“Going Out” and Going In-House: Chinese Multinationals’ Internal Legal Capacity in the United States

Abstract

The “in-house counsel movement” of the past few decades, with its far-reaching implications for the legal profession, the legal service market, and corporate governance, has attracted a great deal of academic attention. Few scholars, however, have examined the global expansion of emerging market companies and their in-house legal capacity. To narrow the gap, this article investigates the in-house legal capacity of Chinese firms in the United States. In doing so, it focuses on two important yet underexplored questions: (1) whether and how institutions in China influence the capacity building; and (2) whether the Chinese investors’ ownership structure makes a difference in that regard. By analyzing a unique set of survey data and 122 interviews with lawyers, in-house counsel, and business executives, this article uncovers evidence of both multi-institutional influence and state-ownership effects. The findings contribute to theoretical and policy debates about the legal profession, the legal service market, and the ramifications of expanding Chinese multinational companies.

Trials of trustworthiness between Ethiopian lawyers and Chinese clients

“…In 2004 the State-Owned Assets Supervision and Administration Commission, an institution mandated to oversee and regulate China's SOEs, promoted a strategy to upgrade their in-house legal capacity with an eye to safeguarding state assets. Meanwhile, market forces propelled the expansion of legal departments in private Chinese firms (Li 2021) In Ethiopia, Chinese involvement gradually expanded from infrastructural construction to the hospitality and manufacturing sectors (Fei and Liao 2019;Oqubay 2015;Oqubay and Lin 2019;Tesfaye 2020). The proliferation of activities led to a surge in lawsuits against Chinese firms, most of which they lost because of their lack of legal knowledge and antagonistic attitude.…”

“…Chinese companies in Ethiopia, much like in China, hired legal experts only after the fact (Li 2021). Yet the reluctance of enterprise managers to recruit legal professionals cannot be explained by their mistrust alone.…”

“…In 2004 the State‐Owned Assets Supervision and Administration Commission, an institution mandated to oversee and regulate China's SOEs, promoted a strategy to upgrade their in‐house legal capacity with an eye to safeguarding state assets. Meanwhile, market forces propelled the expansion of legal departments in private Chinese firms (Li 2021). The number of in‐house lawyers of Chinese enterprises had grown considerably by the time Xi Jinping launched the Belt and Road Initiative, which resulted in a rapid expansion of Chinese activities overseas and introduced a new set of legal challenges (Erie 2021; Kidane 2011).…”