Partners at Dentons and at Dacheng, China's largest law firm, have agreed to merge subject to approval of the Chinese regulator. The merged firm will, as is the current fashion, adopt a verein structure so although there'll be a single brand the firms will keep their finances separate.
Dacheng has 4,000 lawyers throughout China and the merger would create a truly massive 6,000 lawyer firm with offices in 50 countries (dwarfing Baker & McKenzie, currently the largest firm in the world with 4,200 lawyers). The deal is now in the hands of the Chinese regulators who will rule on the matter once they have
finished hacking the inboxes of every Dentons lawyer given it their close attention.
Foreign lawyers are generally not allowed to provide domestic legal advice in China, so the merger will provide Dentons' clients with a one stop shop in the region that other firms can't match. Very handy.
But it comes at the price of having to assuage the Chinese government. Lawyers in China have to swear an oath of allegiance to the Communist party. In 2012 a lawyer was jailed for "picking quarrels" and "provoking trouble". And the government is well known for its love of snooping through emails. Dentons' current client base might be just a little anxious at the thought that Beijing might be tempted to harvest its sensitive data and hand it over to Chinese competitors.
A spokeswoman for Dentons said that the firm would have sophisticated systems in place to ensure that "only lawyers and professionals who need to know the client's business" would be able to access the data. Hmm, should be fine as Dentons IT dept clearly bosses that of the Chinese government.
|China's IT department
|Dentons' IT department
But if the firms can pull it off, it will be a major coup that could show up the countless City law firms who rushed to Australian mergers in the (largely vain) hope that they would get a way into China.