China Lawyer Cycles His Way to Create World’s Largest Legal Firm

Peng Xuefeng’s journey to creating the world’s largest law firm started in 1992 with bicycle rides across Beijing as he met with clients on a handful of cases.

Encouraged by China’s opening up to the world economy after three decades of insular rule under Mao Zedong, Peng said he had left a job paying less than 100 yuan ($16) a month as a government lawyer to set up Dacheng Law Offices, one of China’s first private law firms, with four partners. In the first eight months of operation, the firm generated $56,000.

“In the summer of 1992, sometimes I had to cycle for more than 30 kilometers (19 miles) which is about half of Beijing city at that time,” Peng said in an interview at Dacheng’s Beijing headquarters in Parkview Green, a complex that houses the city’s Tesla showroom and designer boutiques. “One day I had to appear in a court in the morning and later meet a client for some minor business far away,” he said. “I cycled so hard to not be late.”

Peng, 53, had spent years thinking about whether to start his own business. “To work for a government sponsored firm was an easy job at the time, and the pay wasn’t that bad compared to others,” he said. “I wanted to give it a try when sensing a chance for a new era for the legal profession, as I didn’t want to miss that chance.”

China’s lawyers have risen with the country’s three decades of economic growth. After expanding Dacheng to more than 4,000 lawyers and $400 million in revenue last year, Peng in January signed a deal to tie up with Dentons, a firm of more than 2,500 U.S., U.K., French and Canadian lawyers with $1.3 billion in revenue.

Labor Camps

Peng is now advocating for the better treatment of lawyers, as Communist Party leaders turn their policy focus to improving the rule of law, with plans to tackle interference in markets and the courts. Peng, a member of the Chinese People’s Political Consultative Conference, will use the annual meeting next month of the top political advisory body to raise protection of lawyers’ rights.

“Now it is important to make the agenda and guidelines into reality,” he said. Since taking office in 2012, President Xi Jinping has abolished labor camps, allowed citizens more leeway to sue the government and introduced circuit courts to reduce interference by local officials in the judiciary.

Even as Xi stresses the rule of law, dissent isn’t tolerated and academics and lawyers alike are sent to jail. The Communist Party has also continued an internal-discipline system called shuanggui, where cadres can be held incommunicado before being handed over to prosecutors.

Danger Persists

Defending dissidents is still fraught with risk, with advocates who are deemed to have veered into activism liable to arrest and detention.

A court last June sentenced three anti-corruption activists to jail, two of them for the longest prison terms yet for links to a movement that sought disclosure of official assets. Prominent rights lawyer Pu Zhiqiang was formally arrested the same month on charges of disturbing public order and obtaining peoples’ personal information illegally.

Government officials are still struggling to choose between the rule of law and the rule of men, Peng said, noting that the legal profession was abolished in China in the 1950s and not restored until 1978, two years after the end of Mao’s Cultural Revolution. The country of 1.4 billion now has about 250,000 lawyers, he said.

Peng, who remembers when Chinese lawyers were sent to labor camps for defending suspected counter revolutionaries, said that lawyers sometimes need to criticize the government but they have to find “a middle ground.” While Peng’s firm has flourished, other legal companies have closed for advocating human rights.

Lawyers Detained

Asked about recent detentions of human rights lawyers, activists and liberal scholars, he said it was inappropriate for lawyers dealing with “sensitive and extreme” cases to use “harsh” means that may be illegal.

“It’s a good thing that now leaders realize the rule of law is important,” Peng said. But there is still “a long way to go.”

Peng has successfully navigated China’s complex business environment, where political connections are important. He met Zhou Qiang, China’s justice chief, in January to advise on legal reform, and has met with Chinese leaders, including Yu Zhengsheng, a member of the ruling Politburo’s elite seven-man standing committee, and former top political adviser Jia Qinglin.

Foreign Companies

Dacheng counts some of the biggest state-owned enterprises among its clients, acting as legal adviser to PetroChina Co., China Telecom Corp., and China National Aviation Fuel., as well providing legal consultancy to local governments and China’s Financial Futures Exchange, according to documents on its website.

China is removing preferential policies designed to attract foreign companies in the 1980s and treating them the same as domestic ones, said Peng, who has represented multinationals including Coca-Cola Co., Hewlett-Packard Co. and Japan’s Shiseido Co.

Within China, which last week fined U.S. chipmaker Qualcomm Inc. a record $975 million for antitrust violations, 60 percent of respondents in an American Chamber of Commerce in China survey last year said they felt less welcome, up from 41 percent a year earlier.

Recent antitrust and graft probes have also involved companies like Microsoft Corp., Bayerische Motoren Werke AG, Daimler AG’s Mercedes Benz and GlaxoSmithKline Plc.

Foreign companies still have plenty of opportunities in China and should “change their mindset” and grab them rather than keep blaming the Chinese government, Peng said.

‘Big Success’

Dacheng’s growth mirrors that of Dentons and the combined firm’s structure including separate finances meant Chinese authorities decided they didn’t need to approve the deal, according to Elliot Portnoy, who will be global chief executive of the new firm.

It will be called Dentons except in Chinese, where it will be “Beijing Dacheng Law Offices.” The logo is the Chinese characters for Dacheng (which means Big Success) and the word Dentons.

The firms will integrate how their lawyers are paid over time, according to Peng, Portnoy and Joe Andrew, the global chairman of the new Dentons. Peng will be chairman of the combined firm’s global board and its global advisory committee.

The merger and continued globalization of Chinese law firms was welcomed by the heads of Baker & McKenzie and DLA Piper, which have both used the same verein -- or association -- structure to become the world’s two biggest firms by lawyers now.

Greater Role

Chinese lawyers will play an increasing role on the international stage in commerce and will be involved in the shaping of regional and global institutions, said Stuart Fuller, global managing partner of King & Wood Mallesons, the first verein combination of a Chinese and Western firm.

When he traveled to the U.S. 15 years ago to pick up management tips from lawyers there, Peng said he remembered vividly how American lawyers left his business cards behind on the table because they weren’t interested in communicating with Chinese lawyers.

“But now it’s different, now they are chasing me wherever I go,” Peng said. “The rapid economic development of the country makes you feel you’re living with dignity.”

— With assistance by Keith Zhai

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