U.S.-founded law firm Dechert is considering closing its offices in Hong Kong and Beijing, making it the latest foreign firm to scale back in Greater China, according to two sources. This decision comes amid a prolonged capital market downturn and growing Sino-U.S. tensions.
Dechert employs more than 20 people in its Hong Kong office, including 14 lawyers and four partners, according to its website and one of the sources. Its Beijing office houses only three lawyers. The firm’s website lists no other China offices.
Earlier this month, Dechert notified some of the impacted employees about a potential office closure, said the sources, who requested anonymity as they are not authorized to speak to the media. The firm, which has about 1,000 lawyers globally, has since been discussing potential relocation to Singapore with several employees in Hong Kong and Beijing, particularly lawyers, said one of the sources.
If Dechert finalizes its move from China, the firm’s Asia footprint will be limited to Singapore, which has 14 lawyers, including six partners. The effective date of the office closures and whether the firm has started notifying its clients about the move remain unclear. Dechert representatives in the U.S. did not respond to Reuters’ requests for comment.
This move comes as a growing number of U.S. and other global law firms are rethinking or reducing their presence in China amid increasing pressures on foreign businesses, economic uncertainties, muted deal activities, and geopolitical tensions.
Last year, Dentons cited new government rules on data privacy and cybersecurity as reasons for ending 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.
Morrison & Foerster announced last week that it is winding down its Beijing office as its lease ends later this year, with most of its work in China already being handled by lawyers in Shanghai, Hong Kong, and elsewhere. In May, Sidley Austin said 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 dropped 1.2% year-on-year, according to The American Lawyer magazine. In May of last year, Dechert announced the layoff of 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 axed its entire corporate offering team earlier this year, which had about four lawyers, including one partner, due to a market downturn and sluggish IPOs darkening prospects, said one of the sources and another person with direct knowledge.
