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China's Great Leap In-House

By Vivia Chen
July 31, 2006

Alibaba has another measure of success: It now has 14 lawyers among its 2000-plus employees. And the company plans to add at least another six in-house counsel, including a new chief legal officer, in the next year or so. Most of the new hires are Chinese bred and educated.

While a dozen-plus lawyers for a company with $200 million in revenue is hardly startling, consider this: Just over a decade ago, in-house lawyers in China were almost nonexistent; most legal needs were outsourced to firms. Alibaba's burgeoning legal department is an example of how much has changed in the in-house bar in just a few years. It also underscores the point that companies in China ' both domestic and multinational ' are no longer rushing to costly international law firms for help every time a question comes up. Increasingly, they're grooming their own legal team to compete in the heated China market. 'We literally review thousands of contracts a year,' says Peter Schloss, the chief legal officer of TOM Online Inc., a Beijing-based wireless Internet provider, which has 10 in-house lawyers. 'We could double our legal department. We're that busy.'

What's igniting this phenomenon is China's business boom. In 2005, the country's gross domestic product was $1.79 trillion, making it the sixth-largest economy in the world. In 2006, China is expected to land in fourth place, surpassing the economies of the United Kingdom and France. What's more, China is cranking out more laws and regulations to govern all that business activity, especially in the media and Internet sector. 'We spend a lot of time just answering inquiries from governmental authorities,' says Joseph Tsai, Alibaba's CFO and acting general counsel.

The result is an unprecedented demand for talent. 'We see a huge increase in in-house jobs,' says Hong Kong-based recruiter Andrew Pringle of Major, Lindsey & Africa. 'The market is red-hot.' So hot that Pringle reports at least 15 to 20 openings in China at any given time. Besides the manufacturing and financial sector, Pringle sees demand for in-house lawyers in banking, private equity, hedge funds and distressed debt. 'Everyone ' law firms and companies ' is looking for a Mandarin-speaking securities lawyer,' Pringle says. 'It's a headhunter's nightmare.'

But even though multinationals and elite Chinese companies are eager to fill these jobs, many businesses are trying to decide which skill set best fits their needs. The legal talent pool in China has never been stronger: Bilingual lawyers with top law firm experience, particularly those Westerners who landed in China or Hong Kong in the early '90s, are now seasoned dealmakers, ripe for top in-house legal jobs. At the same time, there's a whole new generation of China-educated lawyers versed in the ways of capitalism (including some who have garnered experience with Western law firms and companies).

But there are pros and cons to hiring each group. While, generally speaking, bilingual Western lawyers often have the requisite communication skills and international experience, few can claim to have the real inside track to Chinese bureaucracy. And while the Chinese bar is young, many of these lawyers already know how to talk their way through the bureaucracy and how to obtain the myriad licenses necessary for businesses to operate in the country. However, some of the Chinese-educated lawyers lack international experience ' a drawback for companies headquarted in Europe and the United States.

For now, bilingual American lawyers with international law firm experience are the hot tickets for U.S. companies, according to interviews with more than a dozen in-house lawyers in China. St. Louis-based Emerson Electric Co.'s Asia Pacific division in Hong Kong is headed by American lawyer Sara Yang Bosco. A former partner at Baker & McKenzie's Hong Kong office, Bosco left the firm for a partnership at Perkins Coie before landing at Emerson, a longtime client, last year. Born, raised and schooled in Indiana, Bosco is a midwesterner of Chinese descent. And though she speaks and writes Chinese, Bosco says, 'Culturally, my perspective is 100 percent American.'

Another American lawyer, Kenneth Tung, a Coudert Brothers alum, serves as the legal affairs director of Pacific Asia for The Goodyear Tire & Rubber Co. in Shanghai. Just 2 months ago, Tung was the assistant general counsel of Honeywell International Inc.'s transportation and specialty materials division in the region; before that, he was GC of Eastman Kodak Co.'s China operation. Yet another American lawyer and Coudert alum, Albert Wang, acts as the legal director, China, of Dell (China) Co. Limited.

Big U.S. corporations favor these lawyers because they speak the same language ' literally and figuratively. Tung says that many American corporations want to send an attorney over from the United States who has worked with the company for years and already carries a high profile within the business.


Vivia Chen writes for Corporate Counsel magazine, an ALM affiliate publication of The China Trade Law Report.

