Foreign Lawyers Under Siege - Part II
Just a quick update on an item we previously wrote about here regarding foreign lawyers potentially being under siege by the Shanghai Bar Association. The Shanghai Bar wants the government to start enforcing the law prohibiting foreign lawyers in China from providing Chinese legal advice. Things appear to be developing as noted in a couple of recent posts by Asia Business Intelligence Blog. Our Shanghai sources on this issue are still insisting something "really big" will be coming down soon, including possibly the shutting down of a big firm's Shanghai office. In a few days I will be meeting with a friend of mine who heads up China operations for one of the mega-firms and will be asking for his "off the record" views on this issue. Is anyone else getting any information on this?
Comments (8)
Read through and enter the discussion by using the form at the endHubert Shea - July 29, 2006 2:31 AM
If it becomes a fact, it means that other overseas professional firms should close their business activities in Shanghai too.
It must be a rumour rather than a fact. As a seasoned executive in the real estate investment world in Shanghai, I cannot survive without professional advice from foreign law firms.
China Law Blog - July 29, 2006 1:33 PM
Mr. Shea --
Thanks for checking in. This law applies to foreign law firms in China opining on Chinese law. It does not apply to consulting companies giving general advice on China.
I agree this is likely to cause problems for foreign companies operating in China. It will. My firm gets a call nearly every week from a foreign company that is about to give up on working with a Chinese law firm because even though the Chinese firm knows Chinese law, it has no real clue on how to translate that knowledge on an international basis. Just by way of example, I got a call last weeek from a New York company that was using a Chinese law firm to register a company in China. The Chinese law firm was asking the American company for corporate documents that simply do not exist for American companies. The Chinese law firm could not translate the Chinese registration laws other than literally and the literal translation would call for things like "notes of association," which have no meaning in the U.S.
To do right by Western clients doing business in China, I am of the view that the lawyer/law firm must be versed in the laws of both the West AND of China and also understand the business culture and of its client's country and its clients business goals. Do you agree? Is this why you are so troubled about the possibility of foreign law firms being squashed?
Tim - July 30, 2006 9:23 AM
True, there is quite often much that is lost in translation for Chinese law/consulting firms; however there are top notch local law firms in China with western trained Chinese lawyers. There is certainly a place for foreign law firms in China in particular for cross-border M&A�s, IPO�s etc. but I would not discount the usefulness of local firms for local legal issues. (BTW, I believe that is Articles of Association that the local firm was trying to translate).
China Law Blog - July 30, 2006 5:26 PM
Tim --
Thanks for checking in. I did not mean to claim there are no top notch local firms in China as that is certainly NOT the case. We have worked with excellent law firms throughout China. However, there are many firms doing international work (usually at shockingly low prices) that have no clue. Indeed, it would be absurd for anyone to assert local firms are not needed because they most certainly are.
I too figured he was talking about Articles of Association, but where the legal knowledge comes in is that some states call Articles of Association something different and the typical American businessperson (i.e. the client) is not positioned to figure it out. An American lawyer likely would have no trouble figuring this out, but an American business would (and, in this case, did).
Louis Tremblay - August 7, 2006 10:38 PM
This is most likely a rumor given the fact that;
China has committments under WTO to open the service sector to foreign firms
Several Law firms are now able to invoice and fully practice in China under special rights given to Hong Kong firms under CEPA
Most of the arbitration commissions in China, recognize the rights of a defendant to be represented by a foreign lawyer
China Law Blog - August 9, 2006 12:41 AM
Thanks for checking in.
I disagree.
1. It is my understanding that the laws on attorneys China is proposing to enforce fully comply with China's WTO commitments.
2. I knew there were special rules for Hong Kong lawyers, but I was not aware of special rules for Hong Kong law firms. In any event, Hong Kong law firms does not include U.S., British, French, Belgium, or Australian law firms.
3. Arbitration is a completely separate issue. I am not aware of any country that wants to be viewed as a legitimate international arbitration venue that does not permit the appearance of foreign lawyers.
Li - April 15, 2007 6:48 PM
While I fully understand the anxiety among the foreign legal professional community practising in or in relation to China, it is also interesting to note that the Shanghai Bar Association's arguments, which seem to be well grounded in the long issued regulations on this area, would be received in this way. Whatever motives the Shanghai Bar Association might have, the fact (if it is a fact) that foreign law firms have practised in violation of Chinese laws or regulations shall not thus be dimissed simply because this takes place in China. The Confidential China Blogger demonstrates a typical example of this kind of dimissive attitude. I am not sure how the same people would react to a similar announce issued in the U.S. that prohibits foreign lawyers or law firms from practising American law illegally. Just some random observations, not necessarily directed to postings here.
China Law Blog - April 18, 2007 12:45 AM
Li --
I don't disagree with you.