The Tipping Point (Conan Ju)

| Conan Ju | 17 July 2012 | Shanghai, China |

Negotiating a fee structure is no simple task in China. Chinese clients are very results-orientated and thus are generally reluctant to enter into an hourly rate fee structure. Their rationale is that only favorable outcomes merit legal fees, whereas unfavorable outcomes deserve less or even no payment (aside from court fees, which are always paid for by the client).It is a tough sell to tell a Chinese client that you will be charging $x per hour. You don’t know exactly how many hours will be billed, or how long representation will last. As a result, contingency and fixed-price fee payments are more prevalent in China than in the U.S (for a good summary of the different types of legal fee structures in China, see A Chinese law firm will often provide at least some rudimentary form of legal research for the potential client before a written agreement of representation (委托书wěituōshū) is signed. It is common, and perfectly acceptable, for a Chinese client to approach multiple law firms and inquire as to how each firm will strategically tackle a case before signing a 委托书. The difference in fee structure preference goes beyond wariness towards lawyers, and is heavily influenced by Chinese culture and the Chinese way of thinking. The Chinese demand to know exactly how much they will spend and what specific results they are paying for.

Take tipping for example. In China, noone aside from well-intentioned but misinformed foreigners tip for services. Not for meals, cab fare, haircuts, or drinks at a bar. But why not? The rationale is that the Chinese consider services and taxes to be part of the stated cost because 1) it is part of the worker’s salary to provide decent service, and 2) not including these costs adds to the uncertainty of the total cost. I wouldn’t go as far as to say the Chinese share Mr. Pink’s views towards tipping in the movie “Reservoir Dogs”, but rather view it as an unnecessary expense that should be included in the price tag.

I personally enjoy tipping and feel that it makes for an overall better service.However, the tangibility of that “something extra” is hard to measure. Will a barber really cut your hair any better because you left him a big tip on the last visit? Will a taxi driver drive any faster? Will a bartender pour you more alcohol? From field research, I can empirically conclude that there is a direct correlation between bartender tip and the amount of alcohol in your beverage. But that is not why Americans tip, is it? We do it because it feels good to reward and to receive for that extra effort. But that is simply not part of Chinese custom, and does not resonate logically with them. For better or worse, some Shanghainese have caught on. I’ve had two haircuts at two different barbershops since I’ve arrived. Unavoidably during small talk, I mentioned that I was an American here on an internship. Both barbers asked if it was true that Americans tipped their barbers, obviously knowing the answer. I tipped anyway.

On an unrelated note, I spent my Saturday night watching the Shanghai Shenhua (上海申花) destroy Beijing Guoan (北京国安) in a soccer match at Hongkou Football Stadium. The match was amazing and the fans were cheering, singing, chanting, and jeering for the entire 90 minutes. Unfortunately, Didier Drogba, who had just signed a two and a half year deal with Shenhua, did not make his debut. Nonetheless, it was a fantastic experience.


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