Lawyer Zhiheng's conversation with Big Fish Chat Room - "From boutique office to large-scale office, the motivation and trend behind the success of rapid transformation"- Zhiheng Law Firm

Zhang Shanhua, Director of the Management Committee of

, was invited by the Big Fish Chat Room to talk with Mr. Yu Pengming, the founder of Xinze, on the topic of "From boutique to scale, the motivation and trend behind the transformation" in the Big Fish Live Room.

Under the trend of scale, in order to maintain competitiveness, many law firms are seeking to develop and transform, but the transformation is "easier said than done".

Guangdong

is a well-established law firm established for nearly 30 years. Previously, it has maintained the positioning of a professional boutique law firm. Since the end of 2021, Zhiheng has established a large-scale development strategy. In just over a year, it has grown from a dozen lawyers to nearly 300 lawyers, transforming into a comprehensive large-scale firm.

In this live chat room of Big Fish, lawyer Zhang Shanhua, director of the management committee of

, discussed with Big Fish why law firms need to scale up, what conditions are there for law firms to successfully carry out strategic transformation, what institutional support is required for the rapid development of law firms, and what business opportunities are available in Shenzhen's legal service market.

Source | This article organizes the live broadcast record of Director Zhang Shanhua's conversation with Big Fish in the Big Fish chat room

The diverse demand for legal services is driving law firms to expand on a large scale

Big Fish:In the past 10 years, with the continuous increase in the number of lawyers in China, China's law firms have entered a stage of rapid large-scale development. In the future, the development of law firms will show a trend of polarization. The so-called polarization means that on the one hand, the concentration of the industry will be higher and higher, and the advantages of large-scale law firms will become more and more obvious. On the other hand, while more and more large-scale law firms exist, many professional boutique law firms will also be born.

According to the survey data of Xinze, law firms in Beijing and Shanghai account for the absolute dominance of the 100 largest law firms in China, with more than 60%. Although Guangdong Province is economically developed and open-minded, the scale and volume of Guangdong law firms are not as large as we imagine.

The guest we invited today is lawyer Zhang Shanhua, director of the management committee of

and deputy secretary of the party committee of the Shenzhen law industry.

has a history of nearly 30 years of development. It has started a strategic transformation from the end of 2021. Even under the epidemic, it has transformed from a traditional boutique law firm to a comprehensive large-scale firm with nearly 300 lawyers at an amazing speed of development.

In our private conversations, I can also clearly feel that Zhiheng is a very ambitious law firm that wants to go further nationwide. Their thinking and practice must inspire colleagues who are facing the same choice.

So, the first question I would like to discuss with Director Zhang Shanhua is why Zhiheng transitioned from a boutique law firm to a large-scale law firm, and what is the thinking behind it?

Zhang Shanhua:Zhiheng was established in 1995 and was one of the first law firms in Shenzhen to undergo partnership restructuring. I also switched careers as a lawyer that year and spent the previous 10 years working in universities and central enterprises.

Before 2012, Zhiheng had been a traditional partnership law firm. In 2012, Zhiheng was transformed and upgraded for the first time, implementing a full-staff company system reform, which matched Zhiheng's intellectual property-based business characteristics at that time. But later, we gradually found that,The positioning of a professional boutique law firm is no longer suitable for the development of Zhiheng。

First, a single-business boutique law firm cannot fully meet the needs of its clientsFor example, Zhiheng once served the intellectual property business of more than 30 listed companies at the same time, but the knowledge business is only a small part of the legal service needs of listed companies. We can only give up other business needs of customers. In this case, the customer's experience is very poor.

Secondly, the brain drain is seriousOn the one hand, in a corporate law firm, lawyers receive a fixed salary. Over time, the lawyer's service will lack vitality and motivation to further improve the quality. On the other hand, many salaried lawyers want to practice independently after working for 3 to 5 years, but the system at

at that time cannot help them achieve it. Those lawyers who want to practice independently can only choose to leave, resulting in a serious brain drain.

Third, the epidemic brings new challengesAfter the epidemic in recent years, the legal service market has narrowed, client demand has decreased, and many law firms and lawyers in a single business field have encountered tremendous challenges. For example, lawyers specializing in cross-border mergers and acquisitions cannot work normally during the epidemic. And those law firms and teams with a certain scale and rich business types have stronger anti-risk capabilities, which is beyond doubt.

