Did European Firms Act Too Soon? Rethinking Hong Kong & Asia’s Market Exit

In a dramatic geopolitical twist, China recently lifted sanctions on several European Union lawmakers, signalling a potential thaw in EU-China relations. This diplomatic softening, coupled with ongoing trade tensions between the U.S. and China, has sparked renewed interest in the Asian legal market, raising questions about whether some European law firms may have miscalculated by withdrawing too quickly from key Asian jurisdictions like Hong Kong.

A noticeable trend emerged in the last five years: several high-profile European law firms downsized or exited their Hong Kong operations, citing geopolitical uncertainty, increasing regulatory scrutiny, and shifting client focus toward the United States. The U.S. was viewed as a more stable and predictable alternative amidst the turbulence caused by the National Security Law, Beijing’s tightening grip, and escalating U.S.-China tensions under the Trump administration.

However, this calculated pivot is now being questioned with shifting global alliances, trade recalibrations, and China's re-engagement with Europe.

Recalibrating Legal Strategy: Did European Firms Miscalculate?

Many international law firms consolidated their presence in Asia between 2020 and 2023. Among them were leading European firms that shut down or significantly downsized offices in Hong Kong, a city once hailed as the legal gateway to China.

The rationale was straightforward: corporate clients were increasingly directing transactions through U.S. markets, Asian regulatory regimes were becoming less predictable, and talent acquisition in Hong Kong became more complex. However, a fresh window of opportunity is opening with China's recent overtures to Europe and an increased EU-China trade volume—surpassing $847 billion in 2024.

Legal analysts now suggest that law firms that held onto their Asian presence may have the upper hand. The best international law firms are already reassessing market trends and client needs in sectors such as cross-border mergers, tech, and green energy, which are rapidly expanding in Asia-Pacific.

China’s EU Pivot: Strategic Opportunity for Legal Services

Beijing’s decision to lift sanctions on EU parliamentarians is more than symbolic. It comes as the EU and China resume dialogue on trade and intellectual property frameworks. As bilateral talks resume, the demand for legal expertise around policy, compliance, and dispute resolution is expected to grow.

European lawyers, attorneys, and legal consultants may find themselves in demand for their proficiency in EU regulatory frameworks and ability to mediate complex, high-stakes commercial deals involving Chinese entities.

Strategic missteps can happen when firms base decisions solely on short-term volatility. But those who’ve maintained a presence, even if minimal, in Hong Kong or Singapore are now better positioned to capitalize on renewed momentum.

The Rise of Regional Alternatives

While Hong Kong remains a legal powerhouse, its competitors—such as Singapore and Tokyo—have seized the moment. The Singapore International Commercial Court (SICC) and the city’s arbitration-friendly stance have made it a preferred venue for complex disputes.

That said, Hong Kong still boasts superior connectivity to mainland China, deep bench strength in common law traditions, and a solid base of experienced lawyers and top solicitors familiar with regional corporate frameworks.

Recent data from the Hong Kong Law Society shows that, despite exits by some European law firms, the number of practicing lawyers rose by 4.2% in 2024, with a sharp increase in cross-border legal services.

A Return to Asia?

As multinational corporations revive investments in Asia and bilateral trade flows regain momentum, legal firms face mounting pressure to reassess Asia strategies.

Top law firms that maintained lean operations in Hong Kong are hiring again. Lateral movements, recruitment of senior lawyers, and regional partnerships are picking up pace, especially in financial, energy, and infrastructure verticals.

Expert Commentary

Sunil Ambalavelil, Chairman of Kaden Boriss and a Famous Indian lawyer in Dubai, commented on the shifting dynamics:

“Clients are demanding not just legal solutions, but strategic foresight—especially in volatile markets like Asia. Law firms must evaluate risks and long-term geopolitical and economic opportunities.”

As the head of one of the best international law firms in the Middle East, Ambalavelil emphasized that experienced legal counsel is key in helping global firms navigate complex cross-border landscapes.

Lessons Learned: A Need for a Balanced Strategy

This evolving scenario is a case study for law firms navigating geopolitical risk. An overly reactive strategy, such as complete withdrawal from a global legal centre, can lead to missed opportunities.

The best international law firm in Dubai, which maintains a liaison office in Hong Kong, reports a 27% uptick in advisory mandates from European clients targeting China or Southeast Asia in the first quarter of 2025 alone.

Powerhouse law firms with diversified portfolios—across Dubai, Singapore, and Hong Kong—appear best positioned to ride the wave of re-globalization.

Conclusion: A Market Worth Watching

While the U.S. remains a vital market, Europe’s rekindling of relations with China means Asia is once again squarely in focus. This might be the right moment for lawyers, solicitors, and advocates, especially those working within international law firms, to re-engage with Asia-Pacific markets.

From a talent and investment standpoint, staying adaptable is key. As the geopolitical winds shift again, so too must the strategies of the largest law firms and top-rated attorneys looking to serve the future of global commerce.