New York Times

The USA China Law Group gets mentioned in an article published by the New York Times.
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On July 11, 2008, attorney Julia Zhu met with Professor Zhi Yi He, Ashley Lan, Ling Yun, and Jinzi at Beijing University to discuss the USA-China Law Group’s potential involvement in the 2nd Annual International CEO Roundtable of Chinese and Foreign Multinational Companies on November 15th & 16th 2008 in Beijing.  The theme of this roundtable is to strengthen international cooperation and promote sustainable business development.

This event is approved by the Ministry of Commerce of People’s Republic of China and includes an impressive list of attendees including 15 Chinese Ministers, 20 Chinese and foreign mayors, and18 global CEO’s from Fortune 500 companies to name a few.  The USA-China Law Group is also now recognized as a preferred law firm in the Shanghai & Changzhou Municipal People’s Government attorney referral networking list, accessed by US companies looking to do business in China.

Kellie Schmitt
The Recorder

For many years, U.S. law firms have been rushing into China, investing people and resources to help clients on the ground there.

Now, a Chinese firm is mimicking their strategy — opening a representative office in the United States. This year, Guangzhou-based Alpha & Leader, with more than 60 lawyers, planted its flag in Los Angeles.

The firm is among a handful from China that have set up shop here — such as King & Wood in Silicon Valley and Jun He in New York City — likely harbingers as Chinese law firms mature and expand internationally.

“I think we’re going to see more Chinese firms here — they want to have a footprint here,” said Robert Allan, the managing partner of Alpha & Leader’s Los Angeles office.

For now, the advantages for Alpha of having its five-lawyer office here are mostly practical, he said. They also mirror what American firms say about opening in Asia: It’s helpful to have someone based in the distant time zone, who literally speaks the client’s language.

Allan is a Canadian-trained lawyer who has been a solo practitioner in the U.S. since 1985. In 2003, a client suggested that Allan meet one of the client’s Chinese lawyers. Through an interpreter, he connected with Wesley Pan, now the senior partner in Alpha & Leader’s China office. The two started working together under a loose alliance called the USA China Law Group. This summer, they formalized the relationship under the Alpha & Leader name, and Allan now devotes most of his time to the firm because, he says, the name says it all.

“We’re first and first. You can’t beat that.”

He and Pan formed an alliance that resulted this summer in the L.A. representative office.

The firm targets much of its practice on a specialized niche: the purchase and sale of non-performing loans — loans that are in or near default. As the Chinese government has transferred NPLs from state-owned banks to asset management companies over the past decade, it opened the door for foreign investors. Those foreign investors were looking to invest in China’s development, but were limited by the Chinese government’s currency restrictions and rules governing foreign ownership of property, Allan explained.

The legal work includes locating a loan, doing the due diligence on it, and handling the actual transaction. The firm’s clients include Chinese banks and asset management companies as well as purchasers such as Citigroup, Bank of America and Goldman Sachs.

Allan said it was Pan who realized that a firm could find a lot of work in that specific area.

“Wesley’s theory really struck me — I thought it was an astute observation,” Allan said.

Alpha & Leader has been involved in some aspect of more than 50 percent of the transactions involving non-performing loans in China, Allan said. Its competitors are other Chinese firms and American-trained lawyers such as Howard Chao, the head of O’Melveny & Myers’ Asia practice.

But Chao said he wasn’t familiar with Alpha, and dismissed the importance of a non-performing-loan practice for firms like his.

“The NPL practice in China has not blossomed the way some people thought it would,” he said “The market for those deals has been decidedly smaller and local, domestic. There haven’t been large-sized transactions anymore.”

Chao attributes that, in part, to the policy of the Chinese government that encourages smaller, domestic bidders. There’s so much liquidity in the Chinese domestic market that they don’t need foreign investors in that sector, he said.

But, within China, Alpha & Leader is known as the go-to counsel on NPL portfolios, said Jinshu “John” Zhang, the head of the China practice at Greenberg Traurig, a firm that has sponsored Alpha attorneys to work in its L.A. office for a summer.

“In connection with the sale of NPL portfolios, they have worked with quite a few major I-banking houses,” Zhang added.

ALPHA’S BEACHHEAD

Alpha’s L.A. outpost houses five lawyers, all of whom are U.S.-trained. As a representative office, the attorneys focus on coordination, strategy and referrals for the firm’s China offices.

Their Malibu office, accentuated with high ceilings and exposed white beams, was Demi Moore and Bruce Willis’ former gym, back when the now-divorced couple lived across the street in a home overlooking the ocean.

