Biglaw

World's Largest Law Firm Splitting Up

Dentons and Dacheng part ways as Chinese government regulations stiffen.

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chinaDentons and Dacheng got together back in 2015 to create the world’s largest law firm with over 6,000 attorneys. The union since ballooned to roughly 12K lawyers. But that’s set to end as Dacheng will leave the Dentons umbrella. Can we characterize this as verein bad news? No… that’s a pun too far.

A draft letter to the erstwhile conglomerate’s clients pins the blame for the conscious uncoupling on the Chinese government.

I write to share that, in response to an evolving regulatory environment for Chinese law firms in China — including new mandates and requirements relating to data privacy, cybersecurity, capital control and governance —Dentons is modifying its relationship with Beijing Dacheng Law Offices (大成), the Chinese law firm partnership that has been a member of the Dentons Group since 2015. Effective this month, 大成 — previously our China Region — will no longer be a member of the Dentons Group and will instead operate as a separate and independent legal entity under a “preferred firm” relationship with Dentons.

Dentons will maintain its Hong Kong practice which predated the Dacheng agreement.

While China’s data privacy laws date back a couple years, new guidance has transformed “China’s version of GDPR” into a compliance nightmare steeped in vague national security rhetoric. The final version of the “Measures for the Standard Contract for Cross-border Transfer of Personal Information” and the “Standard Contractual Clauses for Cross-border Transfer of Personal Information” recently took effect and bar the transfer of personal data outside China without undergoing a security assessment. And it all sounds… onerous:

To complete the mandatory government security assessment, the company subject to such assessment in China must submit a self-assessment report, the cross-border data transfer agreement, the application form, and any other documents/information requested by Cyberspace Administration. Based on the timeline given in the Security Assessment Measures, if the company submits an adequate application, it will take about 60 days to complete the security assessment, but such time may be extended depending on the complexity of each application. Once approved, the security assessment is valid for two years, except that a new security assessment is required if there are certain changes, such as changes in how the foreign recipient uses the data, change of control at the personal information processor or the foreign recipient.

Some sources indicate that six months in, only two companies had managed to pass the assessment process. That’s not going to work for a global law firm structure and even with the most benign of stated intentions, there are a lot of Western clients that might fear any process that gives a Chinese government entity access to its law firm’s systems.

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Alas, this story might have a bit of a “meet the old boss, same as the old boss” flair. Even without Dacheng… Dentons is most likely going to have more lawyers than everyone else by next year.

Dentons Divorces China’s Dacheng, Citing New Chinese Rules [Law360]

HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

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