Last week I had a long phone call with one of our China lawyers after discussing a very difficult and unusual labor law issue we are handling for one of our clients. Her parting words to me were something to the effect that she would discuss the situation with the appropriate people at the specific China city’s labor bureau, but she doubted that they would have any answers for us. We briefly reiterated how unusual our client’s situation is, implicitly saying that talking with the labor bureau usually provides answers, though it likely would not this time.
And then a few hours later I received an email from someone asking me to refer them to an “inexpensive lawyer” because their firm cannot afford “high priced attorneys.” We used to keep a list of fairly inexpensive Chinese lawyers to whom we would make these sorts of referrals, but we stopped doing that after all of the lawyers on that list either substantially raised their rates or were removed by us after complaints by the companies for whom we had made the referrals. Now my response to these requests is something like the following, which response I sent out recently to a company wanting to set up a international school in China:
There is no such lawyer, or at least none of which I am aware. All of the lawyers I know who could competently handle the tasks you set forth are going to charge well over the amount you want to pay. Virtually all the good business lawyers (in China and in the U.S. and just about everywhere else) are super busy these days and no lawyer becomes expert in something as complicated as international/China/cross-border law to charge discount rates and I am not aware of any that do.
I am not kidding when I say that your best chance for finding someone might be to try to find a small law firm in a less expensive city like Cincinnati or Des Moines or Santiago, Chile, or Kuala Lumpur with a young lawyer that does China work. Those cities have some very good business lawyers who charge less than in the bigger cities in the US and in China and you might be able to find one that does China work and is also be capable of understanding the international/US ramifications of what you are seeking to do.
But what makes your situation even more difficult is that the education industry is a particularly difficult and complicated one for China and we have more than once been retained to clean up other law firms’ mistakes in it and so I strongly caution you against hiring a low-priced lawyer (should you even be able to find one) as he or she may well end up costing you more in the long run.
I am sorry I could not be of more help, but if you do find such a lawyer please let me know so that I can put him or her on our list for the next time.
Then today I just read a blog post by Professor Donald Clarke on his Chinese Law Prof Blog, entitled, Life as an official, from the Inside. Professor Clarke’s post was on an essay he had “just read” by Zhang Xingxiang, a Practitioner-in-Residence at Indiana University’s Research Center for Chinese Politics and Business. The essay was about Zhang Xingxiang’s life as an official in China and Professor Clarke wrote how he “was struck by one observation he [Zhang Xingxiang] made.” The one observation (shortened a bit) is the following:
Although government agencies were required to abide by the stipulations of laws and regulations, the enforcement of laws was a big headache in China. The law itself did not have intrinsic mechanisms to ensure its implementation. The State Council usually issued regulations or circulars which specifying how to enforce the law. Without that, most of time the law was just a written piece of paper posted on the wall but never seriously executed. The Constitution and Legislation Law stipulate the rank of legal instruments: among laws, regulations, rules, circulars and decisions, from highest to lowest. In practice, however, it went in a totally different direction. Whenever companies or individuals had a legal issue, they did not just look up the law, but sought decisions from a mayor, a governor of a province, or even the Premier because they knew such disposition was more effective.
In response to which Professor Clarke observed the following: “Zhang is not the first to observe that the actual hierarchy of norms is virtually the opposite of the formal hierarchy of norms; in terms of actual binding force, for example, the Constitution is far weaker than a rule on, say, severance pay issued by an urban district labor department.”
Professor Clarke then contrasts this with the United States where those who want to comply with the law ask their lawyers who, in turn, review the law and provide their clients with answers. This is quite different from China, where the following is true:
But think about what must be true for this [Chinese] system to work. There must be law for lawyers to become expert in. In other words, there must be a reasonably predictable and unified system of rules. Ad hoc, discretionary decisions by government officials cannot supply this kind of legal environment. Thus, regardless of what we think of ad hoc decision-making from a fairness perspective, it’s important to see that it renders impossible a certain mode of governance that has the advantage, among others, of being a lot cheaper.
I agree. Take the China employment law issue I discussed with one of our China lawyers. She is going to extensively research the issue by reading relevant statutes and case law, just as a domestic United States lawyer would do when confronted with a similar issue relating to U.S. employment law. But after doing that research, there is about a 99% chance she will still need to talk to one or more people at the relevant “urban district labor department” in an effort to determine how that department believes our client should handle this situation. This particular China lawyer of ours has a daily stream of employment law work and virtually all of it requires she speak with the relevant labor bureau. Indeed, in my conversation with the client I made sure to mention that the lawyer I would be assigning to its matter had a lot of experience working with the labor bureau with jurisdiction over our client.
So what this all means is that for China we do the same research that lawyers in the United States would do on a U.S. domestic matter, but in addition to that, we have to gather up our research and discuss it with a labor bureau, half to try to convince that particular bureau to see things our way on the law and half to get its take on the law. If our take on the law fully jibes with the labor bureau’s take on the law, we are done. But if the labor bureau’s take on the law is less favorable for our client than we believe is appropriate, we then will need to work with our client to determine whether to abide by the labor bureau’s view of the law (the safe and more common way to proceed) or to go against the labor bureau because we believe that we are right and because our position is so much better for our client (a way less common and way more risky way to proceed).
This whole portion involving the labor bureau would not be necessary in the United States and probably increases the overall bill by 30%. Not to mention that our lawyer doing the work has a law degree from top schools in both China (Peking University) and the United States (University of Washington) and is completely fluent in both Mandarin and in English, all of which means that she (and us) have no reason to charge her out at discount rates.
So the next time you are wondering why China lawyers tend to be so expensive….