The Law Society’s confirmation of the outcome regarding the consultation on proposed amendments to the regime for foreign lawyers in Hong Kong was as welcome (in many quarters) as it was timely. In short, none of the principal proposed amendments will be adopted*.
The consultation took place in the last quarter of 2018 and generated some interesting headlines in the domestic and international media. Hong Kong has traditionally welcomed diverse international legal talent, which dovetails nicely with the city’s reputation as a leading regional capital markets and international hub.
The principal proposals, which now appear to be (in effect) withdrawn, were as follows.
Foreign Lawyers Registration Rule 12 (“Prohibition on the practice of Hong Kong law”)
It was proposed to amend Rule 12(1) to clarify that a foreign lawyer may only provide a legal service which relates to the law(s) of the jurisdiction(s) stated on a certificate of registration issued by the Law Society. This appears to have been of particular concern to some offshore and international law firms, whose foreign lawyers advise on international transactions and international disputes involving cross-border matters, for which Hong Kong excels.
“A foreign lawyer may give advice on or handle any matter which –
(a) is expected to be subject to the law of a jurisdiction other than Hong Kong; or
(b) involves private or public international law or conflict of laws.”
It was proposed to amend Rule 12(2) to clarify the circumstances in which a foreign lawyer may be involved in (among other things) the process of disseminating advice concerning Hong Kong law given by a practising solicitor. This proposal appears to have proven too difficult to progress and detracted from the generally permissive and well-established nature of rule 12(2). Indeed, rule 12(2) may have been central to the consultation process and, together with rule 12(1), bears out that foreign lawyers shall not practise or advise on Hong Kong law. This fundamental principle will have received understandable and widespread support.
However, the maintenance of the status quo in this regard should give foreign lawyers, and their supervising solicitors (in Hong Kong law firms), pause for thought. Those found to be operating in breach of (among other things) rule 12 should not be surprised if they face the prospect of disciplinary proceedings. Some foreign lawyers in the past appear to have honoured rule 12 more in breach than observance; this also raises the prospect of a breach of a personal undertaking given by a foreign lawyer on applying for registration – a serious matter.
Foreign Lawyers Registration Rule 13
On reflection, the proposal (in effect) to double the “ratio” of solicitors to foreign lawyers in a Hong Kong law firm may not have been the best way to nurture local talent and appears to have lacked some empirical justification. The same might be stated with respect to the now defunct proposal to increase the “change of name” route for a foreign law firm to become a Hong Kong law firm from three years to five years (Solicitors’ Practice Rules (Cap. 159H), rule 2A(2)). Firms that have gone through this process can confirm that it is rigorous enough – anything more may have deterred some foreign law firms from coming to Hong Kong at a time when there should be a particular focus on attracting overseas talent and business.
Foreign Lawyers Registration (Fees) Rules (Cap. 159U)
The one proposal to survive was to increase the registration fees for applying for and renewing registration as a foreign law firm. The amount of these fees appears to have been stuck for over twenty years and an increase (as proposed) is long overdue. The proposed fee increases are unlikely to represent the true regulatory cost to the Law Society in vetting applications for registration.
It is time that the proposed fee increases found their way to the Chief Justice’s “inbox” and the sooner they are approved the better. This should herald a welcome conclusion to a high quality and professional consultation, in which all stakeholders played their part.
*Editorial Note: This was confirmed as much in the “President’s Letter” to members dated 5 July 2019 and the “President’s Message” in the Hong Kong Lawyer Journal for July 2019; both are required reading.