Law firms in Hong Kong in the line of fire

In March, when China slapped sanctions on Essex Court, the UK barristers’ set, Guy Sandhurst QC issued a warning.

“Today, it is the members of Essex Court Chambers who are sanctioned,” the former chair of the Bar of England and Wales said. “But tomorrow it might be Clifford Chance, Freshfields or some other major city law firm or chambers of barristers which wittingly or otherwise offends the Chinese state.”

Essex Court was targeted after its barristers provided legal advice to a non-governmental organisation over how to describe Beijing’s policies on the Uyghurs in Xinjiang in north-west China. But taking on cases that might be seen in a more positive light in Beijing can also prove problematic, as the international law firm Mayer Brown found out.

Its experience with a case about the removal of a monument commemorating the 1989 Tiananmen massacre from Hong Kong university’s campus shows how difficult the waters that multinational law firms in the territory must now navigate are.

Mayer Brown, which operates in 26 countries, agreed to represent the university, a longtime client, as it sought to remove the monument known as the “pillar of shame”.

This soon drew criticism from pro-democracy activists in Hong Kong and US Republicans as China’s tightening grip on the territory extended to academia. Outspoken academics have been sacked and students subjected to national security education programmes.

Mayer Brown subsequently backed away and said it would no longer be representing the university on the case. Shortly after the U-turn, CY Leung, Hong Kong’s former leader, called for Chinese companies to boycott the firm.

While there has been no formal statement from the Chinese government backing Leung, he still has a formal position in China’s governance and he is in regular contact with officials. Leung is the vice-chair of the national committee of the Chinese People’s Political Consultative Conference, a mainland political advisory body.

The fallout has raised questions about why Mayer Brown took on the job. The firm initially said it was just an extension of the real estate work it already did for the university.

Gary Watson, a former Mayer Brown partner, says while he was personally not in favour of the decision to work on the matter, “the university of Hong Kong is a longstanding client”. “I could see they would find it very difficult [to refuse the instruction],” he says.

The university board is also chock full of influential government figures, including one who sits on an “executive council” that advises the city’s leader.

Within Mayer Brown, there also is likely to have been differences of opinion on such work. “There will be people who are pro-democracy and there are some people more in line with China,” says Watson.

Two senior Hong Kong lawyers add that the Hong Kong branch of Mayer Brown might have been more led by domestic considerations rather than international issues. It had maintained greater autonomy from its parent after its 2007 merger with Johnson Stokes & Master, a local firm seen as more establishment or pro-government. One partner sits on a Chinese government body.

The situation neatly demonstrates the increasingly difficult dilemma for corporations in Hong Kong as Beijing demands more ideological loyalty from its commercial sector.

Some foreign Hong Kong corporates have been encouraged to vocally support government policies that western politicians have slammed as oppressive. This includes the national security law imposed on Hong Kong last year which critics say has curtailed dissent and political freedom in the territory.

Additionally, Xi Jinping, China’s leader, has recently embarked on a push to overhaul the business sector through his “common prosperity” project to bring it into line with the state’s goals.

At the same time, companies in the US and Europe are facing greater expectations to take a more active stance on social issues. Mayer Brown, for example, has been a vocal supporter of the Black Lives Matter movement.

Antony Dapiran, a longtime Hong Kong lawyer, argues: “It’s possible to be a ‘good corporate citizen’ in the US or in China but not both.”

When asked about working on the pillar of shame case, Mayer Brown said: “Our legal advice is not intended as commentary on current or historical events.” But for those straddling the divide between China and the west, firms should only expect more scrutiny and criticism when they disappoint one side or the other.

primrose.riordan@ft.com