operation between Chinese and foreign firms has been driven by western firms trying to do more business in China.

“Large PRC [People’s Republic of China] companies now have an urge to go outside China and the same kind of urge also applies to the more successful PRC law firms,” Mr Ng said. “We are seeing the very initial stage of an internationalisation of PRC law firms.”

The firms would not disclose the financial terms of the transaction, which is expected to be finalised in February.

King & Wood will soon complete the integration of Arculli Fong & Ng, a Hong Kong firm, a process that the two firms started in 2004.

The overseas ambitions of Chinese firms are a further challenge for western firms that have been advising successfully foreign investors in China, as well as acting as consultants to Chinese firms.

Their activities, however, were the subject of a 2006 complaint by the Shanghai Bar Association because Chinese legislation prevents foreign firms from advising on Chinese law and even hiring Chinese lawyers to practise Chinese law.

Copyright The Financial Times Limited 2008