The union between Dentons and Dacheng, forged in 2015 to shape the world’s largest law firm with over 6,000 attorneys, has seen a remarkable expansion to approximately 12K lawyers since. Nonetheless, this vast establishment is in the process of its imminent closure as Dacheng opts to separate from the Dentons umbrella. Dentons secures its continued operative presence in Hong Kong – a practice that predates the Dacheng pact.
An emergent draft letter submits Chinese regulatory changes as the major reason for the parting ways. As translated for clients of the erstwhile conglomerate, a changing regulatory landscape in China, constituting new protocols and requirements relating to data confidentiality, cyber security, capital control, and governance, prompts Dentons to alter its association with Beijing Dacheng Law Offices, a member of the Dentons Group since 2015. Effectively this month, Dacheng, originally Dentons’ China Region, will no longer be part of the Dentons Group; instead, it will function as a stand-alone legal entity under a “preferred firm” relationship with Dentons.
A crucial stumbling block to smooth operations of law firms, like Denton and Dacheng, comes in the form of China’s personal data protection laws that have seen recent updates. This newly transformed “China’s version of GDPR” requires any cross-border transfer of personal information to undergo a security assessment, a procedure now perceived as an insurmountable compliance hurdle encapsulated in ambiguous national security rhetoric. The final interaction of the “Measures for the Standard Contract for Cross-border Transfer of Personal Information” and the “Standard Contractual Clauses for Cross-border Transfer of Personal Information”, now in force, reinforce the sanction on trans-border data transfer without a prior security review. Dentons’ divorce from Dacheng would likely be attributed to these stringent regulatory reforms, which deter the functioning of a global law firm structure. As a case in point, within the first six months of the protocol’s initiation, merely two firms managed to successfully navigate through the assessment process.
A potential complication for Western clients is the risk of unintentionally granting access to their law firm’s system to a Chinese government entity during this complex assessment process. With Dacheng’s departure, Dentons is still speculated to continue as a dominant presence with more lawyers on the roll than most others by the following year.
Read the original article here.