Law Society seeks to push out foreign lawyers

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The Law Society of Hong Kong has proposed restricting the work of non-Hong Kong lawyers and increasing the ratio of local to foreign lawyers in the city.

Under the proposed rules, foreign lawyers could only advise on cases that involve overseas jurisdictions they were registered in. Two local lawyers would also need to be hired for each foreign lawyer, doubling the current requirement of one.

The stated aims are to ensure Hong Kong law is “not to be practised by unqualified persons” and to “promote local talent”, according to the Law Society’s letter.

Foreign and mainland Chinese lawyers are currently barred from directly handling Hong Kong cases under the Foreign Lawyers Registration Rules. But there is a loophole for them to get involved in such cases.

For example, if a mainland Chinese client seeks lawyers in Hong Kong to handle his assets in the U.S., then legal advisers from China, Hong Kong and the U.S. would be involved.

In such a case, the U.S. legal adviser might touch on issues regarding Chinese and Hong Kong law, when he is supposed to only advise on matters involving U.S. jurisdiction. This is seen as the “grey area”.

The new rules proposed by the city’s Law Society are expected to hit lawyers from other common law jurisdictions – such as the UK, Australia, New Zealand and Canada – the hardest. They have been able to advise on Hong Kong cases previously as these territories share the same law system as Commonwealth countries.

Not at all good or bad

Mr Dennis Kwok Wing-hang, a legislator representing the legal sector, feels that a more precise definition is needed regarding the roles of foreign lawyers.

“I agree there is room for more clarity in relation to the regulation of their roles under the current legislation, and the stricter enforcement of those rules. Regulation of registered foreign lawyers should not be improperly practicing Hong Kong law in any way. There is a need to stamp out any such improper conduct,” he tells Harbour Times.

But on the other hand, the employment rule is met with backlash from the legal community.

“I disagree with this proposal. Whether a person should be hired should
depend on his/her ability and suitability for the post in question and not
whether another person has been hired,” Mr Ronny Tong Ka-wah, a senior counsel at Temple Chambers and a former politician, tells Harbour Times.

The Law Society justifies it by saying it is a requirement.

“The current statutory requirement is that the number of foreign lawyers cannot exceed that of Hong Kong solicitors in a Hong Kong firm or in an Association between a Hong Kong firm and a foreign firm,” the Society tells Harbour Times.

On Tuesday, 15 international law firms voiced their “enormous concern.”

“In particular, [the international firms] are concerned that the implementation of this proposal will have colossal negative repercussions for the economy of Hong Kong and for Hong Kong’s status as an international financial centre,” the lawyers wrote in a joint letter.

These law firms would face higher costs since they would be forced to hire more local lawyers, making it harder for them to do business in the city.

Mr Andrew Shuen, co-founder and director of The Lion Rock Institute, says the high costs is “an abject ripoff of anyone who uses Hong Kong’s legal system.”

“Hong Kong lawyers are, pound for pound, grossly expensive compared to those in other common law jurisdictions,” Mr Sheun says. “In America, one illness can cost one’s middle-class status. In Hong Kong, it would be one single legal case.”

Legal lawmaker Mr Kwok also worries this particular rule may restrict the business of international law firms in Hong Kong and prompt them to move to Singapore.

“Any changes must not have any negative impact on Hong Kong as an international legal services centre,” says Mr Kwok.

Many of the listed companies in Hong Kong are registered in the Cayman Islands or the British Virgin Islands, so the Company Law of these jurisdictions are involved in cases for these companies.

If the new rules are to be in place, lawyers might not be able to work on cases involving these jurisdictions.

The consultation regarding this new rule has been extended until December 31 from November 1, possibly due to the backlash. There would also be a transition period of at least two years if the changes are green lighted.

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