For another example, there is a team of lawyers in Shenzhen who specialize in marriage and family affairs. When the team leader chatted with me, he mentioned that his team had only worked on high-end clients' marriage and family affairs cases before, but later found a problem. In addition to dividing the house, high-net-worth clients' divorces also involved a large amount of equity, funds, stocks, etc., which traditional marriage and family lawyers were unable to handle, so they merged with another team that did real estate and securities business.

Therefore, a single legal service cannot meet the diverse needs of the market. In today's highly competitive market environment, law firms must strive for comprehensive service capabilities and professional talent reserves in the end. Law firms are gradually moving towards scale, which may be a trend that has to be followed.

Big Fish:Director Zhang actually shared three internal motivations for the scale of law firms:One is market demand.The larger the client, the more diverse the needs of the institutional clientsWhen he builds trust in the law firm and team, he must expect the law firm/team to provide more services, because re-selecting lawyers means paying a high cost of trust

Therefore, if you want to retain customers, you must make your business as diverse as possible to cover as many needs as possible.The second is to attract talentYoung lawyers choose a practice platform, and the size of the law firm may be the most intuitive attraction.Third, the external environmentAt present, the industry has entered the stock market from the incremental market. The best competitive strategy is to control risks and "eat more than one fish".

Of course, for lawyers who do individual business and for teams/firms that are unique in a particular niche, the drive to scale is less intense.

So, can it be understood that the "scale-boutique" pattern of the legal industry will gradually take shape, and law firms that are too small or too traditional will be forced to transform?

Zhang Shanhua:I'd like to start by sharing with you a couple of personal stories.

The first story: I once worked in a corporate law firm for more than ten years. Once, the young lawyer in the firm said: "Our law firm has more than ten lawyers, more than 600 square meters of offices, and the law firm served by my classmates has more than 200 lawyers. Working in a five-star office building, I am embarrassed to introduce our firm." This touched me a lot at the time.

The second story: We won a large business in a certain district of Shenzhen. The client said, can you set up a branch in our district? We are rather biased. Lawyers rarely come. We welcome you to open a branch. But at that time, our firm had less than 20 lawyers and could not meet the conditions for setting up a branch.

The third story: The legal director of a bank once invited our law firm to join their firm's lawyer pool. I asked how many lawyers the law firm required for warehousing, and he said 20. I said that our firm did not have 20 lawyers, which did not meet the warehousing standards.

This is the dilemma I encountered when managing a small law firm.

Perhaps more than 10 years ago, the social form was still relatively single and solidified. Although law firms were not large, they could achieve good development by working hard in a certain industry and understanding their customers thoroughly. However, now, there are more and more cross-industry and cross-professional business needs, and small firms may need to make changes.

After working as a lawyer for so many years, I found that when dealing with a lot of business, a profound legal profession is the foundation. Lawyers also need to accurately grasp national policies and industry development trends, have rich experience in dealing with difficult problems, and master new knowledge and new information in order to truly help clients solve problems. It can be said that a diverse society has brought us more challenges and opportunities, and large firms are obviously more capable than small firms.

I have always believed that both boutique firms and scale firms are safe and have their own value, and there is no distinction between the better and the worse. However, the trend of diversified legal service demand in the market is gradually emerging, which deserves the attention of each of our lawyers and makes adjustments to choose a development path that is both in line with the trend and in line with their own reality.

Big Fish:Such a choice was easier said than done, and many people could think of it, but few people could make it happen. What were the main things that Zhiheng had achieved in his successful transformation?

Zhang Shanhua:One is to reach a consensus.I have always believed that it is not difficult to achieve something, but how to reach a consensus. Lawyers have long been independent and equal, and in order to build a large-scale law firm with their own characteristics, it is essential to brainstorm and get everyone to reach a consensus.

When I was chatting and communicating with the peers who were about to be introduced to the law firm, they were all asking for advice on how to solve the common problems we encountered. As a result, the more we talked together, the happier we became, the more excited we became. Together, we actually had the feeling of being a young entrepreneur.