Allan said it’s a great location, though it’s separated from the city’s typical legal hub by miles of infamous Los Angeles traffic.

“I would rather fly to China than drive to downtown L.A.,” Allan said.

Among their U.S. attorneys is Julia Zhu, an associate with law degrees in both the U.S. and China who has served as a judicial clerk in a China district court. She had been working for another small law firm in Los Angeles — Brinkman Portillo — but decided she “wanted something more.”

Zhu’s expertise comes in handy when helping U.S. clients navigate the Chinese markets.

“It’s not only about lawyering,” she said. “You really need to understand the mentality of the Chinese business community.”

She offered the example of cautious American investors who wanted to insert a clause prohibiting money laundering in a contract, and the offense the Chinese took at the suggestion.

The firm is already looking into expanding its reach in the U.S. They have an exchange program with Greenberg Traurig, and, this month, agreed to an exclusive affiliation with Bryan Cave, an 800-lawyer firm. Bryan Cave will be the preferred firm to support Alpha on work in the U.S., and Alpha will become Bryan’s preferred firm for local law services in China.

ENTERING THE U.S. MARKET

James Zhu, a Perkins Coie partner who helped established that firm’s Shanghai office, said he recently attended a conference in Hong Kong that discussed whether more China firms would be entering the U.S.

As of now, there are just a handful of major Chinese firms with U.S. outposts.

“I think, given the economic transactions between the two countries, we’re going to see such trends,” Zhu said. “The caveat, right now, is that their offices in the U.S. are just windows to help clients’ needs, but the majority of the work here is done through collaborations with U.S. firms.”

That’s largely because of the more recent establishment of larger Chinese law firms, many of which are still catching up to their international counterparts when it comes to sophisticated lawyering and full-service firms.

That is changing though, lawyers say.

“Chinese law firms are getting bigger and stronger and they have clients throughout the world,” said O’Melveny’s Chao. “It’s the next step.”

The advantages to having one’s own office — instead of just linking with U.S. firms for work here — include having greater control of the work pipeline and developing stronger relationships with clients, Chao said.

But setting up shop in the U.S. is very costly and time-consuming, he pointed out. It’s hard to find the resources to devote to opening an office abroad, given the demanding work climate for legal services in China.

Firms will probably be encouraged to do so as more Chinese companies come to the U.S., Greenberg’s Zhang predicted.

Zhang agreed that there’s still a steep learning curve for Chinese firms. Large-scale transactions require sophisticated, full-service U.S. counsel, and having a small outpost often isn’t enough to fulfill those needs.

If they do establish a U.S. office the likely choices are Los Angeles — and the entire West Coast of North America — he said. The closer geographic proximity and the more culturally welcoming atmosphere are key, he said.

But even though more Chinese firms are likely to follow Alpha’s example, Zhang pointed out that the real trend will largely remain in the opposite direction.

“The important moves are still in China, not here,” he said. “We’re opening an office in Shanghai as we speak.”

LOS ANGELES BUSINESS JOURNAL

Posted date: 10/22/2007
Chinese Law Firm Establishes an Outpost in Los Angeles

INTERNATIONAL: Alpha & Leader wants to better compete for trade business.

By DREW COMBS
LOS ANGELES BUSINESS JOURNAL STAFF

Chinese law firm Alpha & Leader has set up shop in Los Angeles.

The new outpost is a sign of the increasing amount of legal activity resulting from trade between China and the United States.

More than a dozen large American law firms have offices in China, including L.A.-based Sheppard Mullin Richter & Hampton LLP and Latham & Watkins LLP. There are more than 150 foreign law firms with an office in China. And while far fewer Chinese law firms have come to the United States, Alpha & Leader is not the first to set up shop in America. For example, China’s King & Wood has had an office in San Francisco since 2001.

Alpha & Leader has itself had a presence, of sorts, in America since 2003 with an affiliated law firm called the USA China Law Group. But more recently, the firm decided to establish a full-fledged office to better compete for legal business related to Sino-American trade.

Malibu-based attorney Robert Allan will oversee Alpha & Leader’s efforts here, while maintaining his own separate practice.

Alpha & Leader will provide a bridge to firms and mid-sized businesses that want to do business in China, Allan said.

According to Sunny Lin, a China-based attorney with Alpha & Leader, it is the leading law firm when it comes to non-performing loan transactions, a primary vehicle for investing in China. Non-performing loans are those made by state-owned banks to state-owned companies, a way of business life in Beijing.

