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China’s Best In-House Legal Deparment: Eastern China Airlines

Established in 2009 with a legal staff of 22, Eastern China Airlines’ in-house legal department was awarded “Chinese Company In-house Team of the Year” at the 2010 ALB China Law Awards.  This is quite an accomplishment for such a new legal department, especially considering the turbulent global aviation market.  Eastern China Airlines Corporation Limited is the country’s top-three carrier listed on the Shanghai, Hong Kong and New York Stock Exchanges.

What’s made the difference? 

General Manager, Lijun Guo, who joined the company in 1994, has had a lot to do with it. “The legal department is now regarded as critical as [the] finance and audit departments in our company. It’s a cost-effective and expert resource for all the company’s legal affairs. Its influence is on the rise in every stage and aspect of the company’s operations,” he says.  His efforts in recruiting and taking more responsibilities to increase the legal department's profile within the company can be credited for much of its success.

What have been some of the highlights?

Raising RMB$14bn through A-share and H-share equity placements, the absorption of Shanghai Airlines via share swap – a high-profile and complex transaction involving RMB$16bn asset acquisition, over 50 aircraft transactions with a total value of US$10bn, the negotiation and preparation of the company’s merger with SkyTeam, compiling a comprehensive anti-trust and competition, and creating compliance manual for all of its employees, providing key information on antitrust and competition laws in major jurisdictions, including US, Europe, Japan, China and Australia.  Not bad in less than two years with a relatively small legal staff.

How did that success evolve over time?  

The airline’s expansion and adverse market conditions triggered a substantial increase in legal needs.  As a result, the company increased its legal staff, and soon realized it capacity to handle major transactions, and ability to cut down cost by reducing its reliance on outside counsel.

Sounds familiar?  

While Chinese companies have traditionally relied on outside counsel to handle their legal needs, more and more are turning to in-house counsels to do the job, and growing their legal departments to handle increasing legal demands.  This is a trend that is very likely to continue.

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Hot Summer and Cool Legal Job Market

While we may be experiencing a sizzling hot summer this year, the same can’t be said about the job market.  What’s it like out there?  Clearly, we are not out of the woods, and may even be scaling back.  With the headline unemployment rate ticking back up to 9.1 percent in May, the sense of alarm over the state of the economy is once again growing. And it's not helped by a slew of recent reports on everything from the continued high rate of foreclosures to the precarious position of the Greek debt crisis.  Things are still incredibly tough in the job market with layoffs outnumber hiring announcements by a sizeable margin.

Where does legal stack up in this declining employment market?

The legal sector lost 2,600 jobs in June 2011 according to the U.S. Bureau of Labor Statistics report; making it the fourth consecutive month this year the industry has seen declining job prospects.  Who is affected?  Pretty much everyone in the legal sector: lawyers, paralegals, notaries, and the support staff needed to run law firms, such as secretaries and accountants according to the Wall Street Journal Blog.  The fall in legal jobs this past month – the biggest decline so far this year – came on the heels of a hint of recovery in May, during which 200 jobs were added, according to the BLS report.

How is this decline impacting unemployed lawyers?

The Great Recession eliminated thousand of lawyer jobs, which never quite returned.  This has left a huge hole in the marketplace, with thousands of well-qualified attorney still looking for employment – many hitting the 2-year mark. And there is no visible change on the horizon.

The long line of the unemployed is not comprised of lawyers that are unqualified or not well credentialed.  This candidate pool, for the most part, is made up of experienced attorneys with more than 10 year of experience, who have had a solid record of employment, until the Great Recession.  The majority never bounced back simply because the jobs never returned.

The change was profound in the legal industry, as both law firms and corporate legal departments have adjusted to doing “more with less.”  How does this work? Those that survived layoffs are working more, and firms and corporate legal departments are spending less by not hiring.  If firms and corporate legal departments are hiring, it’s most often for part-time and contract positions – and the competition for these jobs remains fierce.

What about the in-house legal market?

Companies, for the most part, are not hiring.  Companies that are hiring lawyers are generally looking for general counsel-level candidates to take the legal work in-house and reduce outside counsel spending.   They are looking for a "one man shop" to take on as much as possible in-house and curb legal spending.  They are also hiring part-time and contract lawyers to fill in the gaps, and increasing their outsourcing whenever possible.  In other words, they are hiring as a cost-saving measure.

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