Breaking News

Struggling Chinese Economy Sparks Exodus of US Law Firms
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)

In recent years, the landscape for American law firms in China has undergone significant transformation, with several notable firms shuttering their offices amid economic challenges and stiffening competition on the domestic front. This shift, fueled by China’s slowing economic growth and increasing domestic competition, is reshaping where these firms allocate their resources.

Shrinking Presence: US Law Firms Retreat

Since 2020, a string of prominent US law firms including Orrick Herrington & Sutcliffe, Baker Botts, McDermott Will & Emery, Vinson & Elkins, and Latham & Watkins have closed at least one of their offices in China. According to the Chinese Ministry of Justice’s annual report, the number of foreign law firms with operations in China declined from 244 in 2017 to 205 in 2022.

Want to know if you’re earning what you deserve? Find out with LawCrossing’s salary surveys.


Robert C. Bata, principal at advisory firm WarwickPlace Legal, foresees a continued exodus, particularly among mid-tier American law firms with substantial industrial client bases, over the next five years.

Economic Headwinds: Impact on Investment Landscape

China’s economic slowdown, coupled with a decline in foreign direct investment, is reshaping the investment landscape for US law firms. Loan growth in China reached a record low in the previous month, and foreign direct investment plummeted by 8% in 2023 compared to the previous year, marking the first decline since 2012, according to data from the Chinese Commerce Ministry.

Rising Competition and Regulatory Challenges

Adding to the complexity, US law firms face escalating competition from their Chinese counterparts. Over the past decade, the quality of legal practices in China has become increasingly comparable to Western firms. This shift has been driven by many Chinese lawyers’ backgrounds in government agencies, providing them with deep insights into regulatory policies and navigation strategies.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!

Uncover exclusive insights and strategic approaches through the State of the Lateral Law Firm Legal Market 2024—an in-depth report delving into the intricate patterns and current trends within the lateral law firm market.

Moreover, Chinese firms often offer competitive pricing, particularly appealing to companies, including state-owned enterprises, seeking legal services for business operations or initial public offerings in Hong Kong.

Geopolitical Tensions Exacerbate Challenges

The already challenging environment for US law firms in China is further compounded by escalating tensions between Washington and Beijing. President Biden’s proposed order to restrict countries like China from accessing sensitive American data underscores the growing geopolitical complexities.

Last year, Chinese authorities conducted raids on the Shanghai office of US consulting firm Bain & Co. and the Beijing office of US company Mintz Corp. These actions reflect China’s tightening grip on data security, with the implementation of a new regime giving Beijing the authority to penalize companies for mishandling sensitive information.

Questionable Profitability and Future Outlook

While many Western law firms struggle to turn a profit in China, larger and well-established Wall Street firms are likely to maintain their presence, driven by strategic importance, connections to Hong Kong, or long-term visibility objectives.

However, the prospect of new entrants into the Chinese legal market appears limited, with niche firms targeting specific areas like dispute resolution, maritime law, or offshore structuring.

Despite the challenges, a few firms have recently expanded their operations in China. Morgan Lewis and Quinn Emanuel Urquhart & Sullivan have opened new offices in Shenzhen and Beijing, respectively, aiming to capitalize on emerging opportunities in the tech hub and free trade zones. Additionally, UK firm Holman Fenwick Willan (HFW) and Allen & Gledhill have established offices in Shenzhen and Shanghai, respectively, eyeing the potential for growth in the Greater Bay Area.

Outlook: Opportunities Amidst Uncertainty

Despite the current downturn and geopolitical tensions, Doreen Jaeger-Soong, managing director of legal talent recruitment firm Hughes-Castell (Hong Kong) Ltd., remains optimistic about the long-term prospects. She suggests that historical patterns indicate cyclical opportunities, even in challenging times, emphasizing the potential for growth and adaptation in the dynamic Chinese legal market.

Don’t be a silent ninja! Let us know your thoughts in the comment section below.



Associate Attorney


ASSOCIATE ATTORNEY McKenna Snyder LLC, a law firm in Exton, PA has an immediate opening for an ex...

Apply now



Qualifications: HaasCaywood is seeking associate attorneys for our Coldwater and Sturgis, Michiga...

Apply now



Qualifications: HaasCaywood is seeking associate attorneys for our Coldwater and Sturgis, Michiga...

Apply now

Deputy General Counsel / Senior Deputy General Counsel


Cal Cities Culture and Mission Cal Cities is dedicated to creating a collaborative and inclusive ...

Apply now




Search Now

Education Law Attorney

USA-CA-El Segundo

El Segundo office of a BCG Attorney Search Top Ranked Law Firm seeks an education law attorney with ...

Apply Now

Education Law Attorney


Carlsbad office of a BCG Attorney Search Top Ranked Law Firm seeks an education law attorney with 4-...

Apply Now

Education Law and Public Entity Attorney

USA-CA-El Segundo

El Segundo office of a BCG Attorney Search Top Ranked Law Firm seeks an education law and public ent...

Apply Now

Most Popular


To Top