Linklaters is set to make its long-awaited move into Chinese law with a team of almost 20 lawyers breaking off to set up a new ‘best friends’ firm in the Shanghai Free Trade Zone (FTZ).

Three partners and 16 lawyers are leaving Linklaters’ China offices to set up the new independent firm, which will operate alongside Linklaters on a ‘best friends’ basis, an agreement that is expected to be finalised in the next two to three months.

Under Chinese regulations, international law firms are only permitted to open representative offices in the country, and are restricted from offering Chinese law advice. However, the Shanghai FTZ scheme, which was launched in 2013, enables foreign firms to offer Chinese law advice via an association with a local firm or by setting up an independent practice in the FTZ.

During 2014 and 2015, Linklaters explored the possibility of tying up with an existing Chinese firm, but subsequently made the decision to push ahead with the ‘greenfield’ option of setting up its own independent firm, at its partner conference in Berlin last year.

Linklaters managing partner Gideon Moore said: “We are up and running now – we have got all of the necessary authorisations and we have got a group of partners who have moved over into the new setup.

“We are now able to say to clients: if the matter requires PRC law capability, why don’t we use this firm?

“Our Chinese lawyers are really pleased about the prospects of being able to go back and do what they were trained to do, which is deliver Chinese law. Our clients benefit from the fact that they have been trained in the Linklaters way and understand the expectations of international clients, so you are getting the best of both worlds.”

Linklaters China COO Chris Holt added: “We continue to pursue our aspiration to provide clients with access to a dedicated PRC law capability in China. Once the detailed discussions have concluded we will officially launch the best friends relationship. We hope to do this in the next two to three months.

“We expect to see stable and sustainable growth in China over the long term. Market shifts have indicated that outbound work and high-end domestic transactions will become ever more important for our business. We believe that being able to offer integrated Chinese and international law advice will help us to protect our competitive advantage both in China and globally.”

Other firms with a presence in the Shanghai FTZ include Baker McKenzie, which became the first international firm to make such a move in 2015 by agreeing a joint operation with Chinese firm FenXun Partners.

Holman Fenwick Willan entered into an association with Chinese firm Wintell & Co last year, while Hogan Lovells became the third firm to take advantage of the new regulations after agreeing a formal association with FTZ firm Fidelity last October.

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