Bev Weise

Editor's Note
Interlaw Executive Director Beverly Weise completed a three- week trip to Interlaw's Asia Pacific Region this spring where she visited with Interlawyers at Allen & Gledhill, (Kuala Lumpur), Kelvin Chia Partnership in Singapore, and the Guangzhou and Hong Kong offices of Stevenson, Wong & Co. She conducted due diligence visits to Taipei and Bangkok with Asia Pacific Board Member Kumar Kanagasingam of Allen & Gledhill, and conducted due diligence visits in Beijing and Shanghai with Interlaw Chair, Jim Harrowell of Hunt & Hunt, (Sydney), and Katie Young, also from Sydney office of Hunt & Hunt. They visited ten law firms, met with government officials, and met with in-house China Counsel.

Bev learned first hand how the legal market is rapidly developing in China and shared with The Interlawyer some key points and opportunities:

It is news to no one that China has become the world's economic powerhouse both in terms of its domestic and export markets. What surprised me is the rapidly evolving commercial and legal infrastructure to sustain China's growth and encourage trade and investment.

Clients have a distinct advantage when using indigenous Chinese firms with a global reach rather than a foreign law firm operating out of one or two major cities.

I learned that in addition to the codified laws, there are a large body of "policies" that are interpretive. There is a significant competitive advantage for companies who are first on the ground in China because their local Chinese counsel can work with government officials to ensure that the policies are interpreted favorable to the client, thereafter becoming law. China is therefore making laws "real time" to facilitate commerce and China's integration into the global economy.

The cultural -and even language-differences within China are significant between regions and major cities. Furthermore, since laws and regulations are evolving rapidly, it is often the indigenous lawyer who will decipher the nuance of the local business environment and the intent of the regulations beyond the black letter of the law, successfully facilitating a deal or advocating a case. Clients that come to China now need to navigate local regulations, but because the "rule book is just now being written," it is also possible that current cases can "make law" to the client's benefit.

Chinese Law Firms Started in 1992
Deng Xiaoping established an open door policy for China in December of 1978, initiating trade beyond the Soviet Union and its satellites. By the early 1980's, China began introducing legislative and economic reforms including:

• Legislation establishing and regulating company laws, securities laws, and laws relating to joint ventures and banking and commercial matters
• Establishment of a strong legal profession to:
• Assist in developing and interpreting these new laws;
• Ensure that Chinese and foreign enterprises have access to credible, reliable, high quality legal advice;
• Position China to compete globally

During the Cultural Revolution there was little opportunity for professionals to receive training for conducting commercial enterprise or practicing law. Nor were there sophisticated regulatory structures in place. Yet, to "catch up" the learning curve has been swift and steep this last twenty years. China itself has enjoyed a rapidly developing economy, and with it, the pressures of building an entirely new and modern infrastructure. The result is that the rule of law-based on a combination of civil and common law-is being written contemporaneously. Indeed, even the Chinese constitution has recently been revised to recognize commercial enterprise, while protecting human rights.

By 1991 there was an intensive legislative program to encourage the development of the practice of law along lines similar to the legal profession in most Interlaw jurisdictions. In 1992, to further encourage and facilitate trade and investment opportunities between Chinese enterprises and foreign enterprises, foreign law firms were granted licenses to practice in China, of which Hunt & Hunt was one of the first.

Between 1992 and 1995 the Chinese legal profession developed rapidly when lawyers who previously worked as in-house counsel for Chinese trading houses and lawyers with overseas training with foreign law firms began to practice independently. As lawyers left the state-controlled financial agencies and foreign firms to privatize and "hang a shingle" they named themselves not after their given names, but rather, the generic, "Law Firm # 1," "Law Firm # 2," and so on. Notably, "Law Firm # 10," was, for a time, Interlaw's Beijing member firm. Chinese law firms now select more distinctive names, but the firms have remained relatively small; the largest, at 200 lawyers, is located in Shanghai.

Traditionally, in many countries, the legal profession has been self-regulating through Bar Associations and the Law Societies, but lately several jurisdictions note increased professional regulation from their governments; the opposite is the case in China. The regulator for the Chinese legal profession is the Bureau of Justice, which educates the general public about the role of lawyers and the credibility of the profession, seeks to integrate lawyers into many segments of the society, and actively protects lawyers from undue interference from some authorities, ensuring robust client representation. In order to ensure quality of service and reputation of Chinese lawyers, the Bureau reviews private law firms every year; awarding the top quality firms.

China is serious about competing globally. There is a growing view that lawyers should educate their clients about timeliness in filing, the enforceability of arbitration awards in China and beyond, the critical importance of local counsel, the nuances of governmental regulations, and the advantages of lobbying for favorable laws.

Interlaw in China
There is still much to be done, but there is energy in China that is palpable. The Olympics are around the corner, and infrastructure improvements are well under-way for the Games of 2008. There is profound dedication and commitment by the government and legal professionals to establish a reputable, strong and vibrant private legal profession in China that is regarded as credible, technically competent, and competitive with the private profession in other jurisdictions. As Interlawyers gather for the Annual Global Meeting of 2004 in Guangzhou, China, I hope they schedule additional time to join the post tour, or make other arrangements to independently get to know this amazing world powerhouse.

Bev Weise at Stevenson, Wong & Co.

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Editor: Regina A. McConahay

Copyright 2004. Interlaw. All rights reserved.

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