Why do international law firms like to hire from the Red Circle?
The term ‘Red Circle’ first appeared in a report by The Lawyer in 2014. Eight top tier PRC law firms were given the title, including Commerce & Finance, Global Law Office, Haiwen & Partners, Jingtian & Gongcheng, Jun He Law Offices, King & Wood Mallesons, Zhong Lun, and Fangda. Whilst gaining international reputation as individual firms, these firms also became targets for talent from the international law firms. This is particularly true at the associate level and in this article Levana Huang highlights why the international law firms in China are always looking to hire Red Circle trained associates.
‘One Belt One Road’ Initiatives
The Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives, also known as ’One Belt, One Road’, were first proposed by Chinese President Xi Jinping in September 2013. In view of globalisation, the ‘One Belt, One Road’ initiatives urge investment and trade cooperation to run through Asia, Europe and Africa.
In order to better serve their major SOE (State Owned Enterprises) clients around these initiatives, international law firms are always interested in recruiting lawyers who speak native Mandarin, fluent English, and most important of all, have a deep understanding of the Chinese culture and experience in handling tough Chinese clients. These requirements are easily met by associates at the 5-7 PQE level with training and experience from top domestic Chinese law firms.
While capital markets work has slowed down this year, we are witnessing a growing demand for PRC lawyers with specialist banking and project finance and outbound M&A experience, as well as specific sector experience in heavily regulated industries including oil and gas, energy, infrastructure and aviation.
Jack of All Trades
At a typical large Red Circle firm, an associate supports a number of partners in the same department. In some cases, it may even be a fine line between departments. From day one, an associate is exposed to a wide range of matters and sectors. A corporate associate from a Red Circle firm is very likely to have a deal list encompassing transactions in IPO, M&A, PE/VC, and real estate finance. At the junior level, these candidates are not really in demand as generalists, but as they build up valuable experience in each practice area over time, they become ideal candidates for international law firms with partners that have diversified practices or large international law firms that also share a pool of associates.
An experienced generalist is able to think about the bigger picture, solve a wider range of legal issues presented by clients, and thus serve as a one stop shop as the entity moves through different stages of corporate financing and restructuring.
International law firms in China can be very creative when it comes to title. This is mainly because a PRC qualified lawyer is usually on a different salary band and career track than a lawyer qualified in a common law jurisdiction. To distinguish the two different tracks, a PRC lawyer may be called anything but associate; titles include but are not limited to Legal Consultant, Foreign Consultant, PRC/China Associate, PRC/China Consultant, PRC/China Advisor, Special Counsel etc. Some firms are flexible and will offer the associate title, but generally the salary bandings at domestic firms will be lower than for associates at international firms. Red Circle firms will generally hire the same caliber of associates, with a preference for dual qualified lawyers, native Mandarin speakers highly proficient in English (or the other way around), and experience in high profile deals. Therefore, when a PRC firm is hiring it can be more cost efficient to hire from a Red Circle firm than an international practice.
These domestically trained lawyers have become invaluable to the international law firms because of the experience and local knowledge they can bring to firms looking to develop further in China. If you are looking to build your team or would like more information on the Associate market in China please contact Levana Huang on +86 10 6535 0163 or via email [email protected].