Opinion | 10-10-16

How to hire your first in-house counsel in China

Since about 2005 we have seen a number of the more established international companies in China look to establish their own in-house legal team, initially through the hire of their first legal counsel or sole counsel. In this article our consultant Li Ji outlines the types of businesses who look for a sole counsel and what kind of lawyer fits the profile. 
 
Foreign invested enterprises (FIEs) are continuing to enter the Chinese market and more and more headquarters are seeing the region as key for business. Therefore there are continuing opportunities for in-house lawyers looking for roles that will offer them the chance to be a business’s first legal counsel. These opportunities are also expanding into compliance and in circumstances where there is an established legal team many businesses are now looking to employ their first compliance counsel in order to meet the Chinese local government requirements. With this expansion we are seeing growing legal teams and therefore real career development for the sole legal counsel and the opportunity to develop into a Head of Legal/Compliance in time. 
 
What types of companies look for their first in-house counsel
 

  1. In recent years a number of foreign invested high-tech/TMT companies have entered the Chinese market. These companies are relatively young in Europe as well as in the U.S., with high speed development and expansion globally. These businesses have looked to build in China as part of their global expansion plan and when they reach a certain scale they have the need to hire their first counsel. Examples include businesses such as LinkedIn, Airbnb and Tesla.
     
  2. Many companies look to spin off certain business units following various M&A deals. Those businesses which spin off will only take the core business team away and therefore the daily operational roles need to be filled, including legal support.
     
  3. Chinese domestic companies, including start-ups and listed companies, are aware of the importance of establishing an in-house legal team after listing or even during the pre-IPO stage due to the fact that the Chinese legal system continues to get more and more complicated.
     
  4. FIEs with a decent legal team also have the need to hire their first compliance counsel, due to more and more demanding regulatory requirements from the Chinese government about anti-trust and anti-corruption.

How to hire your first counsel
 
Companies generally ask the same question when they plan to hire their first counsel: what level of post qualification experience should the candidate be? We feel that PQE is not really the most important element. It is difficult to give a definitive answer to this as different companies are different sizes each with their own complexities and therefore different seniority of the legal counsel may be generally required. 
 
When thinking about what a business should consider they need to look at themselves. Looking at the businesses who are generally hiring, they all have something in common: they are growing fast and have minimal internal operations. It is important to choose the right person for the business to act as the first counsel. They need to have the right qualities and be able to integrate into the company in order to ensure that they stay in the longer term. 
 
A business’s first counsel should:
 

  1. Have the motivation for self-development. The reality is that many lawyers pursue a work-life balance when moving in-house and want to move away from the overtime and large workloads that lawyers experience at the law firms. The role of a sole counsel is often large and will likely include high levels of responsibility and the right candidate needs to be motivated for this.
     
  2. Not only be capable of working independently, but also thinking strategically. Regardless of the size of the company globally, when a business opens in China it is still new, without clear internal policies or regulations. Thus it requires the first legal counsel not only to solve any potential problems arising from the business operations, but also establish the rules and procedures by taking into account the regulatory environment, the company’s strategy in China, as well as the company’s global principles and requirements.
     
  3. Be optimistic, creative and enthusiastic. Sometimes candidates have concerns about the stability of the role when it is the first counsel role. But from another point of view, a role like this presents opportunities and not just challenges. For example, going back 10 to 15 years, most current legal heads in Fortune 500 companies were the first legal counsel when they joined. When they joined there was likely to be uncertainty as to the success the business would experience in China; therefore only the candidates with entrepreneurial enthusiasm, willingness to accept the challenge and confront uncertainty are right for these roles. 

 
Taking on a role as a sole counsel can be highly exciting and incredibly rewarding. However it is not a role that is for everyone and in order to make a success of the opportunity there needs to be genuine enthusiasm from the candidate. We regularly work with businesses looking to take on their first lawyer and therefore we have in-depth insight into what it entails. If you would like more information on our current opportunities or if you are looking to hire your first in-house lawyer please contact Shawn Chen on +86 21 6103 7331 or via email [email protected].