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January 24, 2011 6:31 PM

China's Zhong Lun Strengthens Hong Kong Presence

Posted by Anthony Lin

Beijing-based Zhong Lun Law Firm, one of China's largest firms with over 300 lawyers, is stepping up its internationalization drive with a new merger in Hong Kong and plans for another in New York.

Zhong Lun's Hong Kong affiliate firm, six-lawyer Roger Ho & Co., has agreed to merge next month with Hong Kong's 21-lawyer Boughton, Peterson, Young, Anderson (BPYA). The Hong Kong Law Society requires mainland Chinese firms to participate in such affiliation arrangements for three years before they can practice Hong Kong law themselves. Zhong Lun, which opened an office in Hong Kong last year, plans to merge with the combined firm, BPYA, after the three-year requirement is met, says Zhong Lun managing partner Zhang Xuebing.

The merger will effectively triple the size of Zhong Lun's presence in Hong Kong, bringing it to nine partners and 18 associates--the biggest Hong Kong office of any mainland Chinese firm except for that of King & Wood, which has around 60 lawyers in Hong Kong.

Hong Kong, though part of China, has a separate legal and economic system. It is the main base in Asia for international financial institutions, and its stock exchange has led the world in initial public offerings in recent years, largely on the strength of new listings by mainland companies. It is also one of the world’s most competitive legal markets, with firms from the U.S., U.K., Australia, and elsewhere all vying for major assignments. Despite the level of competition, many leading Chinese firms see Hong Kong as the critical first step in expanding abroad.

"This is a significant expansion for us," says Zhong Lun's Zhang, who predicts rivals like Jun He Law Offices and Grandall will also increase their presence in Hong Kong. "Hong Kong will be that bridge that links us to the international market."

Zhang says the new arrangement will also allow Zhong Lun to expand its scope of services. "Our association with Roger Ho & Co was aimed at tackling the Hong Kong capital markets work, and the association with BPYA will help us focus more on cross-border M&A work," said Zhang.

While Zhang says that Zhong Lun has no more intentions of expanding its Hong Kong branch via associations, he is keen to recruit more Hong Kong local lawyers. "It is part of a service that we provide to our Chinese clients who are doing business in Hong Kong and will also help us develop more local clients," says Zhang.

Though Hong Kong will be main focus for the firm's internationalization, Zhang says the firm is also eyeing New York and is searching for a small firm to be a merger partner there. Like other Chinese firms with New York offices, Zhong Lun in New York would seek mostly to assist Chinese clients abroad as well as to market the firm's services in China to U.S.-based companies.

--Jessica Seah

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