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Preparing for China

News Update

The slowing China legal market gets its own RollonFriday as irreverent legal website Totoo
lifts the lid on life at the top firms active in China.

"When the market goes up, you are [the firm's] money-making machine," the comment from Lawsman starts. "You will be exhausted, but they will keep you well-oiled and well-fed. But once the market is seizing up, you will be cast aside as a worn-out tool even though you still work efficiently."

It is an ominous warning and one that reflects the sentiments of so many dime-a-dozen comments on legal blogs such as Above the Law, Greedy Associates and RollonFriday. Young lawyers in the US and UK are a vociferous, demanding lot. And now, it seems, young Chinese lawyers are doing the same.

Lawsman's comment was posted on the Chinese-language Totoo site, an internet message board whose growing popularity is a sign of how China's legal profession increasingly mirrors those of Western economies, warts and all.

Though perhaps somewhat less vituperative, the gossipy tone of Totoo will be familiar to anyone who has visited equivalent Anglo-Saxon sites. A poster warns that one of China's largest law firms is "famous for being stingy" when it comes to salaries. Elsewhere on the site, a leading Beijing firm is described as a "fish in troubled waters" following its announcement of pay cuts. One US law firm's Shanghai office is said to be "good if you like American culture." If not, then "it's just rubbish".

Totoo's origins are unclear, and the site itself contains no indication of who owns or operates it. But China's legal profession has certainly taken notice.

Kirk Tong, a partner at Jun He Law Offices, one of Beijing's top firms, says he first heard of Totoo about a year ago. While the site irritates many of his partners, Tong himself is more ambivalent.

"Much of the information on the site is not very precise," he says. "But, even with its misinformation, it's a channel for law students and other legal personnel to learn about firms."

Among the misinformation, Tong says, are posts claiming Jun He has laid off lawyers. He says the firm has not let anyone go, but he acknowledges the truth of posts detailing the firm's recently instituted four-day work week and a 20% pay reduction for junior lawyers who fail to meet their original billing targets.

Layoffs and other cost-cutting measures are hot topics on Totoo these days, an indication of how quickly the red-hot China legal market of just last year has cooled. A number of international firms that were eagerly expanding in China before have lately cropped up in the layoff discussions.

Chinese law graduates without overseas training or work are typically hired by large UK and US firms as "legal consultants" with salaries often starting well below $20,000 (£13,500). Many international firms have greatly expanded their hiring of such Chinese lawyers in recent years, as the profit margin on their billable work is far higher than for expatriate associates. Some are now thinning those ranks.

Layoffs at O'Melveny & Myers' China offices spurred numerous topics on Totoo in March, with posters pegging the number let go at 17 lawyers and staff in Shanghai and 13 in Beijing. Kurt Berney, O'Melveny's Shanghai office head, says the Totoo numbers seem a bit off but he confirms the firm conducted layoffs in China.

"They were economic cuts," says Berney. "We are predominantly a transactional firm in Asia and transactions are down." He says O'Melveny still has more than 100 lawyers in the China group.

Paul Hastings Janofsky & Walker is another US firm that is frequently named on Totoo, with more than 20 lawyers said to have been let go from the firm's Shanghai office in December. One poster said Paul Hastings had staffed up over the past couple of years, adding some 40 legal consultants to its Shanghai office, but that there was never enough work for more than a fraction of those hired.

Mitchell Dudek, the head of Paul Hastings' Shanghai office, declined to comment. Both Paul Hastings and O'Melveny announced substantial US layoffs in March.

Beyond layoffs and the poor economy, a large number of posts inquire about work conditions at various international and Chinese firms. Law firm salaries generate much interest, too, though perhaps less than a year ago, when competition among international and Chinese firms for the best local talent was steadily ratcheting pay upward and pushing the lateral recruitment market into overdrive.

Berney says the rise of Totoo in China was perhaps inevitable. "The legal industry in China is just getting bigger," he says. "People want to communicate with each other about it."

And if the buzz is not always good, at least it's buzz. "We're actually flattered that we're so often on that site," says Tong. "It means we're seen as a leader."

 

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