CHINA (PRC FIRMS): An Introduction to Dispute Resolution: Litigation

Dispute Resolution: An Overview of Litigation 

Litigation is a firewall against commercial risks. In the context of the pandemic, litigation practice must respond to various changes in the environment, such as economic downturn, tighter regulation and the delegation of trial powers to lower levels, and has featured the trends of "more diverse customer needs", "new types of legal instructions" and "increased competitive intensity".

First of all, the economic downturn has stimulated the growth of demand for legal services and clients are setting a higher bar on firms' ability to deliver comprehensive services firms, which is exemplified in the following three aspects:

a) Clients tend to transfer their experience in dispute resolution to risk prevention, and re-examine commercial transactions against risks from a litigation perspective. Such practical shift in requirements by clients has further blurred the boundaries between litigation and non-litigation matters, and requires litigation lawyers to get involved in the whole process of commercial transactions with ability and mindset to provide comprehensive services.

b) Clients' requirements for the ability to dispose of assets and the liquidity efficiency have risen significantly. In 2021, the first year of the 14th Five-Year Plan, the national policy grip on the financial services, real estate and education sectors has continued to intensify, and quickly that has a knock-on impact onto the legal services industry, resulting in closer connection between legal services and capital operations. Lawyers not only need to stay ahead of the curve in the rapidly changing policy environment, but need to demonstrate strength in resources integration in collaboration across teams and regions. For example, the ability to quickly receive and dispose of the assets of the transferee and the ability to coordinate with other creditors in bankruptcy proceedings would often become the key to win clients in insolvency matters.

c) Clients’ demand for cross-border legal services has increased sharply. The COVID-19 pandemic has inflicted heavy losses on the global supply chain and given rise to frequent cross-border disputes. There has been an increasing demand by domestic clients for assistance with cross-border litigation and arbitration cases and the preservation and disposal of overseas assets. With the PRC legal services market being further integrated into the global market, clients now prefer law firms which showcase capabilities of global collaboration.

Moreover, the rise of new economic growth poles has promoted the formation and development of new business sectors, most notably the internet and intellectual property. Sector giants such as Tencent and Alibaba and unicorn companies such as ByteDance, Didi, and Kuaishou have not only reshaped the economic landscape but also created a new blue ocean for legal services for this sector. Legal services concerning data security, offshore compliance, privacy protection and monopoly issues become in demand and law firms have quickly responded and established specialised teams to cater for that rising need. In the field of intellectual property, events such as COVID-19, the Sino-US trade dispute and Huawei's chips have brought the strategic significance of domestic innovation to an unprecedented height, while intellectual property disputes in the fields of biomedicine and artificial intelligence have become hot topics, areas that TianTong also cover and focus on to serve high and new tech enterprises.

Finally, the delegation of trial powers to lower levels has intensified competition in the regional market and placed higher requirements on lawyers' professional service capabilities. Since 2019, the Supreme People’s Court ("SPC") has launched the reform of the civil trial functions of four-level courts. After a series of policy adjustments, the number of cases accepted by the SPC and the higher people's courts has decreased significantly, and a large number of cases will pile up and be handled by the primary and intermediate people's courts. Accordingly, the litigation practice has to face the same trend of delegation to lower levels, and the geographic advantage of lawyers based in provincial capitals or first-tier cities, where the proceedings of the higher people's courts or SPC are heard, will no longer exist. As a result, all lawyers are now competing for mandates of major cases and regional competition continues to heat up. In the meantime, since the issue of limited resources available at primary and intermediate people’s courts with few number of judges dealing with increasing load of cases has become prominent, having no court hearings for the second instance will become a norm. This requires lawyers to be more professional to meet the needs of judges to rule cases in a rapid and accurate fashion, by offering more refined oral advocacy as well as more organised and persuading written materials.

In 2021, the global economy underwent a major test and lawyers faced great uncertainty in terms of how the environment and market will develop in the future. However, there are always opportunities in crisis. No matter how the external environment changes, the delivery of professional and refined legal services remains a key to the practice. We believe that the market of commercial litigation practice will continue to grow and lawyers are expected to keep improving their professional service capabilities, adapt to changes, and grow together with their clients and the market.

争议解决：诉讼领域概览 

诉讼是商事风险的防火墙。在全球疫情的背景下，诉讼服务不得不回应经济下行、监管加码、审级下沉等多种外部环境的变化，显示出“客户需求更为多元、新类型业务不断涌现、竞争格局更为激烈”三大特点。

首先，经济下行刺激了法律服务需求的增长，客户对律所及律师的综合服务能力提出了更高的要求，具体表现在三个方面：一是客户需要将争议解决的经验反哺到风险防控，以诉讼的视角重新审视商事交易风险，这进一步模糊了诉讼与非诉的界限，要求诉讼律师必须以更为综合的服务能力融入商事交易全程；二是客户对资产处置能力和变现效率的要求明显提高。

2021是十四五规划开局之年，国家在金融、地产、教育等领域的政策调控持续加码，其影响也迅速传导至法律服务行业，促使法律服务与资本运作的联结更加紧密。律师不仅需要在快速变化的政策中保持领先的专业研究能力，更需要在跨区域、跨团队的协作中展现资源整合优势，譬如能否快速对接待处置资产的受让方，能否在破产程序中统筹其他债权人等，往往会成为赢得客户的关键；三是客户的跨境法律服务需求激增。新冠疫情致使全球供应链遭受重创，跨境纠纷频出。境内客户对跨境诉讼及仲裁、境外资产保全及处置的需求明显高涨，中国的法律服务市场更进一步地融入了全球法律服务市场，客户将更青睐在全球范围内拥有协同服务能力的律所。

其次，新经济增长极的崛起推动了新业务板块的形成和发展，表现最为明显的是互联网和知识产权。腾讯、阿里巴巴等巨头，字节跳动、滴滴、快手等独角兽企业不仅重塑了经济格局，也带来了法律服务新蓝海。数据安全、出海合规、隐私保护、新型垄断等法律服务需求应运而生，各大律所快速响应并组建了专门的业务团队，争抢潮头。在知识产权领域，新冠疫情、中美贸易战、华为芯片等事件将本国创新的战略性意义提到空前高度，生物医药、人工智能等领域的知识产权争议成为热门话题，我们也在该板块着重发力，努力提升为高新企业服务的能力。

最后，审级下沉加剧了区域服务市场的竞争，对律师的专业服务能力提出了更高要求。最高人民法院自2019年起启动四级法院民事审判职能改革，经过一系列政策调整，最高院和高级人民法院受理的案件显著减少，大量案件将累积在基层及中级人民法院处理。与此对应，诉讼业务也必将面临持续下沉的态势，高院和最高院案件所在的省会及一线城市律师的地缘优势将不复存在，所有的律师都将参与到重大案件代理机会的角逐中来，区域竞争不断加剧。与此同时，中基层法院缺少资源人少案多的矛盾将更加突出，二审不开庭审理将成为常态，这要求律师以更加专业的能力去配合法官快速、准确判案的需求，庭审表达要更精炼，书面材料需更有条理、更具说服力。

2021年，全球经济经历大考，对于诉讼市场而言，未来的发展环境和趋势均面临较大的不确定性。但危中有机，无论外部环境如何变化，法律行业专业化、精细化的发展道路不会变。我们相信，商事诉讼服务市场的蛋糕会持续增大，律师需要持续提高自己的专业服务能力，适应变化，与客户、与市场一同成长。