China Esquire

National Law Journal today had an article entitled, “Shanghai Surprise: BigLaw, Feeling Bullish, Opens China Shop to Work Private Equity Deals”, which of course, caught my eye.  Seems like Kirkland & Ellis wants to have a Shanghai base in addition to its Hong Kong office, and is expanding after receiving permission to do so on July 30.  The firm says that:

Kirkland’s Hong Kong and Shanghai offices will be highly integrated. The Shanghai office will be led by corporate private equity and M&A partners Xiaoyang “XY” Li and Chuan Li, who will relocate from Kirkland’s Hong Kong office. They will be supported initially by several associates with Chinese and U.S. legal training and experience in private equity deals.

The article and more after the jump.

The NLJ article reads:

Kirkland & Ellis will open a new office in Shanghai in November, focusing its services at first on the firm’s private equity clients.

The firm will launch the new office with partners XY Li and Chuan Li and plans to transfer two to four associates there once new office space is completed, said David Eich, who heads Kirkland’s office in Hong Kong. The Shanghai office will be located in the new international financial center, now under construction, in the Pudong area of the city, he said.

Although Kirkland is far from the first U.S. firm to open a China office, Eich said the firm is coming at exactly the right time for its private equity clients. “There’s been a titanic evolution in the private equity market in China over the last five to seven years,” he said. “We see a real opportunity to being on the ground and close to our clients who are already doing deals in China.”

Jay Lefkowitz, a Kirkland partner in New York and a member of the firm’s management committee, said the firm has about two dozen private equity clients in Asia. Just recently, the firm finished working on Bain Capital’s investment in the Chinese company Gome Electrical Appliances Holding Ltd., he said.

The partners who will open the Shanghai office, XY Li and Chuan Li, are both natives of China. XY Li is currently based in Hong Kong and came to Kirkland last year from the major Chinese law firm Jun He. Prior to joining Jun He, Li had been head of the corporate practice at King & Wood, the largest law firm in China, according to Kirkland’s Web site. Chuan Li joined Kirkland in 2001 in Chicago, the site said. He currently works in the Chicago and Hong Kong offices.

“China’s a complex place to do deals, and in order to be effective you really need people who know their way around and have experience in China,” Eich said. The firm doesn’t have any specific plans for expanding the office other than adding lawyers to meet client demand, he added.

Normally, I would have ripped Kirkland for wanting to start an office in China by transferring Hong Kong lawyers, but then I read the fine print a little.  XY Li, being someone who actually practiced in China will have a lot more name recognition and knowledge of Chinese PE deals–that made a lot of sense to me.  Here is Kirkland’s version of his short bio:

XY Li, 54, joined Kirkland last year from Jun He Law Offices in Beijing and is internationally recognized as a leading attorney in private equity and M&A. He represents private equity funds and international and domestic public and private companies in mergers and acquisitions and other complex corporate matters in China. Mr. Li has more than 20 years of experience advising clients in China while working in both international and elite Chinese law firms. Prior to his tenure at Jun He, he was the managing partner of the corporate practice group and a member of the management committee of King & Wood, the largest law firm in China.

Seems like this had been in the works when they brought Li on board, and it seems like a good move.  A former head of King & Wood’s corporate group will be a good thing to market outside of China (though I know many in China are quite cynical about Chinese lawyers’ actual legal advising skills), and he was actually in Beijing.  My only criticism is that they are opening a Shanghai office with a Beijing attorney, which is probably not what I would have chosen to do.  Still, it beats what I thought Kirkland was doing, which was opening a mainland office with HK attorneys.

Note of course that Chuan Li is an HK partner being transferred out, but I am guessing that the second Li is more likely the administrative or service partner for the first Li.

It’ll also be interesting to see how much of a “right time” it is to be in Shanghai chasing after PE work when so many say that this is a bubble waiting to burst.  Maybe Kirkland is trying to cash in now while it can and then figure out its strategy afterwards.  But the timing is strange given that the market is ripe for readjustment and I would expect PE to take some hit in the process.  Perhaps its just cheaper to open an office now.

Stay tuned I suppose.

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