Monday, May 15, 2006
The Shanghai Lawyers Association recently issued a memorandum decrying what it called the unauthorized practice of law by foreign law firms in China and calling for a crackdown by the authorities. For details of the memorandum, see the reports by China Confidential and the China Law Blog (not to be confused with this blog). The China Law Blog has posted Chinese and English texts.
A few comments (slightly modified from original posting):
- This is about protecting Shanghai lawyers from competition, not about protecting the public or the clients of the foreign lawyers. The memorandum does not even bother to pretend otherwise, and explicitly highlights the harm done to Shanghai lawyers. Remarkably, the memo does not ever claim that the foreign lawyers have actually given bad advice.
- It is not quite accurate to suggest, as does the China Law Blog, that everyone does the same thing. The China Law Blog says, "Foreign lawyers are not allowed to practice in any of the 50 U.S. states." The states typically (I think) do not distinguish between citizens and non-citizens. They distinguish between those who have passed the state bar and those who have not. LL.M. programs in the U.S. are heavily populated by foreign lawyers who, upon graduation, typically take the New York or California bar exams and then qualify to practice. By contrast, foreigners are not allowed to qualify as PRC lawyers. Even Hong Kong and Macao lawyers may not represent clients in court. These restrictions stem from the still-powerful conception of the legal system, and particularly courts, as part of the state security apparatus; the participation of persons over whom the government has incomplete authority must therefore be limited.
- This is not a WTO issue. The China Law Blog posting wonders why South Korea's complete prohibition of foreign lawyers is not a WTO violation. The answer is that the WTO agreements (the relevant one would be the GATS) do not require you to allow foreign lawyers to practice. China, unlike South Korea, has made some specific promises about legal services (as part of its accession agreement), and those are set forth in its Services Schedule. I doubt that a crackdown would violate any of the those promises, so there are no grounds for a WTO complaint.
- While lawyers in Shanghai and no doubt elsewhere are pushing for a crackdown, there are forces pushing in the other direction, and not just the foreign lawyers. Local bureaux of justice, for example, derive benefits from regulating foreign law firms that they would lose if the foreign firms were to be driven out or reduced in size. Thus, the struggle is not completely one-sided.
Thanks to China Law Blog for bringing this to everyone's attention.