Advising the dragon

The rise of China is creating new opportunities for those interested in a legal career.
Commercial awareness

What do you think these numbers mean? $2.132 trillion (1). $1 trillion (2). One in five (3). When writing about China, the statistics are so mind-numbing that the temptation is to abandon all hope of making sense of them. For the curious, the answers are at the bottom of this page. But for most of you, the instinct is probably to say - yes, China's big. So what's new?

What's new is one statistic that UK students might find worth paying attention to: 177. That's the number of foreign law firms with offices in China, as of February this year. For those of you who can combine an aptitude in languages with a background in law, that's the sort of information that should make you feel a little more upbeat about graduating in a recession.

Clifford Chance, Freshfields, Linklaters, Allen & Overy, Eversheds, Lovells, Norton Rose: just some of the familiar names whose offices you'll find tucked behind the 1920s skyline of Shanghai's Bund, planted among the skyscrapers of the Pudong Development Area or operating out of Beijing's Central Business District.

British firms have led the way in the globalisation of the legal industry, so it should be no surprise to find these well-known names offering their services in China. Nevertheless, each year only a few graduates from Chinese departments opt for further studies in law, while there is only a small minority of law graduates who try to get to grips with Mandarin.

Some of that is inevitable. Despite the welter of media attention devoted to China, and the obvious importance of that country to the future interests of this one, we remain woefully underserved in the provision of Mandarin courses in our universities and schools. There are just not enough Chinese courses on offer. And not every graduate in Chinese wants to be a lawyer - it would probably be a pretty boring world if he did. Meanwhile, it is inescapable that starting Chinese from scratch is a daunting prospect for most law students. But students in Chinese departments might be surprised to realise how much exposure they could get to China by opting for a career in law. Law students might discover that time spent learning Chinese (say, by undertaking an immersion course in China, or through a Master's in the UK) could give them a new perspective on their career path, as well as adding something substantial to their CV.

At my own firm exposure to China takes two forms. The first is the opportunity to work in one of our offices in mainland China or Hong Kong. But you don't necessarily have to be based out of China to do work with the country. Lawyers in London also get involved on deals with Chinese clients, and with some of the many businesses all over the world who are now doing work with China.

A good example was seen over the course of 2008 and the beginning of this year: Clifford Chance's work with Chinalco on its proposed £12.5bn investment in Rio Tinto. This would have been a really transformational deal for the mining sector. China's state owned aluminium company was attempting to buy stakes in many different projects run by one of the largest natural resources companies in the world. The deal required the involvement and coordination of lawyers in London, Beijing, Shanghai and Hong Kong. It involved negotiating with regulators from the UK, Australia, China and beyond. The team based out of London made frequent long trips to China. In the end, Rio Tinto decided to take investment from a different partner but the deal demonstrated the firm's readiness to handle this new breed of complex cross-border mergers and acquisitions transaction.

Because make no mistake, more of these sort of deals will be taking place. China's most successful companies view the world's straightened economic circumstances as an unprecedented opportunity to buy up assets abroad. This summer saw the largest overseas takeover ever by a Chinese company when state oil and gas producer Sinopec paid $7.2bn for Addax Petroleum, a London listed oil-explorer with fields in Iraqi Kurdistan and West Africa. While that deal was especially large, it was symptomatic of Chinese interest in natural resources and energy. In the past few months Chinese companies have bought refineries and fields in Singapore, Ghana, Syria, Colombia, and elsewhere.

Analysts have noted a shift in strategy here. In late 2007, Chinese investors took up large stakes in British and American banks, hedge funds and private equity houses, and suffered terrible losses as the financial crisis took hold. This time around, China is buying tangibles: oil, gas, minerals.

For laissez-faire capitalists, these deals make perfect sense. China wants to secure the resources which will keep the wheels of its extraordinary economic growth turning. Meanwhile, Western companies desperately need cash and, having run huge trade surpluses for years, China has dollars in abundance.

Others are not so sure. Malcolm Turnbull, leader of Australia's opposition Liberal Party, campaigned against the Chinalco/Rio Tinto deal. "It is perfectly clear that very serious issues of national interest arise when you have companies seeking to buy strategic interests in Australia's natural resources which belong to and are an arm of a foreign government," he said. Or as the Movement for the Emancipation of the Niger Delta put it, in response to rumoured Chinese investment in Nigerian oil: "Our take on the Chinese is that we see them as locusts who will ravage any farmland in minutes."

The Australian Opposition Party probably never thought that they would find much in common with Nigerian militants, but Chinese outbound investment is provoking strong feelings the world over. Separating myth from reality is often a task that devolves to lawyers working in these deals.

It's the lawyers who coordinate with Western regulators, explaining the structures and decision-making processes of Chinese state-owned companies, and emphasising that the hand of a Chinese politician is not behind every move made by a state company. It's also the lawyers who will project manage the deal, keeping Western seller and Chinese buyer aware of the corporate, financing and regulatory time-frame that will govern the other's approach to the transaction.

For all parties involved, it can be something of a journey into the unknown, and it is the lawyers who will have to get up to speed quickly if they are to guide the deal along. For them it will be a creative, demanding process.

Inevitably, a firm that can call on Mandarin-speaking, culturally aware lawyers will be better equipped to grapple with these sort of challenges. Today's growth area may be investment by Chinese state-owned companies abroad, but even when that particular sector settles down it is clear that China will be here to stay as a global business and political power.

Hopefully by now you'll have started to believe that Chinese and law can be a good combination. What might be less clear is how to combine the two.

