(Bloomberg) -- Chicago-based law firm Mayer Brown LLP is preparing to split off its Hong Kong operation amid US and China geopolitical tensions, according to people familiar with the matter.

Mayer Brown’s Hong Kong office will become an independent entity, said the people, who requested not to be named discussing private information. Mayer Brown didn’t respond to emailed requests for comment. 

The breakup comes at a time when companies increasingly need to navigate conflict between the world’s two largest economies. In 2021, Mayer Brown represented the University of Hong Kong in ordering the removal of a sculpture commemorating the 1989 Tiananmen Square crackdown from campus, before dropping the client amid controversy.

The Hong Kong operation was formerly Johnson Stokes & Master, which was established locally in the 19th century. The law firm later became part of Mayer Brown in a merger in 2008. The firm now has more than 150 lawyers based in Hong Kong, covering various industries including private equity and infrastructure.

Geopolitical tensions aside, international law firms also face financial hurdles. The property industry’s slump in China has affected companies including Mayer Brown, which has a sizable team in real estate. Nikkei Asia reported the split earlier. 

Law firms have been reducing office space in prime locations, partly due to the dearth of mergers and acquisitions and initial public offerings.

Winston & Strawn LLP closed its Hong Kong office this year, leaving Shanghai as its only presence in Asia. Linklaters LLP let go of 30 lawyers from its offices across China last year, citing a “prolonged downturn in the China market.” 

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