Two high-ranking partners of US and UK law firms have joined local Chinese firms recently, Clifford Chance capital markets partner Rupert Li, who moved to Beijing’s King & Wood and Lovells Beijing Managing Partner Robert Lewis who joined Shanghai’s Albright Law Offices. Formerly Chief Representative of Clifford Chance’s Beijing office and member of the firm’s Partnership Council, Li will join King & Wood as International Managing Partner and will lead their efforts to expand its international law capability with a focus on Hong Kong. “My entire career has been spent somewhere on the periphery of some far-flung legal empire,” says Li, but now “I’m suddenly at the center.”

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Questions have been raised about the use of the counsel position as a promotion for associate lawyers including whether or not these promotions are good for the lawyer, firm and client?

Some recently promoted counsel are David Lam of Clifford Chance, Gerhard Radtke of Davis Polk, Jenny Liu of DLA Piper, Karen Yan of Latham & Watkins and Nicholas Song of Vinson & Elkins. Firms believe that they can use the counsel position to recognize an associate’s outstanding performance and contribution to the firm.

Jay Cuclis, a member of Vinson & Elkins, said, “In our firm, counsel promotion is the management committee’s recognition of specific senior associates who have distinguished themselves with expertise in a certain area of the law, and have demonstrated excellence in practicing law. It’s a compliment to their skill and capability.” So does this mean that being promoted to counsel can be a part of the partner track or is it a final destination within a firm?

Every firm classifies the career potential and responsibilities of the counsel role differently. In some cases it may be used as a stepping-stone to partnership and in others it may be an alternative to partnership.

At Vinson & Elkins, any counsel could be elevated to partner at any time. Cuclis said, “Counsel is not necessarily an intervening step in the partner promotion process, but rather a designation for certain associates to play a greater role.”

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Orrick, Herrington & Sutcliffe LLP has hired Maurice Hoo as a partner and co-head of the firm’s global Private Equity practice. Hoo was a partner at Paul Hastings for five years before this and had headed the China private equity practice there. He brings with him a client base comprised of some of the world’s top equity funds and financial institutions that he helped with in investments in China and other parts of Asia. He also currently serves as counsel to the China Venture Capital Association and the China Real Estate Developers and Investors Association.

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Lovells Beijing managing partner Robert Lewis has left the firm just before the firm’s impending merger with Hogan & Hartson to join Shanghai-based AllBright Law Offices as a senior legal consultant. Foreign lawyers are legally not allowed to be partners at domestic law firms in China. He will continue to interact with his former Lovells co-workers through the Sino-Global Legal Alliance (SGLA), a referral group he helped establish three years ago. SGLA is comprised of 13 Chinese firms along with Lovells.

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Lovells has promoted 21 new partners across its offices, the largest number of its lawyers promoted to partner since 2007 when it made up 13 lawyers to partner, before it rebrands and merges with US firm Hogan & Hartson in May. Six of the new partners are from Asia and the Middle East. The new partners will be officially promoted on the day that Hogan Lovells debuts, and they increase the total partnership to over 800 partners.

Hogan Lovells’ new partners in Asia & Middle East

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Steptoe & Johnson LLP, a Washington-based international trade law firm, has established its first foothold in Asia with the opening of an office in Beijing. While the firm has worked with China extensively in the past, they have not had a branch there until now. The firm believes that the new office will allow it to better serve its Chinese clients along with multinationals doing business in the region. The office will be managed by Eric Emerson, a partner in the firm’s International Trade and China practices, and will advise on anti-corruption (FCPA) issues, export control and sanctions work, litigation and arbitration for Chinese clients engaged in cross-border litigation or dispute resolution, regulatory advice and counseling to non-Chinese companies entering, and doing business in the Chinese market.

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Lovells has expanded its presence in Asian though its associated law firm Al-Yaqoub Attorneys & Legal Advisers. AYALA has opened up a branch in Jeddah to complement its office in Riyadh. Lovells now is one of the few international law firms to have an office in both lf those two major Saudi Arabian city, and it hopes that the new office will give it a strong base to work with Saudi clients and develop new relationships in the largest Middle Eastern market.

Crispin Rapinet, the firm’s regional managing partner for Asia and the Middle East, commented, “Jeddah has historically been the commercial centre - many of Saudi’s largest corporations are headquartered there - and Riyadh the capital and banking hub. As one of the few international firms to have offices in both, we are significantly well-placed to take advantage of the key economic activity in both Eastern and Western Saudi Arabia.”

London and U.S.-based firms with offices in Asia brought up partners - albeit at a slower pace than in 2008 - in a variety of practice areas in recent months, with corporate lawyers in Tokyo seeing the most movement.

