Central Hong Kong

The Association of Corporate Counsel announced its opposition to a proposal that would impact the number of foreign lawyers practicing in Hong Kong.

The global in-house legal association published a press release Monday opposing the Hong Kong Law Society's proposed amendments to its Foreign Lawyers Registration Rules, which would change the ratio of domestic to foreign lawyers in Hong Kong firms from 1:1 to 2:1.

Mary Blatch, the ACC's associate general counsel and senior director of advocacy, said the new rule would not apply to legal department staff but would still harm Hong Kong in-house counsel by limiting their outside counsel options for global matters.

“Right now, being able to have the foreign lawyers in Hong Kong helps the businesses that are located there access the different types of legal expertise they need,” Blatch told Corporate Counsel. “There's a lot of multi-jurisdictional transactions and issues that arise and so our members value having lawyers from different jurisdictions able to work on their matters side by side. It makes for more efficient, more effective legal counsel.”

The new amendments would also “restrict lawyers to practicing only the law of the jurisdiction in which they are qualified.” The provision has prompted concern most frequently in relation to laws in offshore jurisdictions such as the British Virgin Islands or the Cayman Islands, according to the ACC's submission to the Law Society via its Hong Kong chapter.

In practice, the ACC Hong Kong said in its comments that lawyers advising on BVI or Cayman laws in Hong Kong may not be qualified in those jurisdictions because the BVI and the Cayman Islands allow lawyers qualified in other jurisdictions to advise on their laws.

“If a company determines that a lawyer is competent to advise on the law of a jurisdiction (other than that of Hong Kong) in which the lawyer is not licensed, it should be the company's choice to proceed,” wrote the ACC Hong Kong president Lin Shi, and vice president and chief legal officer Susanna McDonald.

“We are particularly concerned that the [proposed change] would strip the business community in Hong Kong of its current choices and further limit competition in Hong Kong's legal marketplace,” wrote Shi and McDonald.

“We always favor free flow of lawyers across borders. Today's businesses are multinational. They're operating on a global basis and they shouldn't have their legal advice subject to the jurisdictional restrictions to impede cross-border transactions and business operations,” Blatch said.

Hong Kong's 1:1 ratio has been in place since 1994. According to the ACC, about 1,500 foreign lawyers from mostly common law jurisdictions currently work in Hong Kong, accounting for more than 15 percent of the total number of practicing solicitors.

The ACC Hong Kong, which has over 900 members, said the proposal risks creating a protectionist environment that would “harm business,” hinder Hong Kong's economic goals and the “quality and integrity of the legal profession in Hong Kong.”

More than 20 American and British firms, including Kirkland & Ellis and Latham & Watkins, oppose the changes. The ACC said in the press release that if the amendments pass, firms may move to Singapore. Firms in Hong Kong would have two years to comply.

“This goes beyond Hong Kong-based businesses,” Blatch said. “Because businesses located elsewhere will also work with Hong Kong-based firms, because it's really seen as a legal hub for much of Asia.”

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