The ongoing tensions in US-China relations and China’s economic downturn have prompted many international law firms to reconsider or gradually reduce their business in China. On Thursday, May 2nd, the US law firm Mayer Brown announced its plan to divest its Hong Kong business, ending a 15-year partnership.
Founded in Chicago, Mayer Brown has 1,800 lawyers and is one of the highest-grossing law firms globally.
In a statement released on Thursday, the firm indicated that it has agreed in principle for its Hong Kong partnership to separate from Mayer Brown and revert to its original name, JSM. Through new collaborative partnerships, Mayer Brown will continue its operations in Hong Kong, focusing on business areas aligned with the company’s international and Asian strategies. JSM will concentrate on its unique position as a comprehensive local law firm in Hong Kong.
Pending regulatory approval in Hong Kong, JSM anticipates independent operations starting next year.
Mayer Brown has around 170 lawyers in Hong Kong, Beijing, and Shanghai, with the majority based in Hong Kong. According to Nikkei Asia, the Hong Kong office has 159 employees, including partners and lawyers, while Beijing and Shanghai offices have a total of 10 employees. It is currently unclear whether there will be layoffs.
In 2021, Mayer Brown faced criticism for representing the University of Hong Kong in removing a sculpture commemorating the 1989 Tiananmen Square crackdown, prompting former Hong Kong Chief Executive Leung Chun-ying to call for Chinese companies to boycott the law firm.
Due to the fallout from the 2021 Hong Kong incident, Mayer Brown lost some state-owned Chinese enterprise clients, including China Development Bank, ICBC Asia, Bank of Communications, and Sinochem Group.
Mayer Brown’s client portfolio in China includes CITIC Group, Fosun Group, as well as non-Chinese multinational corporations like ConocoPhillips, Nestlé, and Unilever.
In a statement on Thursday, Mayer Brown’s Chairman Jon Van Gorp expressed that the new partnership will allow the law firm to continue its operations in Hong Kong in alignment with their strategic focus.
With escalating tensions between the US and China, many American companies operating in China are facing challenges. The Chinese authorities have intensified regulations and introduced new laws regarding espionage and data. Soft market sentiment and slowing capital market activities have led some law firms to downsize and reduce their presence in the region. More and more US and international law firms are withdrawing from the Chinese market.
In August of last year, Dacheng Law Offices ended its merger with China Dacheng Law Offices, citing new regulations from the Chinese government on data privacy and cybersecurity as one of the reasons.
The second-highest-grossing US law firm, Latham & Watkins, recently removed information about its lawyers based in Hong Kong from its international database. According to the Financial Times, the company has also instructed its employees not to bring work laptops to the mainland.
In March of this year, Weil, Gotshal & Manges mentioned the possibility of discontinuing its operations in mainland China, while Orrick, Herrington & Sutcliffe stated that they would integrate their China business into a Beijing office.
Aside from geopolitical tensions, international law firms are also facing financial challenges. The downturn in the Chinese real estate industry has impacted companies with large teams in the real estate sector, such as Mayer Brown.
According to Bloomberg, Winston & Strawn LLP closed its Hong Kong office in 2024, making Shanghai their sole office in Asia. In 2023, Linklaters LLP laid off 30 lawyers from its China offices citing prolonged low performance in the Chinese market.
Peter Zeughauser, a legal industry advisor, told Reuters that major US companies operating in China are reassessing their presence in the Chinese market.