State of the Legal Market in China 2019 Report: What Can the West Learn?

Topics: Client Relations, Efficiency, Law Firm Profitability, Law Firms, Leadership, Legal Innovation, Reports & White Papers, Thomson Reuters


Amid growing tensions over trade between the US and China, it’s too often assumed — erroneously — that the Chinese business model for success is dependent on copying innovations and methods from Western countries.

A newly released report, The State of the Legal Market in China 2019, demonstrates that this perception is not only incorrect, but actually is ignoring innovative methods and practices that law firms based in the West might learn from the Chinese legal market.

The report, published jointly by Thomson Reuters Legal Executive Institute and UK research firm Acritas, shows that the Chinese market is changing much more rapidly than Western markets. Because of the Chinese legal market’s relative youth, the report shows that it is in fact less hindered by the traditional legal industry intransigence that has slowed large-scale change in the legal markets in much of the West, especially in the United States. Indeed, Chinese law firms are shown to be more likely to try different methods and strategies and adapt the legal technologies needed to make alternative approaches possible.

You can download The State of the Legal Market in China 2019 here.

“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, adding that the adoption of the US/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.”

The data in this new report comes 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.)

Some of the report’s key takeaways include:

  •        China uses alternative fee arrangements (AFAs) more often — Among Chinese law firms, AFAs are used in 55% of legal matters. In the US, it’s 17%. Further, 93% of Chinese companies need legal advice elsewhere in the world, whereas only 78% in the US do, and 85% in the UK.
  •        Chinese law firms need to develop closer relationships with clients — In order to enhance partners’ knowledge of their client’s businesses, Chinese law firms know they need to establish closer client relations and deeper business knowledge with clients that would allow Chinese law firm partners to provide more business-savvy advice and better legal service.
  •        Not enough clients think their law firms are innovative — Like law departments in Western countries, their counterparts in China are facing similar pressures to innovate and add value. And like those in the West, Chinese corporate law departments are finding their outside counsel slower to innovate and adopted needed technology than they would like. And, also like corporate clients in the West, Chinese clients will not hesitate to search for alternative legal providers that may be more innovative and tech-savvy to meet their needs.