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China Practice

ImageAs China continues to enter the world market, more Wisconsin companies are looking at business ventures there. Those business activities mean opportunities for the law firms representing state manufacturers and entrepreneurs.

Many middle-market manufacturers are being drawn toward China as the larger multi-national corporations they supply establish overseas operations. The desire to protect patents and copyrights in China also is driving work in the area of intellectual property. And a growing number of business people are seeking assistance with drafting joint ventures in that market.

Wisconsin-based law firms are responding to their clients’ needs for legal services by allying with other firms or opening their own offices. Establishing relationships with Chinese law firms or U.S. firms that already have offices in China is the approach most local law firms are taking. However, one Milwaukee firm recently opened its own office.

"There are a lot of companies in Wisconsin that realize they need to be in China or they need to learn more about China."

Christopher B. Noyes,
Godfrey & Kahn, s.c.

Client-Driven Practice

Christopher B. Noyes was involved with Godfrey & Kahn s.c.’s recent efforts to open an office in Shanghai. Noyes said the firm’s interest in opening an office was driven by the needs of the middle-market companies it serves.

“There are a lot of companies in Wis-consin that realize they need to be in China or they need to learn more about China,” Noyes told the Wisconsin Law Journal.

Daniel Brink, who chairs the Inter-national Department at Reinhart Boerner Van Deuren s.c., became involved with international law in 1988 when he went to England and practiced for a year. When he returned to the United States, Brink focused on middle-market companies and that drew him into the Asian arena, where he has helped clients in Japan, China and Taiwan.

“A lot of it is driven by our client base,” Brink explained.

Most of that work involves clients going over to form wholly-owned foreign enterprises, joint ventures, or to engage in sales and distribution.

Wisconsin’s largest law firm, Foley & Lardner LLP, has dealt with clients seeking intellectual property protection and enforcement, international contract agreements, investment structures and tax planning. Sharon Barner heads the firm’s Intellectual Law Department. Barner said the firm has been representing some clients who have been in China for 20 years.

"We recognize that a lot of the Chinese legal market is about relationships with the Chinese lawyers and business people."

Sharon Barner,
Foley & Lardner LLP

“The amount of growth that has gone on there has rocketed, but it has been going on for a long time,” Barner said during an interview.

Allying with Other Firms

Wisconsin law firms are taking a variety of approaches to help their clients in China. In 2003, Milwaukee-based Michael Best & Friedrich LLP teamed up with three other law firms to form its China Alliance. At the time, two of the firms already had offices, one in Beijing and the other in Shanghai.

John R. Sapp, who was the firm’s managing partner at the time and who now serves on the alliance board, said the four firms had worked together through a worldwide legal network, Lex Mundi. Having worked together for a number of years was essential to setting up a relationship where the four firms serve clients through the two offices.

“I think it would be very difficult to just pick four law firms that didn’t have a strong prior relationship and put them into a partnership,” Sapp said during a recent interview.

He noted that the Ministry of Justice’s restrictions on U.S. law firms opening offices in China made forming an alliance with two firms that already had offices very attractive.

Office Approval

Given that the practice of law in China is a restricted industry, Noyes acknowledged that it can be difficult to get a license to open an office. Godfrey & Kahn began looking at the idea of opening an office in 2004. In March 2005, the firm filed an application and nine months later it was approved.

Godfrey & Kahn received help during the application process from a firm in China that it had formed a relationship with through Terra Lex, another international group of law firms. Angela Rogers, who will head up the new Shanghai office, explained that they had to submit certifications for all of the firm’s 190 lawyers in the United States, showing that there were no ethics violations or criminal problems.

"Anyone who thinks the China thing is just a flash in the pan and that this will just go away is being unrealistic."

John R. Sapp
Michael Best & Friedrich LLP

Rogers worked with the firm for nearly five years before moving to China with her family in 2002. When the firm started planning for the new office, Noyes touched base with Rogers, who was living in Shanghai with her husband, and she agreed to run the office.

Thomas P. Gehl, who helps von Briesen & Roper’s clients in China, said he believes working with established firms in China is a better approach than opening an office. Gehl has been involved in China since the early 1990s when he was working for Kohler Co., which was doing about half of its production internationally.

Throughout the years, Gehl has met with law firms in different regions of China and formed connections to help clients. Those affiliations are now helping as he seeks to meet the needs of clients at von Briesen.

“Our concept is to identify the best person to do the job, so we have not set up a branch in China,” Gehl said.

Relationships Key to Success

Everyone who was interviewed agreed that the biggest key to helping clients succeed in the China market was recognizing the importance of relationships.

“You have to have the relationships with the people you are trying to accomplish things with in the government and in the private sector to be able to be effective,” Gehl explained. “You need to know who has the right influence and abilities in a particular practice field to accomplish a client’s goals.”

He stressed the importance of working with established firms that have developed those essential relationships and whose attorneys have ties to the country.

As an example, Gehl said, “You’d like to use this attorney whose father had been the mayor of Beijing, his grandfather had been a general in the Red Army. This is going to make a difference when trying to accomplish your goals. Where otherwise you might be stuck for years going through the bureaucracy, you can sidestep that and gain direct access to the people who make the decisions.”

Noyes agreed about the importance relationships play in helping clients achieve their goals.

“We will help directly were we can,” he said. “But sometimes it will require us to partner with a Chinese law firm, particularly where there are governmental approvals or regulatory agencies that need to be dealt with, where you will need someone who has connections with the local government or the central government.”

Recognizing the important role relationships play when it comes to getting things done in China, Barner said that Foley has held off opening a branch there in favor of the alliances it has formed with established firms. The Milwaukee-based firm also has hired some Chinese nationals to work in its U.S. offices and help facilitate efforts in China.

“We recognize that a lot of the Chinese legal market is about relationships with the Chinese lawyers and business people, so we will be building upon our already-existing relationships to make sure that we have well-founded contacts and avenues to help our clients,” Barner said.

Michael Best also has recognized the importance relationships and understanding the system. To that end, Sapp said, its China Alliance has recently hired Charles W. Freeman III, the United States’ former chief trade negotiator to China.

Know Your Partners

Several lawyers warned about the dangers of forming relationships with firms without carefully checking them out. They stressed the importance of making sure the firms had the kinds of relationships that would help clients move through the bureaucracy. They also emphasized the importance of continually nurturing those alliances to ensure that the firm’s legal work is handled in a timely fashion with the necessary amount of effort.

Brink noted that the firms Reinhart works with in China are firms he has known through his involvement in Interlaw, a worldwide law firm network. He has been able to see how those firms work and ensure that they will meet the needs of his clients. Failure to develop those working relationships can lead to problems when it comes to prioritizing work, billing and even ensuring proper translation of documents.

“If you don’t have the kinds of relationships that I’m talking about, it can be a disaster because your clients will look back to you as the one who introduced them,” Brink said.

Business opportunities will continue to grow as China’s middle class increases and the country develops as a nation of consumers. However, the opportunities to provide legal services are not just a one-way street. China also is showing tremendous growth in the amount of money it is investing outside the country.

“The other opportunity we ultimately see is that Chinese companies will look to the U.S. to sell their products,” Noyes said.

For now, there is concensus about the tremendous business opportunities for clients and that growth is expected to continue for years to come. That also means increased opportunities for the law firms helping those businesses with their overseas needs.

Sapp observed, “Anyone who thinks the China thing is just a flash in the pan and that this will just go away is being unrealistic.”

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