CHINA

Team size
The legal teams of over 80 percent of those participating in our survey in China are of between two and 20 – 40.7 percent consisting of between two and five people and 40.1 percent being of six-to-20. 9.9 percent of respondents work in teams of 21-50, 7.4 percent work alone and the remaining 1.9 percent are in in-house teams of more than 50 people.

Similarly to last year, in the coming 12 months, the majority (65 percent) of in-house counsel in China anticipate their in-house teams remaining the same size. The second most popular response was that they expect the team to grow, with 31.9 percent believing this, and the rest (just 3.1 percent) foresaw their team shrinking over the next year.

Saving on cost and no requirement for expansion due to either no new projects in the works or a stable business need were the most popular reasons for foreseeing an in-house team’s size continuing as is. Among the main reasons people predicted growth were increased risk and increased business. A requirement to improve compliance was also cited. Increased efficiency and aid no longer being needed were reasons for expected team shrinkage, along with a lack of suitable replacements for departing employees.

Recruitment
When hiring, in-house counsel in China are predominantly found via legal recruiters, with this being the chosen method of 69.9 percent of participants. Placement of job advertisements (20.9 percent) and referrals from other in-house lawyers (19 percent) came second and third, respectively, with job websites coming a close fourth at 17.8 percent. Job websites was the second most common response to this question last year.

KEY ISSUES AND CONCERNS
From a regulatory perspective, compliance with anti-trust and anti-corruption legislation were by far the most commonly cited concerns by in-house counsel in the PRC. Clearly though, anti-corruption and anti-bribery initiatives are having an effect, with one respondent even stating that “local government enforcement on anti-bribery may change the business model [of operations in our] industry”.

Managing the balancing act between business and compliance, especially when the legal function is seen as a hindrance rather than an aid by the business, is also still an issue for many. According to one respondent, “Ensuring the business is running in compliance with the law [whilst] observing local practices” makes their task more taxing, while another noted that “Making sure [their] employees comply with the law [whilst recognising] local culture”, along with “Inconsistency and uncertainty of enforcement” are issues.

Complying with “contradicting US and China laws”, and in the words of another “connecting with European and US laws” were among the comments that shed light on the more international role in-house counsel in China increasingly fulfill.

Other respondents stated that finding quality support, both in terms of good external counsel and competent junior in-house counsel, was a major concern.

Working with external counsel
In the coming year, according to the In-House Community, external counsel should expect to either be called upon the same amount or more, with 61.5 percent suggesting that they will refer to outside aid about the same amount while 34 percent said they’d use external counsel more often. Just 4.5 percent said they’d use external counsel less over the next 12 months.

Budget constraints was a recurring response from participants when asked why they felt that they would either use external counsel less or the same amount in the coming year. Increase in business size and therefore in demand for legal support was the primary reason in-house lawyers said they would use more outside help, along with entry into new areas and therefore the requirement of a more diverse range of expertise.

Above all else, expertise in a specific area (at 80.4 percent) is by far the main reason surveyed in-house counsel choose one law firm over another. Other popular reasons for going to one external counsel over another include fees at 47.2 percent; reputation of a lawyer or law firm, each with 33.1 percent; and responsiveness, which is a main consideration for 27.6 percent of respondents. (Figure 9)

Whereas last year, excessive fees was the sole number one reason for concern of in-house practitioners in China when dealing with outside counsel, this year it came joint first, along with external counsel’s failure to understand their business, at 38.7 percent. This may signify a more demading in-house clientele as much as an area of increased concern. Lack of updates (20.2 percent) and work performed slowly or inefficiently (16 percent) were also noted as drawbacks. (Figure 10)