In mid-October, Clifford Chance shocked the market with the promotion of 15 senior associates across Asia showing it’s commitment to the region.  According to Managing Partner Peter Charlton, despite a notoriously difficult year for firms across the board, the Magic Circle hopes to reward the hard work of its attorneys and retain and attract good talent.

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The partners at Hogan & Hartson have voted to merge with Lovells. With the successful vote, the two firms will become Hogan Lovells from May 1, 2010, forming a top 10 global practice with 2,500 lawyers and revenues of around $1.8 billion.

Lovells managing partner David Harris and Hogan chairman Warren Gorrell will become co-chief executives till 2014. Lovells senior partner John Young and Hogan corporate and project finance partner Claudette Christian will take the role of co-chairman.

Gorrell and Harris have stated that the new firm will pioneer a new kind of legal practice, one in which the global reach of magic circle firms is combined with a more diverse practice coverage and a greater industry focus. Besides its banking and corporate practices, the Hogan Lovells will be strong in the regulatory, antitrust, intellectual property, real estate and litigation areas.

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Davis Polk & Wardwell LLP has represented JP Morgan Securities Ltd as sole dealer manager in regards to a cash tender offer by Noble Group Limited to acquire up to approximately US$488 million of its outstanding US$680 million 6.625% senior notes due 2015. The firm’s team was led by Hong Kong-based partner William F. Barron and partner Eugene C. Gregor of the Tokyo office.

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Clifford Chance has assisted NWS Holdings Limited on its sale of a controlling share, valued at HK$1.82 billion, in Taifook Securities Group Limited to Hai Tong (HK) Financial Holdings Limited. The sale will prompt a mandatory general offer for Taifook’s remaining shares under the Hong Kong Takeovers Code. This is thought to be one of the first takeovers by a Mainland securities company of a Hong Kong securities company. Hong Kong partner Cherry Chan led the firm’s advisory team.

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DLA Piper has advised GGV Capital in relation to its US$15 million investment in China’s leading travel search engine, Qunar.com. The funds will used to develop the company’s brand and other market activities. GGV Capital is one of the first venture capital firms to fund start-ups in China. Beijing-based partner Rocky Lee advised.

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The Hogan Lovells model will maintain separate profit pools and accounting years, even with integrated governance and remuneration.  The proposed structure for the merger between Lovells and Hogan & Hartson would have the firms maintain separate partnerships in the US and UK/international.  It would also likely include an umbrella organization, such as a Swiss verein or co-operative, to allow for firmwide governance, branding and cost-sharing.

The two firms will retain their separate accounting models: Hogan’s December year-end and cash-accounting model, and Lovells’s April year-end and accrual accounting.  While the model will have the firms maintain distinct partnerships and would block direct profit-sharing, the firms will have similar remuneration policies, with Lovells moving towards Hogan’s contribution-based model for partner pay.

85% of profits for equity partners will be allocated on a points-based system, covering sustainable financial and non-financial contribution to the firm over a medium-term basis, and the points allocations will be reviewed every two years.

There would be a 15% bonus pool designed to clearly recognize short-term contribution over a 12-month period. The bonus pool, which will be awarded on the same criteria as the equity points, will also be reviewed annually.

The range of equity points has yet to be decided, but it will probably be wider than the 2:1 range used in Lovells’ current partnership, a modified 10-year lockstep ranging from 30 to 60 points.

There will also be some minor changes to Hogan’s current pay model.

Lovells partners will see changes being phased in over a four-year period from May 2010, with the lockstep system in place for an interim two-year period as new equity points are decided.  The one-year bonus pool could be set up by the end of 2010.

Russia is continuing to be a challenging market for law firms trying to keep an office there with an M&A market that has had deal volumes almost halve over the past year.

Simmons & Simmons became the first major international firm to pull out of Russia last month, and partners at other firms have also admitted that cracking Moscow is a lot more difficult than originally thought.

One Moscow-based partner at a top 10 UK law firm said: “I have a lot of respect for Simmons, but it is getting harder and harder to break into the Moscow market.”

While other firms have not yet exited the market altogether, most firms, including Clifford Chance, Allen & Overy, White & Case and Denton Wilde Sapte, have reduced headcount in Russia over the last year.

Data gathered by Mergermarket for Legal Week demonstrate the M&A drought, with 227 deals with a total value of E22.2bn in the year from November 1, 2008 to October 31, 2009, as compared to 419 deals, worth a total of E80.7bn - the previous year.

However, many partners believe that the market is improving, with a number of firms even hoping on opening an office in Moscow, including SJ Berwin and Am Law 100 firm King & Spalding.

Oxana Balayan, Lovells Moscow managing partner, commented: “The market is really picking up, but with a lot of pressure on pricing it may be difficult for some law firms’ Moscow operations to remain profitable.”