​Shanghai stories

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Dorsey & Whitney partner Carl Hinze has lived in China since 2004 and tells Aidan Devine of his experiences as an Australian lawyer in the middle of the greatest financial boom in world history.

By almost every measure, Carl Hinze’s daily commute to the offi ces of Dorsey & Whitney in Shanghai is fundamentally different from what most Australians would be accustomed to. “I have to wear a mask,” the corporate lawyer says. “I ride a bike, but you look at the sky and it’s usually grey. Sometimes it’s from the weather, but often it is pollution. I wear the mask to protect myself.”

On the rare days when the smog clears, Hinze gets a view of a city that is nothing short of breathtaking. Dwarfed by the world’s tallest skyscrapers, construction cranes and an army of neon signage, Hinze journeys through a city that is both mystically ancient and brand new.

It’s a commute in which Hinze is also frequently stopped by fellow commuters. In a city with more residents than the whole of Australia, a lot of people are curious about him and aren’t shy about asking him anything and everything.

“People ask where I am from, how much money I earn, how much I pay in rent. The idea of personal space is very different here.” Hinze admits it is a hard way to begin the daily grind, but considering the massive changes taking place across the country – its coming status as the world’s largest economy – he believes the difficulties can be summed up in one simple sentence: “Totally worth it,” he says.

After fi rst visiting and falling in love with the country in 1991, Hinze has been practising in China’s big smoke since 2004 and, after various roles within the Shanghai offi ces of a range of international firms, he is now partner at Dorsey & Whitney.

Working on mergers and acquisitions, corporate restructuring and regulatory issues, the Southeast Queensland native practises at the epicentre of a mushroom cloud of economic activity that lawyers only get a small glimpse of from Australia.

That explosion has come in three separate waves and Hinze has experienced each in a profound and different way. Fluent in Mandarin, his insights into what has been happening in Shanghai on the legal and commercial fronts are uniquely informed.

“My own career has really reflected what has happened in China. What is interesting about the practice of law up here is that in the early days it was mostly about inbound investment into China. That evolved into more sophisticated M&A and corporate as well as regulatory work, but over the last four years, assisting large Chinese companies going overseas has been taking up a bigger part of what we do.”

PRACTISING IN CHINA
Hinze points out that one of the biggest, and most obvious, differences between practising in Australia and mainland China is that there are restrictions on the legal services foreigners can provide. Foreign lawyers cannot appear in court, are barred from being involved in litigation, and cannot issue formal legal opinions on Chinese law.

This makes informal partnerships with Chinese firms something of a necessity for international firms operating in the country. Such partnerships allow non-Chinese firms to overcome many of the restrictions placed on foreign lawyers, but it entails deep cooperation: projects need to be approached through joint teams.

Not surprisingly, Hinze’s firm has done just that by forming a special counsel relationship with a local-run Shanghai firm. They share the same building as Dorsey & Whitney and are even on the same floor. “You go out the lift and it’s left to their office and right to ours,” Hinze says.

CHINESE VS AUSTRALIAN FIRMS
Another distinguishing point of practising in China is the difference in the way Chinese and Westernstyle firms are structured and operate.

The leading Chinese law firms tend to be 20 years old or younger, while the biggest and best foreign law firms have often been around for well over a hundred years. This age gap lays the platform for business models that are almost unrecognisable, Hinze says.

“You’ll find that Chinese law firms operate almost as a collection of different teams. Each partner has their own team that generates its own revenue. Many of these partners won’t know each other. “As the foreign lawyers, we’ll often find ourselves introducing partners of the same firm. You’ll be introducing a guy in their Fuzhou office, for example, to his Beijing colleague.”

Such a model is an obvious departure from international firms that have one partnership across the world in which partners regularly interact with each other. Chinese firms are aware of this but most still favour their more fragmented model. Hinze says he sees many firms taking that tendency to operate independently even further.

“We’ve seen some models where law firms are like a grouping of shopping brands,” he says. In this model, the firm acts in some ways like a shopping mall in the sense that it is a collection of different ‘shops’ that have almost nothing to do with each other. Each team generates its own revenue but pays a portion of it, almost like rent or royalty fees, for the opportunity to operate under a firm name that has a national footprint. “It’s like a franchise in a way, and it’s a very common structure,” Hinze says.

‘RED CIRCLE’ FIRMS
Of course, not all Chinese firms employ a fragmented model, and the more united industry players are evolving rapidly. Hinze believes they constitute a genuine source of future competition for Magic Circle and other large international firms. Lawyers will be familiar with the footprint of King & Wood Mallesons, formed out of the 2012 merger of Hong Kong-based King & Wood with Australian firm Mallesons Stephen Jaques, but mainland firms Jun He and Zhong Lun are becoming just as sophisticated.

“These firms are very curious about how foreign law firm partners interact with each other and have hired some well-respected and regarded foreign lawyers to help them restructure their operations and develop more business. There is a major desire among Chinese firms to grow like their Magic Circle counterparts.”

This desire sets Chinese firms apart from the Japanese firms of the 1980s, in Hinze’s opinion. “Japanese firms didn’t really grow with the expansion of Japanese business back then,” he says. “They developed their own strengths and entered strategic relationships with international firms. “Chinese firms aren’t keen to do that. They are much more interested in replicating the biggest British and American firms. These firms are probably aware of that, which would explain a lot of the consolidation we’re seeing among big Western firms.”

LEARNING TO ADAPT
The fact that the Chinese legal landscape is evolving, not to mention the irrepressible economic changes sweeping China, gives Hinze reason to believe that he has the privilege of watching history in the making.

“I first started learning the Chinese language and culture in 1988. Back then, no one could comprehend why I wanted to do it. They’d ask, ‘Do you want to become a communist?’ I only studied it because it was interesting to me. From my perspective, it’s almost coincidental that the country is booming. In a way, I feel vindicated by it. It means I have skills that can help Australian businesses.” Reflecting on his original reasons for learning about China, Hinze says a fascination with all things Chinese could still never have prepared him for the realities of living there – and for almost 10 years at that.

“There are just so many people here. I grew up on a dairy farm in Queensland. That and living in Shanghai are at fundamentally opposite ends of the spectrum. It’s meant I had to learn to adapt and bridge those different experiences. It has been the story of my life.” 


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