Lawyers are losing out in China talks, warn EU/US negotiations

Law firms in China are losing out to the Big Six accountancy firms in the fight to reduce restrictions on practising in China, according to negotiators from the EU and US.

At meetings in Geneva earlier this month, the Chinese accepted US and EU demands that the accountants be able to offer a full range of services, open branch offices and retain ownership within their overall international operations.

However, similar concessions for law firms have not been forthcoming due in part, say western negotiators, to indifference on the issue by the firms themselves.

Tania Friederichs, a chief EU negotiator with China on services, said she wrote to the Law Society's Brussels office to ask for European lawyers' opinions on the issue.

She said Chinese negotiators have said they may consider lifting the rule on “prior practice” which requires foreign lawyers to have three to five years experience before working in the country that some firms have indicated is a problem.

But on the big issue of developing Chinese law practices there is little leeway.

The Chinese are worried, she said, that their best lawyers would be lost to foreign firms. They point to France, where the legal market has become dominated by foreign accountancy firms since liberalisation in the early 1990s. And where, as a result, the French authorities re-imposed heavy restrictions on foreign law firms and accountants.

Chinese negotiators have asked for alternatives to the partnership structure and have tentatively suggested that alliances could be an acceptable first step.

“We sense that China will do something, but have not seen anything concrete. We need to see much more detail,” says Friederichs.

One problem is that law firms, unlike the Big Six accountants, have not voiced a “wish list” of concessions to EU and US trade representatives.

Richard Brecher, in charge of WTO issues at the US/China Business Council in Washington, has just returned from China, where he found a lack of consensus on the issue within the foreign legal community there.

But in an attempt to redress the balance with the accountants, the council is preparing a position paper that will survey the demands of US law firms with interests in China.

The paper will be released at the end of the month to coincide with the next meeting between China and the US trade representative, Charlene Barshefsky.

For Friederichs, this meeting will prove to be the “crucial time for the Chinese to make up their minds”.