Imitation is often referred to as the sincerest form of flattery. When it comes to the legal market in China, there are perceptions that the Chinese business model for law firms is based on models from the West. There may be some truth to that, but there also are opportunities for firms in the West to learn from the success of law firms in China.

A new report, The State of the Legal Market in China 2019, shows organizations are increasing their legal spend significantly in China, are dynamic and require international legal advice, and the legal needs are growing in range and sophistication.

“The legal market in the China is evolving rapidly,” said Li Steven Wang, head of the Corporate Segment for Asia & Emerging Markets at Thomson Reuters. He added that the adoption of the U.S./European model of law firms as private and commercial businesses is a relatively recent development in China. “But because the China legal market is only about 40 years old, one might assume it lags behind their Western counterparts in many areas — but our latest research suggests that this is not necessarily the case.”

Some key takeaways include:

  • Chinese law firms are more likely to use alternative fee arrangements (AFAs) than U.S. law firms
  • Chinese law firms could benefit from developing closer relationships with clients
  • Less than one-fifth of Chinese buyers of legal services feel their providers are using innovative solutions

The report was published jointly by Thomson Reuters Legal Executive Institute and UK research firm Acritas. The data stems from Acritas’ ongoing research with senior in-house counsel and law firm partners across the world. For this report, Acritas’ data is drawn from its Sharplegal interviews with respondents based in Mainland China and those outside of China relating to their legal needs within China. (For the purpose of this report, China does not include Hong Kong, Macau, or Taiwan.)