This is a very important premise. The specific development of Zhiheng in the future is thought up by everyone. We are all the designers of the system, the carriages and cannons of this game of chess, and the masters of the law firm. We brainstorm, and what comes out together is the consensus. Zhiheng's current development plan, vision, system, culture, and business direction are all discussed and collided by everyone together, not by me alone.

The second is to have a planEven if it is a three-year short-term development outline, it is necessary to set clear and specific goals: how many and what kind of lawyers to bring in, how many branches to open, and even how many public welfare activities to do and how many party building trainings to conduct must be written into the planningWe must have a plan for doing things, and we must rely on data to speak, so that everyone can know what to do.

The third is to dare to show shortcomingsWhen we bring in talents, we will be open and honest, and we will show them our shortcomings without fooling or evading them. When we decided to transform, our biggest weakness was the lack of business leaders, and the young lawyers in the firm especially needed the guidance of their masters. Even if we hope that these big-name lawyers will join, we will not casually promise how good our law firm is and what benefits you will have after you come, but honestly tell them that Zhiheng needs you to fill the talent vacancy, and we will achieve our development goals together.

The expansion of law firms requires the support of institutional changes

Big Fish:The slogan of Zhiheng is "Based in South China and going national", which is another curiosity of mine about Zhiheng. Because the vast majority of law firms currently deployed nationwide are brand offices in Beijing and Shanghai, and the large-scale offices in South China and other regions have very few willingness and ability to expand nationwide. Why did Zhiheng carry out such a plan, and how to achieve the goal?

Zhang Shanhua:If Zhiheng is limited to Guangdong, it is not enough to attract me to join. When I reach this age, I hope to hurry up and realize my dream.

As a pioneering demonstration area of socialism with Chinese characteristics, the development of the lawyer industry in Shenzhen has not kept up with the pace of the city's development. In the list of large-scale law firms in the country, the number of law firms in Guangzhou and Shenzhen is far from enough. Therefore, I hope that with the efforts of my colleagues and I, we can build a law firm with national influence.

The layout plan of Zhiheng in China started from the core cities of the Guangdong-Hong Kong-Macao Greater Bay Area and gradually expanded to other provincial capitals. Because the Greater Bay Area is a particularly large market and a locomotive leading China's economic development. Regardless of the total economic volume and market environment, the Greater Bay Area is very conducive to the development of the legal industry in all aspects. Except for the Shenzhen headquarters, we have set up branches in Guangzhou, Longgang, Qianhai, Foshan, Dongguan and Hong Kong. After more than a year, the development effect is still very good.

Outside of Guangdong Province, we have also established branches in Jinan and Haikou. This year, we will gradually expand to other key cities, such as Xi'an, Kunming, Wuhan, Changsha, Shanghai, and Chengdu.

Big Fish:To sum up, first, the development level of law firms in South China does not match the local economy and economic vitality, there is room for further growth, and there is hope for more policy support; second, the Greater Bay Area is a very important market, which determines that Zhiheng will start from the Greater Bay Area, follow the economic development pattern and policy trends, and expand to other key cities step by step.

I'm sure many law firm directors will have similar ideas, but this is easier said than done. According to my observation, Zhiheng is very disciplined and fast in the matter of scale. In your opinion, does this have anything to do with the management and business model of the law firm?

Zhang Shanhua:In fact, Zhiheng is similar to other law firms in terms of management structure, the only difference being the executive director team.

Traditional law firms were managed by full-time lawyers, which had many drawbacks. Firstly, they did not have enough experience, and secondly, they did not have enough time and energy. The reason why Zhiheng developed so quickly was that they completely handed over the daily operation and management of the law firm to the executive director team. They did not do lawyer business and could concentrate on the daily management and operation of the law firm according to the plan.

As the director of the management committee of Zhiheng, my main task is two things, one is to build a good team and realize the talent strategy, and the other is to pay close attention to business development. I am not professional or **As soon as I came to Zhiheng, I was impressed by Zhiheng's service. The administrative team of the law firm established a group for me called "Director Zhang Shanhua Team Service Group". Nearly 30 people in the administrative management team joined the group under the leadership of the executive director. If I need anything, just say it in the group.

This service is open to all lawyers.

