Lawyer Wang Zheng, Partner of Hongqiao Zhenghan, held a dialogue with Wang Yazhe, Founder of Zhexiang and Co-founder of Fachan, to deeply interpret the pure lockstep system and integrated management, and explore the internal logic behind Hongqiao Zhenghan’s steady development with its unique model.
When it comes to corporate law firms, Shanghai Hongqiao Zhenghan Law Firm (hereinafter referred to as “Hongqiao Zhenghan”) undoubtedly holds a prominent position.
In 2005, Shanghai Hongqiao Law Firm and Shanghai Zhenghan Law Firm formally merged. In 2011, Hongqiao Zhenghan chose to embark on the path of the “Pure Lockstep System” and has unswervingly adhered to it for the subsequent 13 years.
Facts have proved that Hongqiao Zhenghan’s exploration of the “Pure Lockstep System” has enabled it to forge ahead steadily amid the increasingly fierce competition in the legal industry, maintain its leading position in the dispute resolution sector, and become a benchmark law firm for integrated management.
What stories have unfolded during Hongqiao Zhenghan’s in-depth exploration of the corporate development path? What impacts and changes has the pure lockstep system it upholds brought to the firm’s growth? Out of curiosity, we held a dialogue with Lawyer Wang Zheng, Partner of Shanghai Hongqiao Zhenghan Law Firm, in the Zhexiang Live Room, discussing the firm’s ideals and persistence in the corporate system.
Today, we have organized the full interview transcript into an article to share with you.
Law firms in China started experimenting with the lockstep system relatively early – as early as 1997, some law firms began to adopt the pure lockstep model. Since then, discussions and practices on this system have been ongoing in the industry.
Admittedly, many law firms have modified the lockstep system to varying degrees in light of their own development conditions during trials and implementation. However, Hongqiao Zhenghan stands out: it considered the corporate system from its establishment and has adhered to the “Pure Lockstep System” since confirming its adoption in 2011, a rarity in the industry. Could you elaborate on what exactly Hongqiao Zhenghan’s pure lockstep system and fully integrated corporate management entail, and how they were established?
The Pure Lockstep System, as the name suggests, means fully locking steps, a model once adopted by the Magic Circle law firms in the UK. Under the pure lockstep system, points are solely determined by a partner’s tenure – the longer the seniority, the higher the points, and the earnings per point are based on the firm’s overall profits.
At Hongqiao Zhenghan, every newly promoted equity partner starts with 10 initial points. With an annual qualified performance review, the partner receives a fixed increase of 4 points, up to a cap of 50 points. The growth of a partner’s points is not affected by performance or outstanding achievements; in other words, most partners’ points increase at a steady rate with no additional special rewards.
Hongqiao Zhenghan chose the pure lockstep system to break away from the long-standing individual or small-team working model in the legal industry, enabling the entire firm to pool its efforts to achieve the best results for every case. This is of great value for the complex and difficult cases Hongqiao Zhenghan handles on a long-term basis. It also breaks through the “revenue-only” mindset of the traditional commission-based system, achieving fully integrated operation of the entire firm.
It is well known that the Chinese legal industry boasts many star lawyers with strong individual capabilities. However, from a law firm’s perspective, unified management of legal elites is challenging, resulting in loose internal relationships, difficulty in coordinated operation and risk control, and even greater obstacles to systematic development and inheritance of the firm.
In our view, Hongqiao Zhenghan should not be a law firm belonging to any single lawyer, but a platform for all its members. We hope that lawyers within the firm can support each other, facilitate mutual growth, and collectively boost earnings.
To this end, Hongqiao Zhenghan has established a series of integrated corporate management models centered on the pure lockstep system:
For instance, all revenues and client resources belong to the firm. The firm has no concepts such as case source fees or commissions, and there are no digitized performance assessments for partners. No partner has an independent team; the entire firm operates as one large team. Members are uniformly deployed based on case nature, client needs and other factors, forming flexible service teams on a project basis, and resources are integrated and allocated at any time according to case requirements.
Seemingly a “small firm” with a modest number of lawyers, Hongqiao Zhenghan appears to clients as a genuine “large firm” thanks to its fully integrated corporate management, which consolidates dispute resolution lawyer resources to serve clients collectively. This is the charm of the corporate model driven by the pure lockstep system.
Although Hongqiao Zhenghan has adhered to the pure lockstep system for more than a decade, objectively speaking, the lockstep system, especially the pure version, is not suitable for all law firms. The implementation of this system faces certain challenges, with the risk of creating a “big pot” egalitarianism being one of them. After all, the system poses a test to the internal values and cohesion of the firm. How has Hongqiao Zhenghan addressed this issue?
First and foremost, we are a group of like-minded individuals who embrace the pure lockstep system out of the shared original aspiration of integration and corporatization. Meanwhile, we deepen the integration of individual lawyers’ interests with the firm’s overall interests from two dimensions: institutional management and personal philosophy.
Why strengthen institutional management? While we have reached a consensus on the concept of common development, differences still exist in views on the implementation of many specific matters. Therefore, we need institutional constraints to ensure no deviations in the arrangement and execution of strategies.
