ANALYSIS: Creating synergy in Greater China

Hundreds of lawyers from the PRC, Hong Kong, Taiwan and Macau unanimously shared the same view on the urgency of closer cooperation between the four regions, at the Cross Strait Four Regions Lawyers Summit in Hong Kong held by the Law Society of Hong Kong late last year. “2009 was a year in which the global financial landscape had faced numerous challenges... There will be heightened demand for legal services to assist in completing transactions and finalising deals,” said Huen Wong, president of the Law Society of Hong Kong. “Legal professions from different regions in Greater China should capitalise upon this opportunity and strengthen our bonds to create the greatest good for all.”

Chief executive of the Hong Kong SAR, Donald Tsang, identified the importance of lawyers’ roles in economic activities and the opportunities and challenges facing legal professions across the four regions. “Despite potential difficulties in seeking cooperation between different legal systems, we should go against the headwind, coordinate with our counterparts, and draw on the strengths of other legal systems to complement our own,” said Tsang.

The legal profession in the mainland has the shortest history among the four regions, but is growing fastest and has the most to learn from its counterparts in Hong Kong, Taiwan and Macau.  “The legal sector in the mainland... has developed its unique features [in terms of the] operating models of its firms and its partnership cultures. This extraordinarily fast pace has created some issues and problems which need to be studied,” said Jiang Min, vice-president of the All China Lawyers Association (ACLA)

Evolving cross-regional legal services
Cooperation between lawyers and firms from the cross-Strait four regions has been in place for some time. However, several new policies issued by China and the recent changes in economic and market conditions have generated a new impetus for working  collaboratively.

In terms of new policies, China has developed plans and economic stimulus packages to create new momentum. Among them is the Outline of the Plan for the Reform and Development of the Pearl River Delta (PRD) issued by the State Council in early 2009, which has brought new opportunities for cooperation between Guangdong and Hong Kong. An important highlight of the PRD development plan lies in the Qianhai area in Shenzhen, where the Shenzen government and Hong Kong governments will jointly develop Qianhai into a regional hub.

Taiwan
In China’s new economic blueprint, Taiwan holds an important position as the fourth major economic pillar of the Greater China Region. The cooperative mechanism of reciprocal investment across the Strait has been significantly enhanced as a result of the Three Direct Links – officially restored in late 2008 – and subsequent rounds of talks between the two sides’ leaders. Against the background of strengthening economic ties between the mainland and Taiwan, the mainland has also started to open its legal sector to Taiwan residents.

In 2008, when the mainland permitted Taiwanese candidates to sit for the lawyer qualification examinations, more than 800 Taiwanese lawyers enrolled. The number of candidates was smaller in 2009 but still exceeded 700. Liou Chih-Poung, president of the Taipei Bar Association, said “People are beginning to recognise that it is important to understand and master mainland laws.”

In addition, the mainland has designated Fuzhou and Xiamen in Fujian province as two pilot cities where Taiwanese lawyers are allowed to set up law firms. So far, three to four law firms in Taipei have filed their applications which, although not yet approved, do reflect an emerging trend.

Macau
At the summit, Macau lawyers also had a chance to share their views and practical experience with their counterparts from the mainland, Hong Kong and Taiwan. “Currently, Macau lawyers mainly focus on handling internal legal issues and servicing the local entertainment industry with few international elements. It is necessary for them to step up cooperation with overseas lawyers. Arbitration seems to be a potentially promising area for development,” said Paulino Comandante, secretary-general of the Macau Lawyers Association.

“Now that Macau’s economy is dominated by Chinese people, Portuguese is no longer a major language there. In future, Macau lawyers will need to change their way of doing business in order to keep up with market developments.” 

Hong Kong
Given the Hong Kong legal industry’s unique history and the city’s international standing, it has a crucial role to play in the integration of the legal services sectors in Greater China. Helena Chen, partner of Taiwan firm Formosan Brothers, said: “Mainland residents and investors are still using Hong Kong or Macau as a platform for investing in Taiwan. For the time being, Hong Kong is still a good choice as an easy and convenient platform.”

She believes that Hong Kong lawyers are capable of learning about the international law market, because it has an open legal sector and is based on a common law system. Tsui Kei Pang, vice chairman of the Mainland Legal Affairs Committee of the Law Society of Hong Kong, shared the same perspective. “Hong Kong’s strength lies in the city’s liberal policy toward the legal sector and flexible operation of Hong Kong law firms, which makes [it] a good candidate for developing a platform of cooperation among law firms in the four regions.”

Ng Ching-Wo, a Hong Kong lawyer and a partner of King & Wood, addressed the urgency for meaningful cooperation between lawyers from the four regions. “If Hong Kong, Taiwanese and Macau lawyers continue to do their own businesses behind closed doors, they will be marginalised, disconnected from the market and finally eliminated from competition,” Ng said.

Another reality facing Hong Kong, Macau and Taiwanese firms is that when they cooperate with the mainland successfully, mainland lawyers will ultimately play the dominant role, as they have the potential to grow into large organisations employing hundreds of lawyers. “There are only about 5,000 solicitors in private practice in Hong Kong (similarly in Taiwan)... we should be aware of and accept this reality before starting any cooperation,” said Ng.