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May 8, 2009 3:52 PM

China Has Greedy Associates, Too

Posted by Anthony Lin

"When the market goes up, you are [the firm's] money-making machine," the comment from Lawsman starts. "You will be exhausted, but they will keep you well-oiled and well-fed. But once the market is seizing up, you will be cast aside as a worn-out tool even though you still work efficiently."

It's an ominous warning and one that reflects the sentiments of so many dime-a-dozen comments on legal blogs like Above the Law or message boards like Greedy Associates. America's young lawyers are a vociferous, demanding lot. And now, it seems, young Chinese lawyers are catching on and doing the same.

Lawsman's comment was posted on the Chinese-language Totoo site, an Internet message board whose growing popularity is a sign of how China's legal profession increasingly mirrors America's, warts and all.

Though perhaps somewhat less vituperative, the gossipy tone of Totoo will be familiar to anyone who has visited similar American sites. A poster warns that one of China's largest law firms is "famous for being stingy" when in it comes to salaries. Elsewhere on the site, a leading Beijing firm is described as a "fish in troubled waters" following its announcement of pay cuts. One U.S. firm's Shanghai office is said to be "good if you like American culture." If not, then "it's just rubbish."

Totoo's origins are unclear, and the site itself contains no indication of who owns or operates it. But China's legal profession has certainly taken notice.

Kirk Tong, a partner at Jun He Law Offices, one of Beijing's top firms, says he first heard of Totoo about a year ago. While the site irritates many of his partners, Tong himself is more ambivalent.

"Much of the information on the site is not very precise," he says. "But, even with its misinformation, it's a channel for law students and other legal personnel to learn about firms."

Among the misinformation, Tong says, are posts claiming Jun He has laid off lawyers. He says the firm has not let anyone go, but he acknowledges the truth of posts detailing the firm's recently instituted four-day work week and a 20-percent pay reduction for junior lawyers who fail to meet their original billing targets.

Layoffs and other cost-cutting measures are hot topics on Totoo these days, an indication of how quickly the red-hot China legal market of just last year has cooled. A number of international firms that were eagerly expanding in China before have lately cropped up in the layoff discussions.

Chinese law graduates without overseas training or work are typically hired by large U.S. and U.K. firms as "legal consultants" with salaries often starting well below $20,000. Many international firms have greatly expanded their hiring of such Chinese lawyers in recent years, as the profit margin on their billable work is far higher than for expatriate associates. Some are now thinning those ranks.

Layoffs at O'Melveny & Myers' China offices spurred numerous topics on Totoo in March, with posters pegging the number let go at 17 lawyers and staff in Shanghai and 13 in Beijing. Kurt Berney, O'Melveny's Shanghai office head, says the Totoo numbers seem a bit off but he confirms the firm conducted layoffs in China.

"They were economic cuts," says Berney. "We are predominantly a transactional firm in Asia and transactions are down." He says O'Melveny still has over 100 lawyers in the China group.

Paul, Hastings, Janofsky & Walker is another U.S. firm that is frequently named on Totoo, with over 20 lawyers said to have been let go from the firm's Shanghai office in December. One poster said Paul Hastings had staffed up over the past couple of years, adding some 40 legal consultants to its Shanghai office, but that there was never enough work for more than a fraction of those hired.

Mitchell Dudek, the head of Paul Hastings's Shanghai office, declined to comment. Both Paul Hastings and O'Melveny announced substantial U.S. layoffs in March.

Beyond layoffs and the poor economy, a large number of posts inquire about work conditions at various international and Chinese firms. Several topics dwell on the ins and outs of applying from China for admission to top U.S. law schools. Law firm salaries generate much interest, too, though perhaps less than a year ago, when competition among international and Chinese firms for the best local talent was steadily ratcheting pay upward and pushing the lateral recruitment market into overdrive.

Berney says he had not previously heard of Totoo. But he says the rise of such a site in China was perhaps inevitable. "The legal industry in China is just getting bigger," he says. "People want to communicate with each other about it."

And if the buzz is not always good, at least it's buzz. "We're actually flattered that we're so often on that site," says Tong. "It means we're seen as a leader."

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Every law firm will try to make money off of an associate. How the law firm treats the associate during a downturn will affect how the firm is viewed when the economy gets better.

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