For those of you who already have some knowledge of a Chinese dialect (say, because you are an undergraduate in a Chinese department, or are from a Chinese background) it might not seem clear how to step from a non-law academic background into the legal profession. You might not have realised that UK solicitors firms sometimes fill a majority of their intake with trainees who did not study law as undergraduates. Converting to law involves two year's study at a legal provider such as the College of Law, followed by two years work as a trainee solicitor (the route is slightly different for barristers). Many firms aim to recruit the best candidates during their second or third year as undergraduates and will sponsor students through their law conversion. If any of this is new to you, you should ask at your careers centre for further details.

For anyone thinking of taking up Chinese at a later stage, such as law student or law graduates, there are options. The truth is that you are unlikely to get anywhere with Mandarin unless you devote a significant amount of time to it. That means either getting out to China and starting from scratch on one of the many language courses there, or enrolling in a Master's course that offers full-time Mandarin training in the UK plus a period of study in China. The advantage of the latter route is that you carry out research in an academic subject while also getting the basics of Mandarin in before you arrive in China. Any of you who have been to China with no or little Mandarin behind you will know just how much of a shock that first experience can be. Make no mistake that the language barrier is daunting. Understanding some of the basics before going to China can make you feel a bit more confident of securing your day to day survival.

Of course, however you try to combine Chinese and law, time can be a big problem factor. If you are studying for a four year Chinese degree, an extra two years of law might seem like a big commitment. You would most likely be at least 24 on starting work, and 26 on qualification as a solicitor. Equally, law graduates may think that a significant amount of time spent in China represents a big detour on their career path.

Only you can gauge whether this sort of time commitment is worthwhile. Mandarin is undeniably a difficult language, and it can be hard to get beyond solid proficiency even after years of full-time study. Law, meanwhile, may not be for everyone. You may feel that there are more direct and obvious areas to which to apply your skills. Taking five years or so to study Mandarin and then law, or vice versa, may feel more than a touch self-indulgent.

But then, there's a lot to be said for self-indulgence. Time spent gaining an understanding of the language and culture of one of the countries likely to dominate the twenty-first century is hardly time wasted. Moreover, as the UK market for graduate jobs has become much tighter this year, I suspect that many of you may already be considering some further study or time abroad. Using that time to gain a proficiency in Mandarin is likely to prove as useful an option as any. And at the end of all that studying, you'll be one of only a handful of people qualified to opine on the law of torts in Mandarin Think how much this will impress your (remaining) friends. Even a middling level of Mandarin will certainly be more than the vast majority of your future colleagues in the legal world. China is not going away as a global power, and the world is going to need lawyers who can help bridge the divide between east and west.

In my own case, after a history degree I studied for a two year M.Phil in Chinese Studies at Oxford. We studied Mandarin full time while in the UK, and our research had to be based partly on Chinese source material. Crucially, this route took me out to China. I spent six months at Beijing University during my Master's, and got back to Shanghai for a Mandarin refresher last summer. For me, it's less a case of believing that a knowledge of Mandarin is going to make my career for me, and more that I am actively pursuing ways of putting my Chinese into use. I am confident that it will take me in interesting directions.

Chairman Mao used to talk about "socialism with Chinese characteristics." Law with Chinese characteristics? If you want to give a novel slant on a legal career, this might be the direction for you.

*"If you open a window, you'll let in a few flies" *

So said China's former Premier Deng Xiaoping, when pondering the impact that opening his country to the West was having on the morals of his nation's youth. But Deng's introduction of market forces to China did not just bring MTV, pornography and previously unimaginable levels of wealth to a nation of 1.3 billion people, it also opened the way for a small army of ambitious foreign law firms.

British lawyers have had something of a head start in China through its colonial history. For years, "filthy" was the maxim for cynical types propping up the bars of the Temple, which stood for "Failed In London, Try Hong Kong." That sort of stereotyping rather missed the point that Hong Kong was for many years the centre of the West's interaction with China, even after the 1997 handover, owing partly to a legal system more familiar to Western parties than that found on the mainland.

Whilst Hong Kong remains an important legal centre, the scene in China has become much more diverse. China's 2002 entry into the WTO resulted in the country relaxing many of its restrictions on foreign firms establishing on the mainland. Scores of offices are now found in Beijing and Shanghai, with the Brits squeezed among their American and continental European counterparts. While foreign firms are still prevented from practicing Chinese law per se, they can advise their foreign clients on "the Chinese legal environment," and of course advise Chinese clients on the laws of their home jurisdiction.

Back in the UK, there is growing engagement between the British and Chinese legal professions. China is not just of interest to corporate-focused expats. The China Law Council provides a year-long training scheme for young Chinese lawyers to work in solicitors' firms and barristers' chambers in the UK, while studying legal English and law at SOAS. This joint venture of the Bar Council and Law Society has seen 238 Chinese lawyers participate since 1989. The Ministry of Justice and Great Britain China Centre run a similar training programme for junior Chinese judges.

Meanwhile, Oxford, Manchester and Bristol universities have established the British Inter-University China Centre, which provides funding for post-graduate students working with China. In business, the China Britain Business Council today incorporates the "Icebreakers" of the 48 Group Club, a business association born in the 1950s with the aim of trading with China in spite of government embargoes on the People's Republic.


(1) Reported value of China's foreign exchange reserves.

(2) Market capitalization of state oil and gas company Petrochina after its 2007 floatation on the Shanghai stock exchange - making it at that time the largest company in the world by some estimations.

*(3) Approximate proportion of Chinese to the global population. *

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