Experience: My legal career began after completing the ILEX Legal Secretaries Diploma and shortly after joining Ann-Blythe Cook & Co Solicitors. I was then instrumental in the setting up of Tahmina & Co where I gained extensive legal experi…
03 May, 2012
Posted in Spring 2012
Could Beijing or Shanghai eclipse Hong Kong as China's primary legal hub?
The seismic changes that have occurred in Mainland China over the ast decasde have had a drastic effect on lawyers, law firms and their clients in that country and beyond. As a result, no one really knows what the Far East's legal landscape will look like in ten years' time.
Magic Circle, US and international firms have dominated the region for many years. However, some commentators believe that the traditional legal powerhouses could soon face a serious threat from the increasingly sophisticated lawyers and increasingly ambitious law firms fo the People's Republic of China (PRC).
Despite their long-term commitment to the Far East, the position of Western firms is by no means invulnerable. While they are well established in Hong Kong - a region that has deep-rooted ties with Western economies - Western firms have found the PRC's legal market a much harder nut to crack.
As a result of Beijing and Shanghai's rise in prominence as legal hubs, the offices of many international firms in these cities are currently in growth mode. No longer letterhead outposts, these offices are now key to many law firms' Far East strategies. With many wealthy Chinese investors diversifying their portfolios through strategic overseas investments, there is a particular interest in growing capabilities in outbound investment work.
Joel Rothstein, a partner in the Beijing office of Paul Hastings, has lived and worked in Asia for the past 15 years. While he acknowledges that Mainland China could eventually eclipse Hong Kong as an international legal hub, he believes that this will not happen unless and until Mainland China introduces additional reforms in the financial and legal industries.
For Beijing or Shanghai to become an international legal hub like London or New York, it must first become an international financial centre. For this to happen, there must be reforms to promote the internationalisation of China's official currency, the RMB, and the opening up of China's financial services industries. The recent relaxation of China's financial regulations in Wenzhou has been touted by some commentators as a move towards greater liberalisation and an important symbolic shift towards a more progressive and more open economy. Greater openness in the financial services industry is essential if China is truly to come into its own.
Joel Rothstein believes that China must also change its protectionist mindset. He says that the measures that currently shield PRC law firms - in the form of discriminatory income tax policies and restrictions on the practice of PRC law by attorneys within international law firms - will only serve to hamper the growth and maturity of China's legal services industry. Only when all law firms are working on a level playing field will they truly be equal.
Last but not least, the PRC will have to address its quality-of-life issues. Until it does so, the PRC will not be in a position to take Hong Kong's crown as China's preferred place for corporate headquarters and business activity.
—FS Regulatory Associate, Leading International Firm - October 2012