Where are We in the Liberalisation Maze?
Since the introduction of the pilot measure allowing Hong Kong law firms to set up representative offices in the Mainland, the Central Government has launched 26 further liberalisation measures giving preferential treatment to Hong Kong legal service providers in the Mainland. These were mainly introduced through the commitments on legal services made by the Central Government under the Closer Economic Partnership Agreement (“CEPA”) with Hong Kong in 2003 and its Supplements signed during the decade that followed. The Ministry of Justice maintains that the extent of the opening up of the Mainland’s legal market to Hong Kong legal practitioners has been the widest, the deepest and the most preferential. Yet the utilisation of these liberalisation measures by Hong Kong legal practitioners is slower than expected.
Specific commitments made by the Mainland in legal services over the years cover the requirements relating to representative offices of Hong Kong law firms in the Mainland, admission of Hong Kong residents as Mainland lawyers, the scope of practice of Hong Kong residents who qualified as Mainland lawyers and the mode of cooperation between Mainland firms and Hong Kong firms in the Mainland. Specifically, they include:
(a) the residency requirement in the Mainland for representatives stationed in representative offices of Hong Kong law firms in the Mainland has been waived;
(b) Mainland law firms can second Mainland lawyers to work as consultants on Mainland law in representative offices of Hong Kong law firms in the Mainland;
(c) Hong Kong law firms can second Hong Kong lawyers to work in Mainland law firms as consultants on Hong Kong law or cross border laws;
(d) Mainland law firms and representative offices of Hong Kong law firms can enter into business cooperation by agreement;
(e) in Guangzhou, Shenzhen and Zhuhai, the association between a Hong Kong firm and a Mainland firm can be in the form of a partnership;
(f) Hong Kong permanent residents with Chinese citizenship are allowed to sit the legal qualifying examination in the Mainland, the National Judicial Examination, to acquire the Mainland legal professional qualification and those who have so acquired the Mainland legal professional qualification are allowed to engage in non-litigation work;
(g) Hong Kong residents who have acquired the legal professional qualification are allowed to undergo internships in a branch office of a Mainland law firm set up in Hong Kong in accordance with the relevant training requirements in the Mainland;
(h) Hong Kong legal practitioners who have at least five years’ experience in legal practice and who have passed the National Judicial Examination are allowed to apply to practise as lawyers in the Mainland after they have completed at least one month of intensive training offered by a lawyers association in the Mainland and passed the assessment; and
(i) Hong Kong residents who have acquired the Mainland lawyer qualifications and who hold a Mainland lawyer’s practice certificate are allowed to engage in activities as agents in civil litigation cases relating to Hong Kong in the capacity of Mainland lawyers.
Since the introduction of the pilot partnership association model in September 2014, there have been nine such partnerships between Mainland law firms and Hong Kong law firms, namely, six in Qianhai, two in Hengqin and one in Nansha.
With the rapid economic and social development in the Mainland, coupled with the launch of the Belt and Road Initiative, there is a big demand for legal services in the Mainland. The legal profession in the Mainland is developing at more than twice the pace in Hong Kong. There are about 300,000 lawyers and 24,000 law firms in the Mainland, representing an increase respectively of 38 percent and 20 percent compared to the figures four years ago. As H.E. Zhang Dejiang, Chairman of the Standing Committee on the National People’s Congress mentioned at the Belt and Road Summit held in May this year, one of the major advantages that Hong Kong enjoys is the superior quality professional services that it can offer. The Hong Kong legal service sector has a big role to play in strengthening the legal service support for the many cross border projects that are ongoing or in the pipeline in China.
Partnership or some form of cooperation with Mainland law firms will form a perfect team showcasing the capability of experienced professional support at international standards and extensive connections to navigate through necessary local liaison work and to overcome cultural barriers. The pilot partnership association model permissible in Qianhai, Nansha and Hengqin requires fulfillment of some eligibility criteria, including, for instance, the Hong Kong law firm partner must have at least 10 practising Hong Kong lawyers or if there is more than one Hong Kong law firm, at least one of the Hong Kong law firms must have a minimum of five practising Hong Kong lawyers. The capital outlay of each law firm must not be less than RMB5 million and if there is only one Hong Kong law firm in the partnership, the firm’s capital outlay should not be less than 30 percent or more than 49 percent. Some Hong Kong firms find these eligibility criteria prohibiting and hence only a few firms have taken advantage of this partnership association model. The Law Society is continually lobbying for further relaxation of these requirements including a lowering of the capital outlay threshold and the minimum size of a Hong Kong law firm to enable more Hong Kong law firms to become eligible to form a closer partnership operation with Mainland law firms.
Another liberalisation initiative that the Law Society has been advocating is a special Mainland legal professional qualification examination for experienced Hong Kong legal practitioners. Instead of sitting the National Judicial Examination that is open to anyone wishing to qualify as a Mainland lawyer, the Law Society has proposed that those Hong Kong qualified lawyers with a minimum of 15 years of experience, who practise in the areas that are in demand in the Mainland legal service sector (eg, international trade and corporate finance), should be provided with a special avenue to qualification as a Mainland lawyer (ie, a special qualifying examination on specified subjects without the need to undergo post-examination practical training).
This proposal is modeled on the Overseas Lawyers Qualification Examination administered by the Law Society which examines overseas qualified lawyers including Mainland lawyers on specific subjects and which allows exemption for candidates with the relevant experience.
The Law Society is focusing its efforts to lobby for these relaxation measures and members are most welcome to send any comments or suggestions on these proposals to me at email@example.com.