Chinese Law Firms Opening In The US

Law Firm News

For many years, U.S. law firms have been rushing into China, investing people and resources to help clients on the ground there.

Now, a Chinese firm is mimicking their strategy -- opening a representative office in the United States. This year, Guangzhou-based Alpha & Leader, with more than 60 lawyers, planted its flag in Los Angeles.

The firm is among a handful from China that have set up shop here -- such as King & Wood in Silicon Valley and Jun He in New York City -- likely harbingers as Chinese law firms mature and expand internationally.

"I think we're going to see more Chinese firms here -- they want to have a footprint here," said Robert Allan, the managing partner of Alpha & Leader's Los Angeles office.

For now, the advantages for Alpha of having its five-lawyer office here are mostly practical, he said. They also mirror what American firms say about opening in Asia: It's helpful to have someone based in the distant time zone, who literally speaks the client's language.

Allan is a Canadian-trained lawyer who has been a solo practitioner in the U.S. since 1985. In 2003, a client suggested that Allan meet one of the client's Chinese lawyers. Through an interpreter, he connected with Wesley Pan, now the senior partner in Alpha & Leader's China office. The two started working together under a loose alliance called the USA China Law Group. This summer, they formalized the relationship under the Alpha & Leader name, and Allan now devotes most of his time to the firm because, he says, the name says it all.

"We're first and first. You can't beat that."

He and Pan formed an alliance that resulted this summer in the L.A. representative office.

The firm targets much of its practice on a specialized niche: the purchase and sale of non-performing loans -- loans that are in or near default. As the Chinese government has transferred NPLs from state-owned banks to asset management companies over the past decade, it opened the door for foreign investors. Those foreign investors were looking to invest in China's development, but were limited by the Chinese government's currency restrictions and rules governing foreign ownership of property, Allan explained.

The legal work includes locating a loan, doing the due diligence on it, and handling the actual transaction. The firm's clients include Chinese banks and asset management companies as well as purchasers such as Citigroup, Bank of America and Goldman Sachs.

Allan said it was Pan who realized that a firm could find a lot of work in that specific area.

"Wesley's theory really struck me -- I thought it was an astute observation," Allan said.

Alpha & Leader has been involved in some aspect of more than 50 percent of the transactions involving non-performing loans in China, Allan said. Its competitors are other Chinese firms and American-trained lawyers such as Howard Chao, the head of O'Melveny & Myers' Asia practice.

But Chao said he wasn't familiar with Alpha, and dismissed the importance of a non-performing-loan practice for firms like his.

"The NPL practice in China has not blossomed the way some people thought it would," he said "The market for those deals has been decidedly smaller and local, domestic. There haven't been large-sized transactions anymore."

Chao attributes that, in part, to the policy of the Chinese government that encourages smaller, domestic bidders. There's so much liquidity in the Chinese domestic market that they don't need foreign investors in that sector, he said.

But, within China, Alpha & Leader is known as the go-to counsel on NPL portfolios, said Jinshu "John" Zhang, the head of the China practice at Greenberg Traurig, a firm that has sponsored Alpha attorneys to work in its L.A. office for a summer.

"In connection with the sale of NPL portfolios, they have worked with quite a few major I-banking houses," Zhang added.

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