President Message - October 2013

At the invitation of the Consulate General of the Republic of Korea, I, together with Ms. Elsie Leung, former Secretary for Justice, had a very pleasant opportunity to share our experiences with our Korean counterparts in Seoul last month.

The Korea-European Union (“EU”) Free Trade Agreement has been in effect since 1 July 2011, followed by the signing of the Korea-US Free Trade Agreement on 15 March 2012.

With its recent admirable track record in economic development, the opening up of the Korean market naturally becomes very attractive. Korea is the 13th largest economy and the 7th largest exporter in the world, globally leading productions of displays and memory semiconductors, mobile phones, automobiles and vessels.

As a result of the Free Trade Agreements with the EU and the US, foreign law firms from the US, UK and other European countries have their eyes firmly set on the Korean legal service market.

The liberalisation of the Korean legal service market takes a three-step approach.

First, as from July 2011, a foreign legal consultant is allowed to practise the law of the jurisdiction of his admission and a foreign law firm is allowed to open a local branch in Korea.

Second, as from July 2013, a Korean law firm and a foreign law firm are allowed to jointly accept instructions on the same client matter and to share profit costs with each other.

Third, as from July 2016, a foreign law firm will be allowed to form a partnership with a Korean law firm and to engage a Korean lawyer to advise on local law.

In contrast with the situation in Korea, Hong Kong opened up its legal service market in as early as the 70s’, when foreign lawyers and foreign law firms were free to practise foreign law subject to relatively informal “control” procedures administered by the Law Society and the Immigration Department. Although foreign law firms and foreign lawyers were not allowed to practise Hong Kong law, local law firms could engage foreign lawyers to assist on matters relating to the law of other jurisdictions. The number of foreign lawyers gradually increased over the years, which necessitated the implementation of a more formal regulatory regime.

The statutory registration requirements of foreign lawyers and foreign law firms came into effect in 1995 regulating how they may operate in Hong Kong. The regime has been in place for 18 years. Similar to Korea, subject to specified requirements, Hong Kong allows foreign law firms to establish their practices to advise on foreign law, to form an Association with Hong Kong firms for the purpose of sharing offices and profit costs and eventually to convert to local firms while retaining their foreign trade names.

With the similarities between the liberalisation measures in both jurisdictions, the lively discussions I had with the Korean legal practitioners and Korean law students from Seoul National University Law School were enlightening. The audience also raised stimulating, critical questions on the impact of liberalisation on local practitioners.

Hong Kong is renowned for its open policy. There are 1,257 foreign lawyers from 30 jurisdictions and 68 foreign law firms involving 20 jurisdictions currently practising in Hong Kong. Any overseas firms that fulfill the specified requirements will be able to enter the legal service market in Hong Kong.

However, considering the level of openness enjoyed by foreign entrants to the Hong Kong market, it is disappointing that Hong Kong does not enjoy a commensurate level of reciprocity in its access to outside markets. I have previously explained about the absurdity of the position in Taiwan where Hong Kong law firms are considered neither “local” nor “foreign “ firms and hence there is no avenue for them to be properly registered to carry on legal practice there.

Like Taiwan, the Korean market, currently open to US and European law firms, is still not accessible by Hong Kong law firms. I strongly urge the Government to quicken its pace in seeking reciprocal access by Hong Kong legal practitioners to the promising Korean legal service market.

All in all, it leads to the question of whether the legal profession in Hong Kong should further open up its market, that is, to allow MDPs (Multi-disciplinary Practices) and non-lawyers to share profits in a law firm and/or to impose measures to protect the healthy growth of local practitioners. Your comments and suggestions are welcome and valuable to the Council in formulating a policy towards this end.