A Chinese Lawyer’s Path to Creation of the World’s Largest Law Firm

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Summary: Peng Xuefeng’s journey began with cycling around Beijing to help his clients. Now, he will manage one of the largest law firms in the world.

Peng Xuefeng’s creation of the world’s largest law firm certainly had humble beginnings. In 1992, he rode his bicycle across Beijing as he met with his small clientele.

  

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According to Bloomberg, when China opened its doors to the world economy after thirty years of rule under Mao Zedong, Peng, now 53, left his government attorney job that paid him less than $16 per month. Dacheng Law Offices, one of the first private law firms in the country, was born. In just eight months, the firm had generated $56,000 worth of business.

Peng recalled, “In the summer of 1992, sometimes I had to cycle for more than 30 kilometers (19 miles) which is about half of Beijing city at that time. One day I had to appear in a court in the morning and later meet a client for some minor business far away. I cycled so hard to not be late.”

Peng had toyed with the idea of opening a firm for years. He explained, “To work for a government sponsored firm was an easy job at the time, and the pay wasn’t that bad compared to others. I wanted to give it a try when sensing a chance for a new era for the legal profession, as I didn’t want to miss that chance.”

Peng should certainly be glad he took that chance. Dacheng now has more than 4,000 attorneys and generated $400 million in revenue last year. By number of lawyers, Wikipedia notes that Dacheng is the tenth-largest law firm in the world. In January, the firm joined Dentons , a law firm with over 2,500 attorneys from Canada, France, and the United States. Dentons produces $1.3 billion in revenue.

Read about the merger here.

Peng is fighting for attorneys to be treated better in their profession. Community Party leaders are working to improve the rule of law, which means interference in both markets and courts. Peng is a member of the Chinese People’s Political Consultative Conference, and, at the annual meeting in March, he will raise the issue of attorney rights.

Peng commented, “Now it is important to make the agenda and guidelines into reality.” In just three years since taking office, President Xi Jinping has done away with labor camps, given citizens additional flexibility in filing suits against the government, and has introduced circuit courts to reduce intervention in the judiciary by local government officials. Unfortunately, disagreement is not taken well, and both academics and attorneys are sent to jail. In addition, the Communist Party still maintains shuanggui, which is a form of internal discipline that allows some to be held without the ability to contact outsiders before they are turned over to prosecutors.

Although things may slowly be changing, the defense of those who disagree is a risky undertaking. Those who are perceived as activists risk arrest.

Last June, three anti-corruption activists were jailed. Two were sentenced to the longest terms ever handed down for involvement in a movement that seeks transparency in official assets. Pu Zhiqiang, a rights attorney, was arrested that same month for disturbing public order and for attaining people’s personal information illegally.

Government officials are still torn between the rule of law and the rule of men. According to Peng, the legal profession was eradicated in the 1950s. It was reinstated in 1978, two years after the Cultural Revolution ended. Now, there are about 250,000 attorneys in China, which has a population of about 1.4 billion.

During Peng’s lifetime, attorneys were sent to labor camps for defending counterrevolutionaries. Peng acknowledges that lawyers, at times, need to be critical of the government, but that they must find a “middle ground.” Dacheng has prospered, but some other legal entities that advocate for human rights have had to close their doors.

In 2013, a Chinese news agency announced that 23,500 attorneys had been hired as legal advisors.

Peng commented that the arrests and detentions of activities, scholars, and human rights attorneys was inappropriate for “sensitive and extreme cases.” Peng added, “It’s a good thing that now leaders realize the rule of law is important, but noted that there is “a long way to go.”

Some of Dacheng’s clients include  some of the biggest state-owned enterprises, such as PetroChina Co. and China National Aviation Fuel.

China is currently in the process of removing preferential policies that lured foreign companies to the country in the 1980s, and is instead treating them the same as domestic ones. In fact, a survey conducted last year in an American Chamber of Commerce in China showed that over 60 percent of respondents felt less welcome. The year prior, only 41 percent felt less welcome.

Just last week, U.S chipmaker Qualcomm Inc. was fined $975 million by China for antitrust violations. Other companies, such as Microsoft and GlaxoSmithKline PLC, have also been investigated by the Chinese. Peng said, however, that foreign companies should “change their mindset” and take advantage of opportunities that remain in China, instead of blaming its government.

The deal between Dacheng and Dentons is structured in such a way that finances will be separate. This meant that Chinese authorities did not need to approve the deal. The firm will be known as Dentons except in Chinese, where it will be called “Beijing Dacheng Law Offices.” According to Reuters, the structure was necessary because China forbids foreign lawyers from practicing law.

The firms will, however, assimilate how firm attorneys are paid over time. Peng will serve as the chairman of the new firm’s global board, as well as its global advisory committee.

The merger was applauded by the heads of both Baker & McKenzie and DLA Piper, which have used similar structures to be named two of the largest law firms by attorney count.

Chinese attorneys will take on larger roles in international commerce, and will take part in shaping both regional and global institutions, according to Stuart Fuller, the global managing partner of King & Wood Mallesons , which was the first combination of a Western and Chinese firm.

Rudy Giuliani’s law firm may expand into China.

Peng recalled that many attorneys discarded his business card when he traveled to the United States years ago to learn management tips. This was because, at that time, American attorneys were not interested in working with Chinese lawyers.

The tables have turned, however. According to Peng, “But now it’s different, now they are chasing me wherever I go. The rapid economic development of the country makes you feel you’re living with dignity.”

Source: Bloomberg

Photo credit: international.ucla.edu