China’s Dacheng Law Offices merged with international firm Dentons late last month, creating the world’s largest law firm and marking the second merger ever between a Chinese and multinational firm. Dacheng will join the other foreign firms that comprise the Dentons conglomerate while maintaining much of its autonomy.

Dacheng and Dentons will bring together 6,600 lawyers in 120 offices across 50 countries, according to Reuters, dethroning Baker & McKenzie LLP as the world’s biggest firm. Dentons is an “umbrella” corporation that already incorporates American, French, British, and Canadian law firms. Dacheng—China’s largest firm with over 4,000 lawyers—has offices across mainland China, Europe, Singapore, Hong Kong, and Taiwan.

The new firm is organized in a Swiss verein structure, which allows the individual companies within it to share the Dentons brand name and organize referrals, but doesn’t require them to share finances. Dacheng will keep its name and remain a separate entity.

The verein structure has many advantages for both firms. Since Dacheng will continue running its own operations, Dentons will avoid the awkward transitional phases that generally accompany mergers. Dacheng will be able to incorporate western ideas and technology while maintaining its own brand.

However, some characteristics of Chinese companies may cause growing pains. While Dacheng, like many Chinese firms, has close relationships with its mainly Chinese state-owned enterprise clients, those clients prefer to work with top-tier New York and London firms on their overseas ventures, not umbrella firms like Dentons. Moreover, the atmosphere at Chinese firms like Dacheng is cutthroat, and partners are more likely to compete than cooperate, potentially hindering the referral process.

Dentons CEO Elliott Portnoy remains optimistic though, expecting Dacheng’s clients to seek Dentons’ attorneys for their ventures outside of China, and Dentons’ clients to seek Dacheng for advice on business in China.

(Photo by Emmanuel Huybrechts via Flickr)

Posted by Lauren Dodillet