The managing partner of Llinks Law Office left the firm to join Shanghai rival Pu Dong Law Office because he was not prepared to help finance the firm's growth plans.

So says David Yu, one of the partners who helped found Llinks in 1998.

David Liu quit Llinks to rejoin his former firm Pu Dong at the beginning of February, together with a working team that included three associates. Another one of Llinks' founding partners Christophe Han has replaced Liu as the firm's managing partner.

"Like all of the other partners at Llinks, I feel a little bit astonished," said Yu. "We had a meeting with David and asked him for his reasons."

Another one of the partners who helped set up Llinks in 1998, Liu was also one of the three founding lawyers of Pu Dong on 6 January 1992.

Describing his reasons for leaving Llinks, Liu said: "It just came down to differences of opinion, perception and value over the development of the firm. I hold a different view from the other partners."

He added: "The economic reason is not the core reason why I left. The main problem was the difference in views on the market and the direction in which the firm should go."

In addition to opening a Beijing office a year ago, Llinks boosted its partner numbers in Shanghai last year with the addition of Wantao Yang from Sidley Austin Brown & Wood in Chicago. The firm also added two new partners in Beijing and Yu says further partner hires - "mostly from overseas markets" - are in the pipeline.

Yu said: "The partners in this firm are very young and they look for a future. So we're looking to build up our profile as a first tier national firm. To achieve this, you have to input a lot of money and effort. It also needs contributions from all the partners, which means our profit ratio will be lower than other law firms.

"David Liu was the eldest partner in this firm and had worked for many years. At this stage in his career, he feels he needs the money not the future and that's why he's rejoined Pu Dong. But at Llinks, we've adopted a profit sharing system. We emphasise cooperation and teamwork between the partners. And we also emphasise the development of the firm. David Liu strongly rejected the new partners because it would decrease our profit ratio."

Yu said Pu Dong's remuneration structure might have proven comparatively attractive to Liu as it incorporates features similar to the US-style 'eat what you kill' structure ... while Llinks offers a combination of lockstep and performance-related elements.

Liu himself vehemently rejects the charge that he is simply following the money by returning to Pu Dong. He said: "If I just pursue the money, then why did I leave Pu Dong five years ago to help start up Llinks?"

He added: "At Llinks, I tried a Western style mixture of a lockstep and profit sharing platform, which proved to be a failure. I believe at Pu Dong we can find a middle way."

And he said that during his stewardship of Llinks, the firm had grown from the four original partners to the 12 it has today.

"Every year I generate almost US$2m in revenue. Under a US-style meritorious system I can earn much more than in a lockstep profit sharing system. You will not believe what I have sacrificed economically to Llinks in the past five years. We have a big gap between the partners in terms of the revenue. If it was for money, I would never have left Pu Dong Law Office."

Liu said his reasons for leaving Pu Dong in 1998 are related to his reasons for returning in 2004. A successful firm since its inception in 1992, Pu Dong - like all Shanghai firms - was technically a 'cooperative' firm up until 1998 unable to obtain the 'privately owned' status enjoyed by its Beijing rivals.

Ironically, the year Liu left to set up Llinks was the first year that Shanghai allowed privately owned practices.

Said Liu: "I have a very good relationship with the other two founding partners of Pu Dong. I know them well and they know me well. Pu Dong was a very good firm years ago, although it is not so good now. I came back because I feel guilty and feel that I owe this firm a lot of things because of my departure several years ago."

Meanwhile, Yu is confident the majority of Liu's clients will stay with Llinks. "We have an understanding between Liu and Llinks that it is up to the clients whether David Liu will continue to work for them or Llinks will advise them."

Last year, Liu and his team advised the Shanghai branch of the Bank of China (BOC) in relation to handling its non-performing loans and the equity investments in more than 30 state owned enterprises, including its disposal to China Oriental Assets Management Company. The deals were arranged to facilitate the proposed IPO and listing process of BOC.

And in December 2003, Liu and his team advised Hang Seng Bank on its strategic investment in Chinese commercial bank, Industrial Bank.