As for avoiding the “big pot” problem, the system has already minimized such risks to the greatest extent.
On the one hand, becoming a partner means not only outstanding individual capabilities but also a high level of recognition for the firm’s system, contributions to the firm, and personal diligence and proactivity. On the other hand, although Hongqiao Zhenghan does not assess partners based on revenue performance, partners are required to submit annual work reports covering multiple dimensions such as working hours, case handling results, internal professional contributions, marketing activities, and professional research.
The pure lockstep system exerts a two-way impact on the firm and its partners. If an individual experiences a short-term slump in performance, the firm as a whole will provide support. However, if a partner’s performance remains unsatisfactory over time, we will promptly assess the compatibility between the partner and the firm to ensure that every partner’s points match their efforts and position. In extreme cases, the firm will discuss with the relevant partner the possibility of moving to another platform.
Why emphasize personal philosophy? As a personal partnership organization, the system is only one of the measures to guarantee the firm’s operation and management. Especially for corporate and integrated law firms, the consensus of all lawyers on the firm’s development values and philosophy is even more crucial. Therefore, every partner should possess a sense of ownership characterized by self-discipline and inclusiveness.
In terms of self-discipline, at Hongqiao Zhenghan, the firm’s overall revenue affects each lawyer’s personal income. Only by expanding the “cake” can we achieve a collective increase in earnings. Thus, unity and concerted efforts are the only way to realize better “collective revenue generation”.
In terms of inclusiveness, every person is bound to experience fatigue, and lawyers should not be “machines that only work”. Therefore, partners at the firm understand and tolerate each other’s work rhythms. We acknowledge temporary slumps in performance and accept individual adjustments to work pace.
As we all know, the establishment of a law firm is not merely a matter of assembling personnel. To achieve sustainable growth and inheritance, it is essential to find lawyer partners who share common values. However, most law firms today prioritize “scale growth”. How does Hongqiao Zhenghan view the issue of scaling up, and has it considered expansion?
Like-minded partners are hard to come by. With Hongqiao Zhenghan’s adherence to the pure lockstep system and corporate model, we are destined to gather only with “a small group of people”. Therefore, Hongqiao Zhenghan has always maintained a scale of around 60 lawyers, and the vast majority of current partners have joined the firm since the start of their legal careers.
Every system has its pros and cons. In Hongqiao Zhenghan’s initial strategic direction, we placed “professional quality” at the forefront. Our vision is that from an external perspective, Hongqiao Zhenghan is a law firm with a top-tier professional image, focusing on complex and difficult dispute resolution; from an internal perspective, it is a firm where both partner per capita revenue and lawyer per capita revenue lead the industry. Accordingly, Hongqiao Zhenghan will not adopt a strategy of “rapid scaling up”.
Admittedly, from the perspective of rapid firm development, scaling up is undoubtedly the most direct approach, as expansion helps a law firm enter the market as extensively and quickly as possible. Therefore, facing the increasingly fierce market competition in the legal industry, Hongqiao Zhenghan also faces considerable challenges in securing a firm foothold in the market.
To address this, we have chosen to focus on professionalism, providing clients with ultimate professional expertise and services, and concentrating on the “dispute resolution” sector. This decision is based on two key reasons:
First, market competition. Given the overall competitive landscape of legal services, we cannot devote limited energy to all-round market competition. Concentrating efforts on a single track is the optimal choice to maximize advantages.
Second, professional strengths. In the field of complex dispute resolution, Hongqiao Zhenghan’s historical accumulation, team development, and professional capability refinement have enabled us to form a distinct competitive edge. At present, Hongqiao Zhenghan has become a leading dispute resolution law firm in the industry.
In fact, strategy formulation is a process of letting go. The greatest challenge is not determining what to do, but clarifying what not to do. To ensure the firm’s professional development and drive everyone to make trade-offs, we have established a Business Management Center and a Business Screening Committee to facilitate internal communication, evaluation and screening of cases.
Concluding Remarks
According to official data from Hongqiao Zhenghan, in 2023, the total subject matter of ongoing cases at the firm exceeded253.6 billion yuan. With 68 professionals, the per capita ongoing case subject matter reached 3.7 billion yuan.
To outsiders, such achievements are remarkable. Yet behind every accomplishment lie Hongqiao Zhenghan’s unique choices and perseverance. In today’s impetuous social and industrial environment, the attitude of staying grounded and focusing on self-improvement may well be the life choice of Hongqiao Zhenghan’s lawyers – minimalism, extremity, and selflessness.
The pure lockstep system and fully integrated corporate model are designed to achieve the goal of “putting aside distractions, devoting wholeheartedly, and pursuing perfection in everything we do”.
On November 14th, Bian Weimin, Member of the Standing Committee of the Jiading District Party Committee and Secretary of the Political and Legal Affairs Committee, led a delegation to visit and investigate Shanghai Hongqiao Zhenghan Law Firm. The delegation gained an in-depth understanding of the firm’s development status, listened to its development demands, and held in-depth discussions on issues such as the better integration and development of the legal service industry with the regional economy and society under the new situation, and optimizing the development environment of the legal service industry.