If a company wants to buy assets in China, the acquisition of those assets is typically accomplished by acquiring a non-performing loan portfolio, Lin said.
In addition to Allan, two other attorneys associated with the firm are based in the Los Angeles office.

by Maya Meinert

Daily Journal Staff Writer

For law firms attempting to capitalize on emerging markets in China, opening outposts in that country makes sense. Latham & Watkins, Paul Hastings and Morrison & Foerster are a few of the many U.S. firms that have opened offices there to better serve their clients’ interests.

And now, Chinese firm Alpha & Leader has done the same for its U.S. clients.

One of the first Chinese firms to establish an outpost in California, and possibly the first in Los Angeles, Alpha & Leader recently started doing business as Alpha & Leader U.S. out of its North American attorney Robert J. Allan’s Malibu office.

Allan, 58, who is also a Canadian barrister and solicitor, has been working with Wesley W.S. Pan, Alpha & Leader’s founding member and managing partner at the firm’s headquarters in Guangzhou, China, since 2003 under the name USA China Law Group. As the practice grew and relationships were formed with U.S. law firms, Allan and Pan decided to bring USA China Law Group in line with the Alpha & Leader name.

“We’re the bridge,” Allan said. “We established the North American representative office for the same reason that a U.S. firm would open a representative office in Shanghai. It makes it easier to represent clients and makes us more accessible.”

Allan said an office in the Los Angeles area also makes more sense than one in New York, for example, because of its proximity to Asia and to the immigration and trade hubs in L.A. Keeping the office in Malibu, where Allan lives, as opposed to moving it to a more central location, will work fine, according to Allan, because most of the work is done electronically.

Two other Chinese law firms, Shanghai-based Albright Law Firm and Beijing-based King & Wood, have established offices in California. Albright’s office was in San Francisco until its closure early this year, and King & Wood maintains an office in San Jose.

Alpha & Leader has 60 attorneys firmwide and six in its Malibu office.

The firm assists its U.S. clients, which include Goldman Sachs, Citigroup, Deutsche Bank and Bank of America, in entering the China marketplace, mainly by the purchase and sale of nonperforming loans in China.

By acquiring nonperforming loans, a company buys the creditors’ rights, which include the right to foreclose on that property. Because China restricts the amount of foreign currency coming into the county, buying real estate or equity in a company is much harder than buying a loan. Purchasing a loan makes rights more easily transferable from one party to another; therefore, money is transferred much more easily into and out of China.

Alpha & Leader started advising its clients in the nonperforming loan business in 2000, when Chinese government-owned banks that had loaned to other government-owned entities started to transfer these uncollected loans to asset management companies. The Chinese government needed to clean up its balance sheets to fulfill its World Trade Organization obligations, and transferring these loans shifted the risk to the asset management companies, which sell these loans below market value.

PricewaterhouseCoopers is one of the companies Alpha & Leader has assisted in the purchase of nonperforming loan portfolios, as well as aiding investors in Chinese companies.

Ted D.E. Osborn, a partner in PricewaterhouseCoopers’ Hong Kong advisory division, described the advantages of a Chinese law firm having a U.S. office.

“Having your lawyer close to you is important, particularly in the heat of battle,” Osborn said. “By setting up shop in the U.S., Alpha & Leader has brought its local market expertise closer to its U.S. client base.”

John M. Gatti, a litigation partner in Greenberg Traurig’s Los Angeles office, has worked with Allan for the last four years on Alpha & Leader client matters.

“Working with Alpha & Leader helps because they have the local knowledge that you’ll need in dealing in China, whether it’s with the government or in the non-performing loan area,” Gatti said. “They perform the due diligence, make sure things are done correctly, make sure you don’t have legal problems. They can steer clients in the right direction because they know the better properties.”

But not everyone is convinced that establishing an outpost here will have a big impact on the way business is done between the United States and Asia.

“There are a lot of Chinese firms that have relationships with U.S. firms to help their U.S. clients accomplish things in China, so that’s not so unusual,” said Peter Zeughauser, an industry consultant with the Zeughauser Group who has helped U.S. law firms establish outposts in China.

Arthur M. Tsai, secretary of the Southern California Chinese Lawyers Association and partner with the Pasadena-based Castellan Law Group, agreed with Zeughauser’s assessment.

“If this firm is coming here strong, creating a presence, marketing heavily, then that’s a big deal,” said Tsai, who practices business and commercial litigation. “But I guess it’s easier for us in the U.S. to go to Asia and establish an office. It might be more difficult for a firm in China to be successful and have the resources to come here. In that sense, it’s significant.”

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© 2007 Daily Journal Corporation. All rights reserved.