Orange County is squarely amid the ongoing influx of Chinese wealth into the U.S., and some local law offices are building business niches out of the trend.
The Irvine office of Jeffer Mangels Butler & Mitchell LLP has seen gains for its Chinese Investment Group, a practice created two years ago to position the firm as a “gateway” for Chinese investors. The firm’s China-focused practice helps investors locate, evaluate and manage hotels and other real estate opportunities, bringing language skills and cultural fluency to the task.
“Our China practice can be broken into three parts—Mainland China, Taiwan and Hong Kong,” said Eudeen Chang, who helped develop the Century City-based practice from scratch.
Chang works at the firm’s Irvine office, which houses 11 attorneys out of a total of 140. The firm’s other offices are in Los Angeles and San Francisco.
“The Chinese have money,” Chang said. “But it’s a challenge for [individual investors] to get that money out. The Chinese government is encouraging a lot of the bigger businesses to come to the U.S. and buy businesses.”
Totals on investments by Chinese individuals are difficult to discern, but data on recent moves by businesses make the overarching trend clear. China-based companies accounted for $17.7 billion in investments and contracts in the U.S. last year, up from $2 billion in 2011 and nearly $9 billion in 2010, according to the Heritage Foundation, a public policy research organization in Washington, D.C.
A trend of growing interest among Chinese investors in hotels helped trigger the creation of Jeffer Mangels’ China practice, according to Monica Vu, of counsel at the Irvine office.
She said Chang’s command of Mandarin opens doors to “opportunities to communicate with a lot of Chinese nationals.”
Both Chang and Vu are business litigators by trade.
“But the opportunity right now is not litigation,” Vu said. “It’s putting deals together. We find deals.”
EB-5
Immigration lawyers are another group served by continued interest from the Chinese, mainly those who aim to gain access to U.S. visas by investing. A vehicle that’s increasingly being used is the EB-5 Immigrant Investor Program, which offers temporary visas in exchange for investments that create jobs here.
That’s been a growing part of the Irvine office of New York-based Fragomen, Del Rey, Bernsen & Loewy LLP, according to Partner Mitchell Wexler.
Fragomen’s EB-5 work is led by David Hirson, partner and co-manager of the Irvine office, whose time is largely spent on visa applications.
“We have filed in the last few months several hundred Chinese EB-5 cases,” Hirson said.
Having offices in China enables Fragomen to engage in EB-5 work “in scale,” Wexler said. The firm has four of its 38 firmwide offices in China.
“We send people out from our China offices to go to the investors’ premises to do due diligence,” Wexler said. “Just about all of them are local to China. Their core business is immigration into China, but there are a few people we’ve trained to help with U.S. work.”
Jeffer Mangels also is active in EB-5 projects, mostly representing hotel developers in the U.S. It has recently worked on “the very early stages” of a couple of hotel projects that are planned for development in the Anaheim resort area, according to Catherine Holmes, partner and senior member of the firm’s Chinese Investment Group.
“It’s not just EB-5, though,” Holmes said. “There’s a lot of interest from people in China who want to diversify their investments. They love real estate. But once they get here, they want to invest in all types of stuff.”
Newport Beach-based WHGC PLC has seen plenty of cases in which Chinese companies are interested in a variety of ventures in the U.S.—and vice versa.
“Some of these companies are involved in packaged-foods distribution, entertainment types of products,” said Rick Karch, a partner overseeing the international corporate transaction practice group.
WHGC has 11 lawyers at the Newport Beach office and four in Mountain View. The 19-year-old firm has aimed to serve as a bridge between companies in the U.S. and China, according to Managing Partner Jeffrey Wang.
Barriers
U.S. lawyers also face barriers in China and other overseas markets, according to Peter Zeughauser, founder of the Zeughauser Group legal consultancy in Newport Beach.
“U.S. lawyers are not permitted to practice there,” he said. “You can serve as legal advisers. But only Chinese-licensed lawyers can practice in China. … What most firms do … is form relationships with Chinese firms and refer work back and forth.”
WHGC last year made such an alliance with Dacheng Law Offices, a Beijing law firm billed to be the largest in the country, with about 2,600 lawyers throughout its 42 offices globally.
“Having our firms tied together the way we are has helped,” said Lindy Herman, a senior associate attorney at the Newport Beach office.
