(Reuters) – U.S.-founded law firm Dechert is considering closing its offices in Hong Kong and Beijing, becoming the latest foreign firm to scale back in Greater China, two people said, amid a prolonged capital market downturn and growing Sino-U.S. tensions.
Dechert has more than 20 employees in its Hong Kong office, 14 of whom are lawyers, including four partners, according to its website and one of the people. Its Beijing office houses only three lawyers, as per the website.
There are no other China offices listed on the global law firm’s website.
Some of the impacted employees were notified earlier this month about a potential office closure, said the people, who have knowledge of the matter but declined to be identified as they are not authorised to speak to the media.
The firm, which has about 1,000 lawyers globally, has since been in discussions with several employees in Hong Kong and Beijing, in particular lawyers, about a potential relocation to Singapore, said one of the people.
If the move from China is finalised, Dechert’s Asia footprint will be limited to Singapore, which has 14 lawyers including six partners.
It was not immediately clear what would be the effective date of closure of the offices, and whether the firm has started notifying its clients about the move.
Dechert representatives in the U.S. did not respond to Reuters requests for comment.
The move comes as a growing number of U.S. and other global law firms have been rethinking or reducing their presence in China amid growing pressures on foreign businesses, economic uncertainties, muted deal activities, and geopolitical tensions.
New government rules on data privacy and cybersecurity were among the reasons cited by Dentons last year when the global law firm ended its combination with China’s Dacheng, an 8,000-lawyer firm.
Several other large U.S. law firms have also announced closures of some of their China offices or scaled down their offerings in the world’s second-largest economy since last year.
DARKENING PROSPECTS
Morrison & Foerster said last week that it is winding down its Beijing office as its lease there ends later this year. It said most of its work in China is already being handled by lawyers in Shanghai, Hong Kong and elsewhere.
Sidley Austin said in May that it will shutter its Shanghai office, relocate staff and consolidate its China operations in Hong Kong and Beijing by September.
Dechert’s gross global revenues grew by just 0.4% to $1.294 billion last year, while profits per equity partner sank 1.2% year-on-year at the firm, according to The American Lawyer magazine.
Dechert said in May last year that it was laying off 55 lawyers and 43 business professionals, equivalent to 5% of its global workforce.
Many major law firms went on a hiring spree globally in 2021 and early 2022, capitalizing on a record-breaking boom in corporate deal making.
However, they have leaned on job cuts to adjust to a decline in demand for legal services since last year as rising interest rates, high inflation and recession fears have soured some companies’ appetites for deals and other legal work.
In Hong Kong, Dechert earlier this year axed the whole corporate offering team which had about four lawyers including one partner, as a market downturn and sluggish IPOs darken prospects, said one of the people and another person with direct knowledge.