Zhiheng's administrative management team is very meticulous in service, and everyone is full of praise. The organization of various activities, equipment maintenance, transfer, stamping, invoicing, and other service details are all in place.

Therefore, when someone makes decisions, executes them, and supervises them, and the execution is carried out by a professional team, everything will be relatively easy to handle.

Big Fish:I can clearly feel that Zhiheng's model and concept are relatively new and have achieved practical results. So in the process of scale layout, can such a model and concept be well replicated in each branch?

Zhang ShanhuaZhiheng aims to develop into a nationally integrated large-scale law firm. Although we started late and are not strong enough, it is precisely because of this that we can learn from the experience and lessons of many predecessors. In order to achieve national integration, our branches are directly managed by the headquarters, in order to avoid the headquarters only charging brand co-construction management fees, and there is no investment relation and binding relationship for the branches.

If Zhiheng develops into a large-scale firm with more than 20 branches, but these more than 20 branches are not managed uniformly, have no common interests, and only share a brand, then the management level and service quality must be uneven. If a branch goes wrong, the brand value of the headquarters and other branches will go wrong together, and a "pot" will be smashed together. This phenomenon Zhiheng should try to avoid.

In the early stage of integrated operation, we will definitely lose money, but even if we work hard, as long as we insist on operating with heart and form a national integrated development pattern, there will definitely be a day of harvest.

Innovation is the core of the development of Shenzhen lawyers

Big Fish:In your opinion, how should Shenzhen law firms and lawyers demonstrate their competitive advantage if they want to go national and achieve greater development? What is the room for development?

Zhang Shanhua:I have been in Shenzhen for more than 30 years, and I really like Shenzhen very much. When I first came to Shenzhen, Shenzhen was really a big fishing village. After 40 years of development, no one could have imagined it. When the epidemic raged, most factories around the world stopped production, and our factory in Bao'an District, Shenzhen was still open to produce orders from all over the world.

In the face of major challenges, Shenzhen's industrial advantages and social governance level are deeply reflected.

The city of Shenzhen has always advocated innovation and daring to try, but to be honest, everyone's life has been good these years, and the sense of innovation and enthusiasm have also faded, which is normal. The "deep generation" is about to retire, and how the new generation will succeed is a big problem. The same is true for law firms. Many established law firms with a long history have the same difficult problem of succession for the second generation.

The rise of Shenzhen, despite the blessing of national policies, has largely relied on its own strength. Shenzhen's large state-owned enterprises, central enterprises, and large state investment are less, and its real development relies on a large number of private economies. Therefore, Shenzhen law firms do not have the super-large scale of Beijing and Shanghai law firms, which may be related to the local economic development model.

But in fact, many legal service fields across the country were first developed in Shenzhen, such as bankruptcy liquidation, building mortgages, etc. Therefore, I firmly believe that as long as the government supports and young lawyers are brave enough to innovate, the future of Shenzhen lawyers is bright.

Of course, the Shenzhen legal profession needs to learn more and find a model that can promote the development of Shenzhen lawyers. In fact, the Shenzhen legal profession has undergone great changes in recent years. Many law firms that started in Shenzhen, such as Huashang Firm and Zhuojian Firm, have developed very well. There have been many innovations and improvements in system and management, and they have spread to all parts of the country with rapid momentum.

Big Fish:Since last year, a law firm director has expressed to me the view that the center of gravity of the legal services market will move southward along with the center of gravity of economic development, because most of the cities with the best economic development in China are located in the south, and the development of legal services is definitely directly related to the level of economic development.

The director also said that the construction of the Shenzhen branch will be the focus of the law firm's future development. How do you see this view? Does it mean that there will be more and more opportunities in the legal services market in the Greater Bay Area in the future?

Zhang Shanhua:The legal service market must follow the industry, which is the choice of the market. In recent years, Guangdong has made great contributions to the development of the national economy, and it will continue to make contributions in the future. Guangdong has a good market environment, a developed economy, and an open concept, which is enough to support a super-large legal service market. The construction of the Guangdong-Hong Kong-Macao Greater Bay Area is a national strategy and an important engine for the country's development in the next few years. Shenzhen is a core city in the Greater Bay Area, which has important strategic significance. Coupled with the relaxation of Beijing's non-capital functions and the relocation of a large number of central enterprises to the south, under the superposition of various factors, Shenzhen will definitely become a "must-fight" for law firms across the country in the future.

