Vietnam’s top law firms are asking their government to impose greater restrictions on the practices of their foreign counterparts.
The country is currently one of the most open markets in Asia for foreign firms. They are free to hire Vietnamese lawyers, who have been permitted to advise on local law short of appearing in court or signing official documents. In many other Asian markets, including China, Korea, and India, foreign firms are explicitly barred from practicing local law.
“In my view, the legal market for foreign lawyers in Vietnam is more open and liberalized than that of the U.S.,” says Tung Ngo, chairman of 50-lawyer Vietnamese firm
, noting that foreign graduates of U.S law schools are only allowed to take bar exams in a few states. “So I think it is understandable and legitimate if local lawyers raise these concerns to the lawmakers to protect our interest.”
Vilaf was one of 18 Vietnamese firms that submitted a letter last month to the Vietnamese Ministry of Justice urging revision of the country’s Lawyers Law to more strictly regulate foreign firms. The group argued that the “open door” policy toward foreign lawyers had hindered “the formation of a healthy and equal legal environment for the development of a force of Vietnamese lawyers who would be dynamic and professional, and who would possess qualifications tantamount to those of the lawyers in the region and in the world.”
The effort has the foreign legal community on edge.
“This is something that is very serious because it affects the development and growth of the Vietnam market,” says Frederick Burke, the Ho Chi Minh City–based Vietnam practice head for Baker & McKenzie. “I’d hate to see it become a civil war between local firms and international firms, because we have had a very good relationship for a very long time.”
In their letter, the Vietnamese firms asked the government to explicitly bar foreign firms from advising on Vietnamese law, including the drafting of contracts and other documents. It was intolerable, they said, that many major deals in the country “do not have the participation of Vietnamese law firms” or that, in many instances, “a Vietnamese law firm is only granted a subcontract, as a disguise, for a small fee, for the purpose of signing the legal opinions required under the Vietnamese laws.”
The group compared Vietnam’s approach to the issue unfavorably to that taken by other Asian countries that have been more restrictive toward foreign lawyers, noting that China, Singapore, India, and Korea have created strong domestic legal professions with firms numbering in the hundreds.
“Even when the Singaporean, Korean, and Japanese lawyers have become strong enough for competition purposes, and for the opening of the legal market, these countries still set forth clearly the licensing procedures and conditions applicable to foreign lawyers on a case-by-case basis,” the Vietnamese lawyers wrote.
The firms also urged the government to require that foreign firms submit business plans for their Vietnam operations and commit to hiring and training a certain number of Vietnamese lawyers. The group recommended that licensing be limited to foreign firms with at least 500 lawyers globally. In addition, they asked that foreign firms’ local practice heads be required to reside full-time in Vietnam and have at least seven years’ experience in their home country jurisdiction.
The foreign legal community responded with its own letter October 24, signed by 11 international firms, including Baker & McKenzie, Allens, Freshfields, and
Gide Loyrette Nouel
. The international firms called the distinction between foreign and domestic firms “archaic,” noting: “Many of us have localized and become more and more Vietnamese, by virtue of the increasing number of Vietnamese citizen lawyers in leadership positions in our firms, or by establishment of family relationships in Vietnamese society.”
In their letter, the foreign firms also noted that they had helped Vietnam attract foreign investment and said the presence of international firms in the market continued to give foreign companies comfort. The fact that that was still necessary, they argued, was a major difference between Vietnam and some of the other, more restrictive Asian markets cited by the local firms in their letter.
“The role of foreign lawyers, and foreign law ‘brands’ that are well-known in their relevant jurisdictions in helping foreign clients navigate and become comfortable with what is perceived to be an unusual or difficult jurisdiction (unlike Singapore or Korea, which are the focus of the letter) should not be underestimated,” the foreign firms wrote.
Burke, who led the response by international firms, says the local firms’ push for more restrictions may be due to Vietnam’s relatively weak economy. Though often seen as a smaller version of China, Vietnam has lagged in economic development due in large part to widespread corruption. Foreign investment in the country has slowed in the past year, and the real estate market has dropped sharply as well, feeding
fears of a coming economic crisis
“Neither Vietnamese nor foreign firms are getting the easy work they used to get in the boom years, and the weak economy, coupled with some powerful new market entrants, is a challenge for the industry,” says Burke. Perhaps the most notable new entrant has been
Allen & Overy
, which opened Hanoi and Ho Chi Minh City offices
earlier in the year
But Truong Nhat Quang, managing partner of YKVN, dismisses the idea that local firms are motivated by fear of competition.
“We are not trying to narrow the scope of work foreign firms can do but are asking for the current laws to be more strictly enforced,” he says. “It is not to create any additional obligations for foreign firms but to maintain consistency and ensure compliance with existing Vietnamese law and [World Trade Organization] commitments in respect of the operation of foreign lawyers in Vietnam and enforcement of the law in practice.”
Vilaf’s Tung also says the local firms’ recommendations were not meant to be antagonistic to international firms.
“Personally, I enjoy good friendships with many foreign colleagues practicing international laws in Vietnam,” he says. “We often support each other. I and many other local lawyers benefit from opening markets for foreign law firms. We look forward to seeing more foreign law firms practice international laws and bringing clients to invest in Vietnam.”
Indeed, YKVN and Vilaf began life, respectively, as the Vietnam offices of
White & Case
, becoming independent after those two foreign firms left the market. They are generally regarded as the leaders among Vietnamese firms and also the main local competitors to international firms.
Truong says he is uncertain what will happen next but that the various submissions will be considered by the ministry and Vietnam’s National Assembly, which will have to approve any amendments to the Lawyers Law.
Burke says he hopes the government keeps in mind the contributions foreign firms have made to the Vietnam legal community, in terms of training Vietnamese lawyers and also helping develop the local legal system, efforts he says add up to “millions of dollars in professional time” per year. He says many local lawyers recognize these benefits and have not joined their peers in calling for more restrictions on foreign firms.
“It is a matter of principle. The open market has been very beneficial for Vietnam,” says Burke.