Articles 16 to 18 of the Law of the People's Republic of China on Lawyers allows three types of law firms in China: state-invested law firms, cooperative law firms and partnership law firms. The law states that a law firm established with the assistance of government capital shall be independent in its practice and shall undertake liability for its debts with its entire assets. Lawyers can also establish cooperative law firms, which are also liable for their debts with their entire assets. The third type of law firm lawyers may establish is a partnership law firm. The partners shall undertake unlimited and joint liability for all debts.
The only difference between a cooperative law firm and a partnership law firm in China is that cooperative law firms are liable for their debts with the entire assets of the law firms, while the debts of partnership law firms shall be undertaken jointly and severally by the partners. This means that cooperative law firms are limited in their liability to the entire assets of the law firm while the liability of partnership law firms extends to the personal assets of the partners.
Since China entered the WTO, reforms have been made in order to transform all state-invested law firms and cooperative law firms into partnership law firms. It is almost definite that all Chinese law firms will be partnership law firms in the future.
