Hong Kong’s Legal Exodus Leaves Law Students With Few Places to Go

(Bloomberg) — When Katie Lam was deciding what to study back in 2018, she thought that a Law degree would open the most doors in a future career. She was overjoyed to be accepted into her chosen subject at the Chinese University of Hong Kong.
Almost six years on, the outlook in the city has soured with top tier firms closing, foreign lawyers leaving and, according to recruiters, fewer trainees being retained. While Lam, 23,  managed to secure work as a paralegal, an increasing number of graduates appear to be dropping out of the profession altogether.
Some industry leaders say the downturn is part of a normal economic cycle and the fundamentals remain strong. But there are also concerns that US-China tensions and national security legislation have undermined faith in the rule of law and are further clouding the future.
The legal industry in Hong Kong is growing at the slowest pace in a decade. At the Law Society, which solicitors are required to join, membership grew by only 90 in 2023, down 83% from an increase of 532 members in 2020. 
At least 16 law firms have left or shut down since 2020 after steady growth in the previous few years, including Philadelphia-founded Dechert LLP and Chicago-based Winston & Strawn LLP. DLA Piper LLP, one of the largest law firms in the world, has cut its office space, while Mayer Brown LLP was preparing to split off its Hong Kong operation, people familiar with the matter said earlier this year. 
“Hong Kong’s status as a legal hub has changed significantly,” said Richard Cullen, an adjunct professor in the Faculty of Law at the University of Hong Kong. “It is caught in the crosshairs of an aggressive campaign by the United States and other Western powers trying to contain China, with the National Security Law becoming a focus.”
The Hong Kong government said in June there’s no truth that the city’s courts are under any political pressure from Chinese central authorities or the hub’s government in the adjudication of national security cases. 
“Hong Kong’s ability to remain as an international financial center is largely attributed to its stable environment with strong rule of law consisting of a robust legal system and a pool of diversified legal talents,” the Department of Justice said in an emailed response to questions Thursday. The national security laws “will not affect normal business operations and worldwide exchanges of local institutions, organizations and individuals.”
That said, foreign lawyers have left the city, according to data from the Law Society. Only 1,476 were registered in 2023, down 13% from a peak of 1,688 in 2019.
Meanwhile, the number of junior lawyers who are being taken on as associates after their two-year training period is declining.
“At the junior level, there has been roughly a 25-30% contraction in retention rates,” said Johnny Hui, a Hong Kong-based legal and compliance manager at recruitment company Robert Walters. “To bump up these rates, some firms retain their trainees on six-month or rolling contracts, defer their commencement dates, or continue paying associates at far lower trainee rates.”
In-house roles have also been falling since 2021, partly due to some companies moving their Asian hubs to Singapore from Hong Kong, according to a report by Lewis Sanders, a specialist legal and compliance recruitment consultancy.
Part of the reason some firms have withdrawn is due to concern they will be forced to divulge client information to the Hong Kong government after implementation of the national security law, according to a partner at a UK-based law firm who asked not to be named due to the sensitive subject matter.
The Financial Times reported in February that US firm Latham & Watkins LLP was cutting off default access to its international databases for its Hong Kong-based lawyers amid growing concern of China’s closer control of the territory. 
Moreover, the decision by several overseas judges to step down from the former British colony’s top court has added to worries over the future of the rule of law. 
“The decision by overseas judges to step down has an impact on Hong Kong’s rule of law, in particular when being perceived by the outsiders,” said Yun Zhao, a Law professor at the University of Hong Kong. Hong Kong needs to “consider possible ways to dissipate possible concerns from the public.”
Nevertheless, industry associations say the recent decline is due to poor economic conditions rather than political fears.
“You can’t have non-stop expansion,” said Victor Dawes, chairman of the Hong Kong Bar Association, adding the local decline in deal volume was part of a worldwide trend. “Dispute resolution in Hong Kong, including liquidation, restructuring and insolvency, has actually increased over the last few years.”
Dawes said he’s confident that Hong Kong will retain its legal hub status given it is a common law jurisdiction. 
Joanne Lau, secretary-general of the Hong Kong International Arbitration Centre, said arbitration and mediation in Hong Kong continue to grow.
“If you look at our fundamentals — we continue to have sophisticated laws, a strong judiciary, experienced arbitral institutions, and a community of vibrant talent,” she said.
Job-Hunting Challenges
The career setbacks that Lam and her cohort face are symptomatic of the industry’s challenges, however. Even with academic scores that placed her well into the top half of her class and five law-related internships, she didn’t secure a full-time offer.
Fellow CUHK graduate Nicholas Chu, 22, said his year group had found it far harder to land jobs than previous cohorts. Out of 70 classmates, only a handful had received full-time offers from international firms, he said.
Chu, who has to wait a year before he can start a training contract, estimates that around 20% of his class won’t take the Postgraduate Certificate in Laws — a one-year qualification that’s a prerequisite for practicing as a lawyer in Hong Kong. These students may instead defer their graduation, seek opportunities overseas, or opt for careers in the civil service or in-house compliance.
The number of applications for the certificate has dropped from around 1,600 10 years ago to around 1,300 in the 2023-2024 cycle, based on data compiled by Bloomberg, while the number of undergraduate law students in Hong Kong has increased slightly over the same period. This indicates that an increasing proportion of students are choosing to leave the legal profession or to qualify elsewhere.
“It is not surprising that, with the increasing number of law students, some are not seeking professional qualification,” said Cullen. “They are looking at the difficult job prospects and the cost of the degree and looking around for other employment opportunities.”
Lam, at least, isn’t ready to drop out. She hopes to be recruited as a trainee in a few years’ time and will work as a paralegal in the meantime.
“I did consider other options such as working at regulatory bodies,” she said. “But I didn’t want to give up on working as a lawyer after five years of study.”
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