Magic Circle UK firm Linklaters is reducing its Greater China legal workforce in response to what it describes as a “prolonged downturn” in the China market.

The job losses will affect all three of its offices – in Beijing, Shanghai and Hong Kong – with 30 roles understood to be affected.

Linklaters has one of the largest legal teams of any international firm in China. According to its website, the current headcount stands at 220, of whom 38 are partners, alongside 16 counsel. 

The vast majority of lawyers, however, are based in Hong Kong, which remains the leading Asia hub for international firms despite the imposition by Beijing of a controversial national security law in 2020 which was used to stamp out the pro-democracy movement in the Special Administrative Region.

“In response to the prolonged downturn in the China market, we have decided to make a modest reduction to the number of lawyers in our Beijing, Shanghai and Hong Kong offices,” the firm said in a statement. “China continues to be an important market for Linklaters. The firm is fully committed to the China market and continues to have the strong capabilities required to service the ongoing needs of our global clients in that market.”

The extent of the slowdown in China legal work is illustrated by research published by Law.com this week. It reported that more than 85% of China’s top 45 firms had recorded significant falls in their fee income, which it put down to extended Covid-19 lockdowns “combined with Beijing’s push for domestic economic growth, its tightened regulation of data and national security, and continued US-China tensions”.

Three major strategic moves by international law firms over the summer have underlined the challenges of operating in China, suggesting that law firms are revisiting their China strategies.

In July, Eversheds Sutherland’s international arm and King & Wood Mallesons’ (KWM’s) China business unveiled an exclusive alliance. Then, last month, Dentons cut its ties with its China arm citing Chinese cybersecurity and data protection laws, and Latham & Watkins announced it is closing its Shanghai office in a strategy shift that will see it operate its mainland China team out of a “consolidated hub” in Beijing.

In an interview with GLP, Eversheds Sutherland’s international CEO, Lee Ranson, said: “The traditional strategy for law firms wanting to operate in China in recent years has been about opening offices: that reflected the relationship between the US and China at the time. But with the world as it is today, is that strategy going to be effective?”

Last week, it emerged that CMS is kicking off a redundancy consultation affecting its UK corporate practice. The consultation marks the latest of a steady stream of cuts among leading firms that have predominantly impacted US tech-focused firms and kicked off last December when Cooley said it would axe 150 US employees including almost 80 attorneys.