Regulation & Law

Sammuel Zhao (Junhe): “We need to get bigger to serve the huge Chinese market, but we will never trade quality for size”

Since its establishment in 1989, JunHe has grown into a leading full-service Chinese law firm with a team of over 600 lawyers and has never ceased its pursuit of quality and innovation. Its analysis of strategy, current challenges and choices of future development are the epitome of a pioneer in the ever-changing landscape of modern China. Sammuel Zhao, Partner, Member of Management Committee, JunHe, sheds light on the firm's strategy and vision.

© JunHe

Since its establishment in 1989, JunHe has grown into a leading full-service Chinese law firm with a team of over 600 lawyers and has never ceased its pursuit of quality and innovation. Its analysis of strategy, current challenges and choices of future development are the epitome of a pioneer in the ever-changing landscape of modern China. Sammuel Zhao, Partner, Member of Management Committee, JunHe, sheds light on the firm's strategy and vision.


Leaders League. An increasing number of Chinese companies are investing overseas. How does JunHe accompany this clientele?

S. Z. As outbound investments also involve domestic investment procedures such as obtaining the approval of Ministry of Commerce (MOFCOM) and studying targets, which requires the intervention of foreign law firms, in order to accompany large-sized State-Owned Enterprises (SOEs) and private companies, our firm is able to leverage our strong coordination capacity thanks to our Best Friends network, LexMundi, as well as our extensive knowledge of other international firms.

During the coordination, apart from routine work such as due diligence and negotiation on contract agreements, we also need to issue legal opinions and play a bridging role to help Chinese companies  communicate with foreign law firms, as Chinese companies prefer Chinese firms to issue legal opinions because of language and cultural differences.

 

Leaders League. Anglo-Saxon firms are strongly present in high-profile Chinese outbound deals. Is it a market segment that your firm wants to target?

S. Z. Indeed! One reason is that for the moment insurance companies such as Anbang Insurance and Ping An Insurance are very active in outbound investments, and they target a lot of assets in London, Europe or the US, so it’s natural that they use Anglo-Saxon law firms. Another reason is that the Chinese representative offices of these firms do a good job of targeting these clients.

Since the majority of the deals use English or American law, as a Chinese law firm we have an inherent disadvantage as we lack western firms’ mastery of those legal systems. In recent years we have brought in many senior associates with qualifications or work experience abroad, but there is still some way to go to catch up. At the current stage, we are focusing on strengthening our coordination capacity and improving our cooperation with international law firms, and in the medium term we want to attract more talents who have foreign qualifications and experience to further improve our ability to compete with western firms.

 

Leaders League. What can Chinese law firms do to catch up with their western peers?

S. Z. Chinese law firms have the advantage of having the world’s second largest economy as backing. Another advantage is that Chinese laws are quite unified. One point we can improve on is documentation. Since Chinese businesses have traditionally had a weak comprehension of contracts -many company decision makers prefer to read two pages of a contract instead of hundreds of pages as it the norm in the West - Chinese law firms are therefore weaker in the logic and structuring of documentation. At JunHe, we have successfully attracted many senior associates from international law firms, and have also cooperation agreements with foreign law firms such as Slaughter & May and some Japanese law firms, so we are strengthening this aspect.

 

Leaders League. What are the challenges for JunHe as you develop?

S. Z. I can see two challenges. First of all, faced with competition from some other law firms that pursue their development by scaling and easily have three to four associates, we want to pioneer emerging niche sectors and constantly cultivate our leading capacity in such areas.

Secondly, the impact of the Internet compels us to review our strategy. For instance, we are considering offering standardized legal services via the Internet.

 

Leaders League. What does the future hold for JunHe?

S. Z. Currently we have around 900 employees and over 600 legal professionals. In the future we’d love to double the number of lawyers to reach the 1000 mark while maintaining our excellent quality and reputation as a strong boutique firm. We need to get bigger to serve the huge Chinese market, but we will never trade quality for size. Although we won’t exclude the possibility of a merger, which is the fastest way to achieve this objective, firms of similar size or foreign law firms are not on our radar at the moment. A merger with a boutique firm might be interesting, why not? But we first need to ensure that anyone who joins us is compatible with our unique culture.

 

 

Jeanne Yizhen Yin

Read the full Special Report: China: Game Changing

The growth story of China’s legal and financial industries is both a product and a testimony of this country’s continuous economic transformation: nascent but fast-growing, vastly different from a decade ago and still rapidly changing. The game has started, and faced with various issues, both international and domestic firms are constantly responding, rethinking, reshaping, readjusting… To survive and thrive, they need to master the fine art of balance between growth and profitability, expansion and quality control, opportunities and risks.

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