Alibaba has another measure of success: It now has 14 lawyers among its 2000-plus employees. And the company plans to add at least another six in-house counsel, including a new chief legal officer, in the next year or so. Most of the new hires are Chinese bred and educated.

While a dozen-plus lawyers for a company with $200 million in revenue is hardly startling, consider this: Just over a decade ago, in-house lawyers in China were almost nonexistent; most legal needs were outsourced to firms. Alibaba's burgeoning legal department is an example of how much has changed in the in-house bar in just a few years. It also underscores the point that companies in China ' both domestic and multinational ' are no longer rushing to costly international law firms for help every time a question comes up. Increasingly, they're grooming their own legal team to compete in the heated China market. 'We literally review thousands of contracts a year,' says Peter Schloss, the chief legal officer of TOM Online Inc., a Beijing-based wireless Internet provider, which has 10 in-house lawyers. 'We could double our legal department. We're that busy.'

What's igniting this phenomenon is China's business boom. In 2005, the country's gross domestic product was $1.79 trillion, making it the sixth-largest economy in the world. In 2006, China is expected to land in fourth place, surpassing the economies of the United Kingdom and France. What's more, China is cranking out more laws and regulations to govern all that business activity, especially in the media and Internet sector. 'We spend a lot of time just answering inquiries from governmental authorities,' says Joseph Tsai, Alibaba's CFO and acting general counsel.

The result is an unprecedented demand for talent. 'We see a huge increase in in-house jobs,' says Hong Kong-based recruiter Andrew Pringle of Major, Lindsey & Africa. 'The market is red-hot.' So hot that Pringle reports at least 15 to 20 openings in China at any given time. Besides the manufacturing and financial sector, Pringle sees demand for in-house lawyers in banking, private equity, hedge funds and distressed debt. 'Everyone ' law firms and companies ' is looking for a Mandarin-speaking securities lawyer,' Pringle says. 'It's a headhunter's nightmare.'

But even though multinationals and elite Chinese companies are eager to fill these jobs, many businesses are trying to decide which skill set best fits their needs. The legal talent pool in China has never been stronger: Bilingual lawyers with top law firm experience, particularly those Westerners who landed in China or Hong Kong in the early '90s, are now seasoned dealmakers, ripe for top in-house legal jobs. At the same time, there's a whole new generation of China-educated lawyers versed in the ways of capitalism (including some who have garnered experience with Western law firms and companies).

But there are pros and cons to hiring each group. While, generally speaking, bilingual Western lawyers often have the requisite communication skills and international experience, few can claim to have the real inside track to Chinese bureaucracy. And while the Chinese bar is young, many of these lawyers already know how to talk their way through the bureaucracy and how to obtain the myriad licenses necessary for businesses to operate in the country. However, some of the Chinese-educated lawyers lack international experience ' a drawback for companies headquarted in Europe and the United States.

For now, bilingual American lawyers with international law firm experience are the hot tickets for U.S. companies, according to interviews with more than a dozen in-house lawyers in China. St. Louis-based Emerson Electric Co.'s Asia Pacific division in Hong Kong is headed by American lawyer Sara Yang Bosco. A former partner at Baker & McKenzie's Hong Kong office, Bosco left the firm for a partnership at Perkins Coie before landing at Emerson, a longtime client, last year. Born, raised and schooled in Indiana, Bosco is a midwesterner of Chinese descent. And though she speaks and writes Chinese, Bosco says, 'Culturally, my perspective is 100 percent American.'

Another American lawyer, Kenneth Tung, a Coudert Brothers alum, serves as the legal affairs director of Pacific Asia for The Goodyear Tire & Rubber Co. in Shanghai. Just 2 months ago, Tung was the assistant general counsel of Honeywell International Inc.'s transportation and specialty materials division in the region; before that, he was GC of Eastman Kodak Co.'s China operation. Yet another American lawyer and Coudert alum, Albert Wang, acts as the legal director, China, of Dell (China) Co. Limited.

Big U.S. corporations favor these lawyers because they speak the same language ' literally and figuratively. Tung says that many American corporations want to send an attorney over from the United States who has worked with the company for years and already carries a high profile within the business.


Vivia Chen writes for Corporate Counsel magazine, an ALM affiliate publication of The China Trade Law Report.

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