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.
 
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Comments

Anonymous 23 January 15 06:37

Like KWMSJBXYZABC it is likely that there will be no sharing of IT systems, financial and other data. It is likely that there will be Decheng sorting out corruption trials in China and Dentons doing everything else everywhere else. Ot the 600 laywers, 4000 are in China.

Anonymous 23 January 15 10:49

IT snooping may be the least of Dentons clients' problems. In a Chinese business of over 6,000 lawyers there is inevitably going to be some chance that one or more is working surreptitiously for the Chinese Government, whether for security or business secret purposes. Something similar will be true for US and UK lawyers at Dentons, no doubt one or two will be tapped on the shoulder and asked by a man in grey if they 'are a patriot' and asked to pass on any interesting info they can pick up about what is going on inside the Chinese government/army/SOEs via Dacheng's contacts in China.
China and the West are quietly sparring behind the scenes, a merger like this is an opportunity for both sides to see what they can find.

Anonymous 23 January 15 11:55

Can. We. PLEASE. Stop calling this the "biggest law firm in the world"?!

Saying they're the biggest because they have lots of lawyers is like saying Foxconn is the biggest tech company in the world because they have the most employees.

The combined revenue of both firms based on their most recent published results is around $700m. That is barely enough to scrape into the world's top 50 firms by revenue.... And then you have those 6,000 lawyers who each want a share of that revenue, so what is the PPEP going to look like? "Here's your twenty quid, and yours, and yours..."

Anonymous 23 January 15 12:08

maybe, for some people, measuring a law firm by its employees rather than its PEP makes sense?! Not everyone is all about the money!

Anonymous 23 January 15 13:20

We're talking about international law firms, not a pro bono advice centre - it clearly is all about the money. Let me guess, everyone here got into law to save the world...?

Anonymous 23 January 15 15:35

"Global, 11 August 2014 - Baker & McKenzie, the world's premier global law firm, has announced record global revenues for the fiscal year ended 30 June 2014 (FY14) of US$2.54 billion, an increase of 5% on FY13. The Firm is the world's largest by revenues, markets and headcount."

Anonymous 24 January 15 00:30

Not sure where you are getting your revenue figures from, Dentons by itself posted revenues of £829.7m for 13/14 according to Legal Week. From a quick search it looks like the combined firm will have revenues of c£1bn/c$1.5bn if you add their latest revenue figures together - a bit more than $700m then...

Anonymous 24 January 15 02:03

A lot of petty xenophobia here against the Chinese, both in the article and in the comments.

Because no western government ever conducts industrial espionage, right?

Anonymous 24 January 15 17:08

Yeah, Western governments are bad - but the Chinese government is even worse. And corruption is (even) more widespread. I don't think anyone has asserted that the West is perfect.

Anonymous 24 January 15 19:48

A lot of sniping on here. Of course the headcount is only one measure, and each of those several thousand Chinese lawyers does not 'generate' as much in fees as us London 'whizz kids' (er...expensive pretenders to our masters thrones). Give it a few years, when everyone wishes they had this reach, and then judge. In my view, a confident move from one of the few firms showing initiative globally. If you build it..etc.

Anonymous 25 January 15 18:10

If you don't make your target or start acting up will you get run over by a tank though?