WilmerHale is leaving China, and they're not alone.

The Big Law firm is shuttering its Beijing office after 20 years in China, and joining a slew of other Big Law firms reassessing their presence in the country.

"Like many others, WilmerHale has evaluated our global footprint and has made the decision to close our office in Beijing," the firm said in a statement this week, reports Reuters. Skadden, Reed Smith, Perkins Coie, Dechert, Morrison & Foerster, and Sidley Austin have all closed their China office this year.

Reuters adds that "a growing number of major U.S. law firms have shrunk their footprints in China over the past two years, amid growing pressures on foreign businesses, economic uncertainties, muted deal activities, and geopolitical tensions."

“Major US law firms used to advise on a lot of US IPOs, but we’ve seen a reduced number … and many delistings over the years,” Simon Luk, a consultant at Hong Kong-based law firm Kwok Yih & Chan and former Asia practice chair of Winston & Strawn in Hong Kong, told the China Business Law Review. “US investors and Chinese companies that want to debut in the US were discouraged by Washington DC’s additional scrutiny. Beijing has also tightened its regulations, which have led to US and European companies fleeing from China; the business environment has changed.”

To fill that void, Ray Liu, the managing partner of Dorsey & Whitney in Beijing, says UK firms has pushed in farther. "Certain UK law firms, such as the ‘Magic Circle’ firms, have expanded overseas over the past decades with spreading geographical presence and diverse practice portfolios." Liu adds: "Taking Dorsey as an example, we have tailored our legal services to meet the needs of local clients. These proactive efforts have also been well received by clients.”

US Investment

The US Treasury Department has severely restricted investment by American companies into Chinese tech (and specifically AI) companies.

New rules taking effect on January 2, 2025, will be overseen by the newly-created Office of Global Transactions, reports Reuters.

"U.S. investments, including the intangible benefits like managerial assistance and access to investment and talent networks that often accompany such capital flows, must not be used to help countries of concern develop their military, intelligence, and cyber capabilities," Paul Rosen, a senior Treasury official, said.

Verdict

The world continues to be in state of acute political and economic flux accelerated by the pandemic and its aftermath. As geo-political tensions rise across the globe, the rift between the US and China appears to be widening. While Big Law firms may be able to advise clients in China from abroad, the costs of remain in the country (both financial and political) may be reaching a breaking point.