KPMG to Close Hong Kong Law Firm Amid Tensions (Correct)

KPMG reportedly is closing its law firm in Hong Kong, joining the list of those scaling back operations in the city and across China amid the region’s authoritarian shift.

SF Lawyers is expected to wind down Hong Kong operations as soon as this month, according to a report from Law.com, citing three unnamed sources.

SF Lawyers is an independent firm of five lawyers associated with KPMG, according to its website. EY, another Big Four consultancy, closed its Hong Kong affiliate LC Lawyers in January.

KPMG declined to comment.

Hong Kong’s economic slowdown has prompted large law firms like Deacons and DLA Piper to trim their footprints in the city. Several major firms, including Latham & Watkins, have shuttered offices in mainland China in recent years amid growing tensions between Beijing and Washington, slow growth, and competition from domestic firms.

China implemented a new data security regime in 2023, giving the government broad authority to shut down or fine companies that leak or mishandle sensitive information. Chinese authorities last year raided the offices of international law firm Mintz and US consulting firm Bain & Co.

The US is set to impose new visa restrictions on some Hong Kong officials in response to what officials describe as a crackdown on civil rights and free speech.

The narrative that all US law firms operating across greater China “are in trouble” is “not true across the board,” according to Evan Jowers, an Asia legal recruiter with Lateral Link. He expects “top tier” firms to thrive when big cross-boarder deal activity picks up.

“In the lower tier of international law firms and the Big Four legal arms, they are being outperformed and outpriced by the vastly improving elite local PRC law firms, which have hired many US trained lawyers over the years,” Jowers said.

“There’s also a bit of a patriotic push currently within China for businesses to use Chinese law firms,” he added.