although the profit data of law firms are still strictly confidential, we can still observe a certain transparency trend in this year's survey. Of the 5 law firms surveyed, only 1% did not provide income data. However, with the assistance of most lawyers from these five law firms, China Top Law Firm Report has been able to roughly estimate and select 3 law firms with the highest income in China, and evaluate their strength, market performance and market position through two important indicators: annual income of law firms and annual income of each lawyer.
the further transparency of financial data of law firms is a reflection of the continuous maturity of China's lawyer industry. Law firms are not only more willing to disclose their income data, but also pay more attention to the income from their legal practice and how to manage it finely. More proficient clients are another key motivation to change the thinking mode of law firms. The managing partner of a top 3 law firm said, "When competing for business, law firms are increasingly asked about income and other financial data by customers."
by the end of 214, there were 18,938 lawyers in the top 3 law firms this year, with total annual income reaching 654,38.58 billion RMB (654,38.6 billion). In comparison, according to the data of Beijing Lawyers Association, as of 213, there were 1. 8 law firms with 23,776 lawyers in Beijing * *, and the total annual revenue of Beijing law firms in 213 was 9.8 billion RMB, less than the top 3 law firms in 214.
nevertheless, the income of 654.38+.58 billion yuan is still lower than that of the four "magic circle firms" in the UK in fiscal year 265.438+3/654.38+4.
in p>214, the average annual income of lawyers in the top 3 law firms in China was 833, yuan, twice that of Beijing lawyers in 21, yuan, and four times that of national lawyers in that year.
with 3,113 lawyers and 45 firms, China Dacheng Law Firm won the highest annual turnover with a total turnover of 2.25 billion RMB. However, this law firm, which merged with Denton not long ago, ranks only 28th in per capita annual income of lawyers.
China Pacific Century Law Firm, with the largest number of lawyers, ranked sixth in the list of law firms with the highest annual income last year with an annual income of 9 million yuan. However, in terms of the per capita annual income of lawyers, PCCW's ranking has fallen to the bottom of the list.
It is reported that the annual turnover of almost all the top 3 law firms increased in 214, except one. The annual income of Guofeng Law Firm, headquartered in Beijing, dropped sharply by 28%, mainly because a team of hundreds of people jumped to Zhonglun Law Firm last year. Although the annual income has declined, lawyer Zhang Liguo, the managing partner of Guofeng Law Firm, is still very optimistic about the development of the firm. He said that he would lead the slimmed-down law firm to catch up with the homogenization competition, and the future growth momentum should not be underestimated.
Among all the law firms surveyed, Han Kun Law Firm in Beijing achieved the largest annual growth, and its revenue jumped by 78% in 214, reaching 2 million yuan. Taihetai Law Firm, located in Chengdu, ranked second in annual revenue growth, with an increase of 5% compared with the same period last year. In the "Red Circle" (the top law firm in China), Zhonglun ranked first with an annual income increase of 43%, from 1.3 billion yuan in 265438 to 14.7 billion yuan in 214. The China law firm with the biggest increase has an average annual income of 25% in 1 years, which is extremely rare in the global legal market.
But among all the law firms that provide annual turnover data, about one third said that it is difficult to collect data that can truly reflect the operation of law firms. There are two reasons, one is the change of tax rules, and the other is the loose branch management mode.
generally speaking, a law firm will produce two data, one is the real income statistics, and the other is for tax purposes. In some extreme cases, the difference between the two data is as high as 4%.
A person in charge of a law firm in Beijing said: "The tax reform in China has a great impact on the profit margin of the law firm. For example, the value-added tax has replaced the business tax, and the fixed tax rate is no longer adopted, but a floating tax based on self-audited financial statements. "
"Law firms usually take reasonable measures to avoid taxes, which will lead to the business data in the published financial statements often being lower than the actual income," he added. "Large national law firms are often more complicated and confused in this respect, because local firms adopt different statistical measures according to tax policies."
from the perspective of national fiscal and taxation management, the lack of national unified accounting standards, tax rules and behavioral norms is one of the reasons for the untrue turnover data of law firms. But Qiao Wenjun, senior managing partner of Zhonglun Law Firm, pointed out another more fundamental reason.
