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The China business law general conducted its annual legal market survey for 2021, where top legal firms participated. The report brought in light, that the leading law firms of the nation are definitely showing an acceleration, while mentioning that there still remains a lot new strategies to be adopted. Let us have a look at what the report conveyed.
With government support via spendings in crucial areas, growth has become predictable in several law fields, even during times of turmoil, resulting in several law firms reporting revenue growth.
Grasping new innovations has also led to quickly adopting new ways of doing business, with law firms, now making attempts to capture the west market.
According to the report, the median revenue of 66 law firms that disclosed their financial performances in 2021 was RMB223 million (USD31.56 million), an 8.6% increase year-on-year. The median annual growth rate, on the other hand, was 21.3%, closer to the 24% recorded in 2019.
Furthermore, In the first quarter of 2021, the domestic economic growth surged to 18.3%, and the growth during the first-half was encouraging, however, due to sporadic covid outbreaks, in the fourth quarter GDP in 2021, the growth was by just 4%, the lowest since the second quarter of 2020 at 3.2%.
Based on the reports, legal experts, such as Zhang Liguo, a chief partner at Grandway Law Offices based in Beijing, still believes that even after the economic downturn, there is still a greater demand for legal services. Even though, economic downturn should have led to a reduction in business in various sectors, at the current time, the government is investing more in infrastructure, medicine and big data management. Hence, there is a positive chance, that there may be some new opportunities for legal services in these areas too.
The pandemic has forced firms to adopt the philosophy, ‘don’t put all your eggs in one basket.’ Even though many firms have witnessed their shares of ups and downs in the China’s capital market over the years, they still need to push forward with diversification. Zhang says, “It’s a move that not only satisfies clients for their needs of a full range of legal services, but further strengthens the firm’s resilience to risk.”
The reports also concluded that, of all law firms that disclosed financial data, 15.9% have exceeded RMB1 billion in revenue last year, up from 12.7% in 2020.
Apart from this, in 2022 shanghai announced a city-wide lockdown in April and may, due to the highly contagious nature of the omicron strain. This lockdown evidently affected many domestic and external economic fluctuations, geo-political relations etc, and as a result also had an effect on the legal market. But overall, the surveyed firms were affirmative of the sector’s development in 2022.
Moving on, as the legal market becomes more competitive, leading firms now tend to be more precisely positioned than in the previous two years. “We are no longer limited to first-tier cities, municipalities and provincial capitals across China,” notes Li Zheng, a Beijing-based director of boards and executive director of China at Yingke Law Firm. “We are focusing on the top 100 cities in China in terms of GDP, and other cities with development potential.” One of the trends of regional expansion is towards the mid-west. Due to the unique political and economic environment and cultural heritage of the mid-west, some firms have chosen to open up their presence there by merging with local firms.
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