The year before last, our Shenzhen lawyer industry party committee inspected the party building work of various law firms and assigned me 10 law firms for inspection tasks, all of which were in the same building. I went over and saw that they were all branches of Beijing law firms, some of which were very large, while others were very small. I asked, why is your firm only 300 square meters? The other party said, let's occupy a space first.

Therefore, large firms, small firms, red circle firms, boutique firms, and scale firms are all setting up locations in Shenzhen, which proves that the industry has high expectations for the core regional market in Shenzhen. I am very confident in the development of the legal service market in Shenzhen. It depends on how law firms and lawyers choose and act.

Big Fish:I have always had the same impression of Shenzhen, which is innovative, inclusive and striving. As a senior in the industry, can you give us some directional suggestions: in your opinion, what innovative businesses or opportunities are worth the attention of Shenzhen lawyers?

Zhang Shanhua:In the next three to five years, the legal service market will need to keep a close watch on the introduction and adjustment of national strategies and national industrial policies, and pay attention to changes and trends in the economic situation, which is very instructive for the adjustment of lawyers' business.

The first business worth lawyers' attention is bankruptcy.For example, now Shenzhen has proposed high-quality development. Coupled with the major changes in the domestic and international situation and the impact of the epidemic in recent years, a large number of enterprises that do not conform to the development of the times, do not conform to industrial policies, and have broken capital chains have entered the stage of bankruptcy liquidation and bankruptcy reorganization. I have always believed that bankruptcy business may be a blue ocean business for our legal industry in the future.

The second is legal services related to green environmental protection.The green industry has become the main battlefield of competition between different countries. The Central Economic Work Conference in December last year made it clear that it is necessary to support consumption such as housing improvement, new energy vehicles, and elderly care services. Therefore, I believe there is also a lot of room for development in this area.

The third is artificial intelligence.Shenzhen has been at the forefront of the domestic artificial intelligence and digital economy. Lawyers, especially young lawyers, should be brave enough to rush up, learn about the latest cutting-edge scientific and technological information, and take the initiative to provide legal services.

We emphasize that law firms should closely follow the national strategy because the national strategy largely determines the state of the legal service market. So I think within three to five years, we should keep an eye on the adjustment and changes of the national industrial policy on the one hand, and the changes in the market on the other hand.

Big Fish:I can hear that the core of your logic is still innovation, which is also very consistent with my understanding of Shenzhen. Finally, I have another question, and I would also like to hear your opinion:

"High-quality development" is a very grand social proposition, even a historical proposition. At present, all walks of life are advocating, and each industry has its own characteristics. So in your opinion, what does the high-quality development of the legal profession mean?

Zhang Shanhua:A law firm also needs to develop with high quality, and it needs to practice its internal skills hard. It is the most important thing to improve its service ability. To avoid increasing the scale, the quality of service will come down, and the customer will run away, and the size of the law firm will not be guaranteed. Zhiheng is still a "recruit", and he needs to step down and find his own problems and shortcomings, and solve them one by one.

From the outside, law firms need to develop with high quality, and they also need to adjust their business structure to eliminate outdated ones that do not conform to national policies and market requirements. Many times it is not that there is no market, but that your business cannot keep up with market changes and requirements. There are also many large enterprises in Shenzhen, but why do they prefer to find lawyers in Beijing and Shanghai? Therefore, the market is just around the corner, and whether we have the ability to take it down is the most important thing.

Big Fish:I agree with Director Zhang very much. First of all, we need to refer to the external manifestation of high-quality development in other industries, adjust the customer structure and business structure, and let those businesses that are more in line with the requirements of the times, customer needs, or have long-term development value stay. Second, this matter can't be said by mouth alone, and it can't be done by director alone. Professional people must do it.

As a platform and an organization, a law firm has to have independent value. In short, it has to serve lawyers well, so that lawyers will be willing or easier to take root on this platform and promote the high-quality development of law firms. And this matter actually puts forward higher requirements for the ability of law firms.

* This article is from the official account