"The legal service industry in China has undergone profound changes, but the position of law firms is still very embarrassing," Mr. Qiao explained. "Law firms are currently unable to register as enterprises in the State Administration for Industry and Commerce, so they cannot obtain the legal qualification of enterprise legal persons. Law firms have been classified as wholly-owned enterprises or individual industrial and commercial households when collecting taxes. Now the main regulator of China Law Firm is the Ministry of Justice. "
"Compared with other professional service companies such as accounting firms, the lack of legal person status has brought more inconvenience to the development of law firms, even if they only engage in the most basic business activities, such as opening bank accounts, applying for loans, opening overseas branches or establishing other consulting subsidiaries."
"It's like someone who has a birth certificate but can't register an ID card. Too embarrassing. "
Finally, he concluded: "Only by solving this fundamental status problem can China Law Firm converge with international law firms, otherwise, China Law Firm will never be motivated to adopt a real corporate governance structure for corporate reform."
change 2: the demand for legal services has increased unprecedentedly.
Although the economic development in China is gradually slowing down, the demand for legal services in China market is growing at an unprecedented speed.
there are two driving forces for the development of the legal market: one is the perfection of national legal supervision, and the other is the determination of the government to develop a balanced economy by relying on domestic consumption and private enterprises.
This year's report confirms this point, and the top law firms in China have benefited from this growing demand for legal services. Twenty-nine of the top 3 law firms reached the highest point of revenue growth, among which the top 1 with the highest and fastest growth rate achieved an average growth rate of 25%. Zhonglun became the leader with a revenue growth rate of 43%, from 65.438+3 billion yuan in 265.438+3 years to 65.438+47 billion yuan today. The large-scale team acquired by Zhonglun from Guofeng and the new offices set up in Chongqing and Qingdao last year have made great contributions to the soaring turnover. Wu Peng, the managing partner, also admitted that 214 was a year in which Zhonglun achieved record-breaking development in many fields.
This is the fastest-growing year of Sino-Lun in recent ten years. Team Wu Peng donated more than 2 million RMB this year, tied for the highest in history. The average income of each shareholder and partner also exceeded RMB 7 million for the first time. Fangda, Tianyuan and Cube also had significant personnel and income growth in 214. In terms of horizontal recruitment, Fonda's most striking move is to hire Michael Han, China antitrust director of Freshfields Bruckhaus Deringer, to work in its Beijing office.
in addition to exploring new businesses from emerging fields, such as anti-monopoly, intellectual property, securities and taxation, the growth of many companies has seized the opportunity of the development of China's capital market. For example, the new third board market is a very critical opportunity at present.
In p>214, there were 1,232 SMEs listed on the New Third Board, and this market was shared by 279 law firms. Guo Hao Law Firm has always performed well in the financing legal services for SMEs. In 214, 77 companies were listed on the New Third Board, which is unparalleled in China. However, in the first half of 215 alone, Dacheng achieved a new breakthrough with the business volume of 81 companies successfully listed, which also made Dacheng the most active law firm in the New Third Board market.
although the profit margin of the new third board business is low, it is a new way to increase revenue and customers, especially for law firms in Beijing and Shanghai.
capital markets and M&A transactions have always been the main business of top law firms. The surge of corporate mergers and acquisitions in China is a positive indicator, and the development and complexity of corporate transactions have benefited domestic law firms a lot.
similar to the situation in the capital market, corporate mergers and acquisitions are still the most important business income of the top 3 law firms. More and more M&A activities make these law firms' business in this field more and more mature, and the increasingly complex transactions between China companies are also greatly beneficial to the established domestic legal consultant market.
according to the data report of Reuters in 214, the capital and M&A market of China law firm with the highest RPL rating is very active. In terms of business volume, Fangda ranked first with 72 transactions, Zhonglun ranked second with 56 transactions, and Guo Hao ranked third with 52 transactions. In terms of total business target, Beijing jiayuan ranked first with the target amount of 66.8 billion US dollars for 28 businesses, followed by Wenhai and Fangda.
domestic law firms have surpassed foreign law firms in capital and M&A market, such as Freshfields, which has 14 M&A businesses in China market, totaling 5 billion US dollars.
The biggest M&A transaction in China market in p>214 was that Sinopec sold its domestic retail business worth $17.5 billion to a large investment group composed of 25 Chinese and foreign enterprises. These retail businesses include a wholesale chain store, more than 3, gas stations and convenience stores, as well as refined oil pipelines and storage facilities.
