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Top Firms Face Associate Problem

Anna Zhang      The American Lawyer      点击: 次     添加日期:2015-01-21
Last May, Qiu Zou, an associate at China's Jun He Law Office, decided to leave the top Beijing firm she had worked at for three years and venture out on her own. Six months later, Zou launched a new firm—Wangheng Partners—with two like-mindedlawyers, former Fangda Partners associate Karen Zhong and former Duan & Duan partner Victor Zhang.

Young Chinese lawyers compete intensely for associate positions at prestigious firms such as Jun He and Fangda in the hope that one day they will make partner. Both firms, along with King & Wood Mallesons and Zhong Lun Law Firm, with their Western-style management and track records of high-profile deals, have been bellwethers of domestic firms.

But the partnership track at top Chinese firms is not always transparent.

"It's uncertain when you are going to make partner," says Zou, who, like many other associates The Asian Lawyer spoke with for this article, notes the reason for leaving top-tier Chinese firms is that their chance of making partner is at the mercy of firm bureaucracy and politics.

This contrasts with the experience of young lawyers working for top firms in the U.S., where roughly 70 percent consider themselves on the partnership track, as revealed by the 2014 Associates Survey of sibling publication The American Lawyer, which collected the views of 5,176 mid-level associates from 132 firms surveyed. (Mid-level refers to third-, fourth- and fifth-year associates.)

At least for Zou, a seventh-year associate, and Zhong, a sixth-year, the path to partnership was less than clear.

Most Chinese law firms generally fall into two structures: a number of leading firms such as King & Wood Mallesons, Jun He, Fangda or Haiwen & Partners follow a so-called corporate system where the firm is run like an integrated corporation with all partners sharing resources, clients and profit; while most firms use a team-based system where partners are responsible for all the costs of their own teams, including associates' salaries and benefits.

The partnership track at corporate-modeled firms can be long and unpredictable. Associates first have to reach a certain level of seniority before they are considered partnership candidates. At elite Chinese firms, associates are divided into three levels: junior, mid-level and senior, with each level then further divided into A, B and C. "So you start as a junior C, then junior B, and work all the way up to senior A, and then there is senior A+, senior A++, and it can go on and on before you make partner," says a former Jun He lawyer, who is now a partner at another firm and who didn't want his name used to preserve his relationships.

That is, if you can make partner at all. For many, the uncertainty also lies in how the firm makes its pick among the eligible. "It's never purely based on performance…Talented lawyers would be sacrificed by firm politics," says Todd Chan, a director at Hong Kong-based law firm rating agency LegalBand, adding that unlike team-based firms, where lawyers with certain experience can buy into the partnership, corporate firms are more seniority-based and subject to a partners' vote.

At a firm like King & Wood Mallesons, according to Hong Kong co-managing partner Zhang Yi, the firm needs to strike a balance among various offices and among practice groups when it comes to making new partners. "You want to avoid the situation where all promotions are coming from one office or one practice group." He says when an associate reaches a certain level, a review committee consisting of senior partners will evaluate the candidate and seek approval from both the practice group and the office where the candidate works.

The corporate-system firms have a partner-to-associate ratio of roughly one to four, meaning that three-quarters of associates will have to leave. In get-rich-quick China, such odds can be discouraging.

Peng Li, a former eighth-year associate at Jun He, tells a similar story to Zou and Zhong. "I wanted more responsibility with clients, and that was difficult for me to achieve at Jun He. The chance of making partner or counsel was small." Li eventually joined Global Law Offices as counsel and says he is not the only one who made the switch, adding that during his first three months at Global another lawyer from Jun He and two from King & Wood Mallesons also joined the Beijing-based firm.

Observers also point out a mismatch between firms’ expectation of junior partners and the preparation they receive as associates. "Salaried partners usually have a revenue target which is really hard for those promoted from associates to reach," says Chan.

The former Jun He lawyer who became a partner at another firm says the ability to develop clients is not evaluated enough during promotion. "They usually promote people [who are] good with paper work. These people often don't understand the concept of bringing in clients," he says.

King & Wood Mallesons' Zhang says it's inevitable for firms like his to lose associates to other competing firms. "The market is big enough for firms with strong brand names and individual lawyers with strong reputations to co-exist." He says that King & Wood's current evaluation methods, which assesses candidates from three aspects—seniority, performance and business development—is widely used by corporate-modeled firms and has proved to be effective in selecting the better candidates.

"Business development is part of our assessment, although unlike other firms it's not the entire case," Zhang says, adding that the associates' business development skills are evaluated by client feedback. "If the associate we sent is very good, the client will tell us that next time there is no need to send the partner, just send the associate; but if the associate doesn't understand what they want, the client will request the partner again."

Firms including King & Wood Mallesons, Fangda and Jun He all offer personal mentoring and secondment opportunities to eligible associates to help improve business development skills.  But he concedes that it’s true lawyers from team-system firms tend to show stronger individual ability. "Corporate-modeled firms are like greenhouses. Firmwide help is always available, whereas in non-corporate-modeled firms, you are more or less forced to do everything on your own."
"It's really hard for corporate-modeled firms to produce lawyers who are capable of surviving in the market on their own," says the former Jun He lawyer, adding that most of the lawyers leaving will go in-house because the switch from corporate-system firms to team-system firms tends to be difficult.

Li says he had a difficult time making the transition. "At the time, Global was in need of a Japan practice team, and I'm Japanese-speaking and had a few Japanese contacts, so it was a good match," he says. "But no matter what you do, there is going to be some time when you find yourself struggling for work."
This is also why the less entrepreneurial prefer the risk-free life of big firms. "When I left, some [associates] from my old firms also wanted to leave," says Li, who had also worked at Freshfields Bruckhaus Deringer. "But when they discovered what it is really like out there, they decided not to move after all."

Despite the hardship of finding clients on his own, Li says he made the right decision. So does Zou, who predicts that more young lawyers will strike out on their own. A graduate of Peking University's 2007 Master of Laws class, Zou says that at least one of her classmates is also starting a new firm.

"I'm grateful to my experiences at Jun He. But I want the promise of a future, and that promise is more reliable coming from myself."
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