Some years ago, mainland Chinese companies that made an initial public offering in Hong Kong would also list their offering on a U.S. market. Such dual listings are now more rare – and that presents lost opportunities to U.S. firms that have no capabilities in the market that last year led the world in IPOs, at $27.2 billion. (But see predictions that legal recruiting will turn to Shanghai within 10 years).

But not all firms consider these facts dispositive.  Some lawyers point to the reduced fees and lower profit margins available in Hong Kong as compared to U.S. legal practice.  Others believe it’s harder to maintain a consistent level of high quality work in foreign-law practice.  Simpson Thacher & Bartlett, Davis Polk & Wardwell, and Sullivan & Cromwell have historically stayed away, or focus on U.S. IPOs for China-based companies.

Still, firms like Shearman & Sterling, London’s Magic Circle and major U.S. firms like Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom, have a long history of establishing local practices globally.  Indeed, Anthony Lin writes in The Am Law Daily blog on AmericanLawyer.com that Shearman & Sterling has recently acquired a Hong-Kong-ready practice by recruiting partners Colin Law and Peter Chen from O’Melveny & Myers. Law, who will lead the office, is experienced in capital markets and once worked for Lovells.

Matthew Bersani, Shearman’s Asia managing partner, says more and more clients are looking for "one-stop-shop" firms. "In Hong Kong listing work, it’s very rare now to see separate U.S. counsel hired.”

Mr. Lin points out that Hong Kong offers only one bar exam a year, in October, and that firms who are merely considering a move may be wise to have their attorneys take and pass it:  “The Hong Kong Law Society requires foreign firms practicing local law to have an equal ratio of Hong Kong-qualified and foreign-qualified lawyers. Having U.S. lawyers who can also be counted as Hong Kong lawyers makes it much easier to meet this ratio requirement should a firm decide on local practice.”

Related:  Mayer Brown calls its merger with Hong Kong’s largest law firm, 260-lawyer Johnson Stokes & Master, an unqualified success.

The Company You Keep

In some markets, you’ve got to be wary of very rich clients, and do your due diligence.  Mainland China, like Russia, has a lot of new and often corrupt wealth.  And some lawyers learn that the hard way.

In 2002, Forbes named Shanghai property developer Zhou Zhengyi the 11th richest man in China.  Not long after, he came up with some tricky methods to acquire a publicly traded company that did property development.  It happened to be part of a history of fraud and corruption, and he ultimately got 19 years in prison.  But that’s not the interesting part, which is:

His lawyers joined him in prison.

Well, maybe not the same prison,  But the three Hong Kong lawyers who worked on his deal — Donald Koo and Vivien Fan of Paul, Hastings, Janofksy & Walker’s Hong Kong office and Simon Lai of Hong Kong-based Deacons – got terms of 2-3 years for drafting the disclosure documents that concealed Zhou’s plans from investors and regulators.

That has led to a lot of soul-searching on the need for more due diligence in wild-west markets like Russia and China, especially on clients whose situations seem too good to be true.

Read the full story of the Hong Kong lawyers caught up in Zhou’s fraud.