The transaction of this scale only comes from the privatization of state-owned enterprises promoted by the state, which is the so-called "mixed ownership reform".
Wenhai Law Firm, headquartered in Beijing, provided the most important legal services in the transaction of Sinopec, covering the whole process of the transaction, including bidding for investors, negotiating, and drafting and executing all documents related to potential investors. The legal services of the investor team are provided by Cheng Jintian, Fonda and Tianyuan.
general situation of p>3 top law firms
change 3: more reasonable partner system
top law firms in China focus on establishing their own business fields and expanding their business coverage nationwide, and some law firms quickly achieve their goals through mergers and acquisitions.
among these top law firms, an obvious trend is to attach importance to the profitability of partners and a more reasonable partner system. Among them, He Jun and Wen Hai, for example, have begun to reform the partner compensation system. In addition, such as Zhonglun and Universal, they provide higher preferential treatment for the managing partners of law firms.
Hejun started a three-year renovation plan at the beginning of this year, which is the biggest internal adjustment since its establishment in 1989. Prior to this, its salary system was almost entirely based on performance.
Hua Xiaojun, one of Hejun's managing partners, said that Hejun has made long-term preparations for the reform of the new system, including learning from international law firms such as thuratts and May and Mayer Brown.
global law firms have always been based on performance-based salary structure, and now they are also feeling the pressure and are trying to reform a more efficient and high-quality financial management structure.
In contrast, in 29, Wenhai has established a western-style salary distribution structure, and its recent reform is to add performance evaluation elements. Partners will be rated according to their business performance, and seniority is also an important evaluation factor.
At the beginning of this year, Wenhai adjusted measures to encourage and stabilize outstanding young partners and actively recruited horizontally. In the past, this structure had certain advantages in maintaining coordination and consistency among partners and management quality, but Wenhai needs to be constantly adjusted to adapt to the rapid changes in the market and maintain its leading position.
Liu Su, the managing partner, said, "One of the factors that contributed to our profit growth last year was to emphasize the concentration and professionalism of partners and teams in advantageous areas, so as to improve the charging standards and competitiveness. Although the operating costs of law firms are soaring due to rising rents and wages, we can still achieve high profit margins by improving the efficiency and fees of each business. "
"Our profits increased last year. This is mainly because we require all partners and lawyers to give full play to their abilities in their professional fields, so that they can increase their agency fees even in the fierce competition, "Liu Su said.
"Because the rent and salary are increasing, the cost of running a big office in China is increasing, but we can complete every transaction and project efficiently by improving our practice ability and charging higher agency fees, so we can still make good profits," he said.
change 4: rapid expansion in merger
for the large national law firms and top 3 inspirational law firms, if they have realized that the merger of law firms is the highlight of the domestic legal market, then they should see that 214 is still a year of firm expansion.
In Beijing, the merger of Tianda Law Firm and * * and Law Firm is one of many noteworthy merger cases, and their merger has made Tianda * * and Law Firm. At the time of this investigation, the firm has a capital of 65.438+4 billion, 22 lawyers and 63 partners, and has an office in China. Li Dajin, managing partner of Tianda Law Firm, called the recent merger "a combination of two law firms with foresight and complementary advantages".
"The merged law firm can provide all-round legal services around the clients' needs, and through this key change, it makes up for the lack of breadth and depth of the original two law firms," Li Dajin said.
"Because the expanded partner team has improved our ability to resist risks in the market and withstood the test of increasingly fierce industry competition, the clients of the original two law firms will benefit from this merger," he said, hoping that this merger will make this new law firm among the top universities.
A recent merger case is the merger of Beijing Juntai Law Firm and Tianchi Hongfan Law Firm. Tianchi Juntai Law Firm, born from the merger completed in July, has 4 employees and 9 offices.
In Shanghai, the merger of local Bangxinyang Law Firm and Zhong Jian Zhonghui Law Firm in early 214 is another noteworthy case in the legal market.
in addition to the merger of law firms in the same city, there are also cases where regional law firms join the business chain of national law firms.
in 265,438+3, Guo Hao Law Firm had more than 65,438+ lawyers and 65,438+5 firms. Last year, it opened two more offices in China, both of which were added with the help of merging with local law firms. Guo Hao's new office in Chongqing is acquiring Tianzhihe Law Firm and Hualisheng Law.