China has become a buyer’s market for legal services. Earlier this year, lawyers there were trading tales about a Western law firm that had agreed to handle an IPO for $100,000 — about a tenth of what such work would usually run, says Greenberg Traurig’s Jinshu “John” Zhang.
It could have just been a rumor. But the speed at which it spread says something about the pressure law firms are under to discount fees as they battle for position in the fast-growing Chinese legal market.
“The Chinese now are so spoiled,” said Carson Wen, chairman of Heller Ehrman’s China practice. “They either ask for fixed fees or discounts. It’s a fact of life in this market. But still, everyone wants to do it because the market is so large.”
Some firms slash prices for work where they face lots of competition. Others say they maintain their rate structures but only seek out high-level work — such as complex M&A — that commands higher prices.
U.S. attorneys in China agree that the pressure to discount is strongest in areas where everyone is eager to grab a share, such as capital markets and M&A. Vying for these projects can be extremely competitive, with many Chinese clients adopting the beauty contest approach.