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March 19, 2007
Sheppard Mullin's China Saga Beginneth
Americans must be working from a script because yet another fellow is auditioning for the same part:
Chairman Guy Halgren of Sheppard, Mullin, Richter & Hampton on plans for a China office:
"It's a giant legal market and we're getting in the middle of it," said Chairman Guy Halgren, who announced last week that the firm had opened a Shanghai office as expected.
A giant legal market? China will never become a giant legal market. China means some additional business for American firms whose clients do business there, but, unlike shoe manufacturing, law will not grow to American-like proportions over time just because an impoverished population has finally made productive use of its human capital.
Chinese businesses -- the market law firms would hope to target -- are unreachable, given the prohibition against legal practice by foreigners. One must also doubt whether Chinese would consider a foreigner competent, as compared to a native-born and educated Chinese, to represent them in China. But even more significantly, Chinese businessmen consider law to be of little importance: it is an afterthought to be avoided always, unless it is impossible to do so. Ask a Chinese businessman to be proactive about legal matters and you will get a laugh.
And besides, Chinese do not and never will pay American rates. American companies in China generally do. (And I've heard more than one rumor of large discounts given by law firms to American clients in China because of the heated competition.) They, the Americans, appear to be Sheppard's target, just as they are everyone else's.
Tell me again how many American firms have offices in China now? 60? 90? (Ever increasing, it seems.) And selling legal services to a few thousand American multi-nationals with sufficient business. Just how many apples can you fit into one pie?
We represent almost every major film studio in the country, and studios are making major investments in China," Halgren said. The firm will ideally work on intellectual property issues related to distribution in Asia, particularly China, he said.
Okay, IP in China is a big deal for Americans. But it's not for Chinese. Is there a market for IP work for anyone but Americans? And lest we forget, the American clients a firm goes over with may jump ship, stranding attorneys with an office, little business and little idea how to market. Attorneys in China who read this know what I mean. So, then, quo vadis, Sheppard?
It appears as if the ex-Coudert people who landed at Sheppard have managed to convince the firm to open an office, perhaps simply to retain current clients. Given the Coudert contacts in Chinese government (if they still have them), perhaps Sheppard may even capture one or two large Chinese clients whose American business interests they might represent. But it doesn't shake up to be the giant legal market pie in the sky. Of course, I hope otherwise for the firm.
Mr. Holmgren stated:
We're going to establish ourselves and show we have the best product. Let the best person win.
To this curious expression of loyalty to market forces (whatever that may mean) where non-market forces reign (government influence, personal networks, a belief in fortune), one can only wish the best.
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