Global law firm Dentons has severed formal ties with Chinese firm Dacheng, according to the Law Society Gazette of England and Wales.

The tie-up between the two made Dentons the biggest global legal practice by headcount when the pair aligned eight years ago.

The Gazette says that the change comes after the Chinese government tightened cyber-security and data-protection laws on national-security grounds.

Restrictions

The 2015 agreement was structured not as a formal merger, but as a verein – an association between partnerships that share a common name but remain financially independent.

The Gazette says that the deal’s structure reflected the fact that Western lawyers face tough restrictions when operating in China.

Foreign law firms are strictly prohibited from advising on Chinese law, and must establish a representative office in order to conduct business there. They also require approval from the Chinese Ministry of Justice.

In a statement, Dentons said: “In response to recent Chinese government mandates on Chinese law firms – including those relating to cyber-security and data protection – Dentons is modifying its relationship with Beijing Dacheng Law Offices, the Chinese legal partnership that has been a member of the Dentons Group since 2015.

Stand-alone firm

“Moving forward, Dacheng will operate as a separate, stand-alone law firm that will serve as Dentons’ preferred law firm for clients with legal needs in China.

“While our legal relationship is changing, we will continue working together to meet our clients’ needs across China and the 80+ countries where Dentons does business,” the statement concluded.

According to the Gazette, Dentons reportedly informed clients on Monday 7 August that it was making the move, citing the “evolving regulatory environment for Chinese law firms”.

Dentons’ Hong Kong practice, which joined in 2013 before the combination with Dacheng, will remain an integrated part of Dentons.