Shanghai authority gets tough on lawyers' rates

Greater transparency drive leaves foreign firms unsure if law applies to them

The Shanghai local government has cast huge uncertainty over global law firms' China practices by issuing a notice on lawyers' fees, which sets an upper limit of 3,000 yuan, or £254, per hour.
Foreign law firms have not been mentioned explicitly, so it is unclear whether the notice covers them or not. Some law firms with Shanghai offices have already sought clarification from the Chinese authorities.
Details of the notice, which was drafted jointly by the Shanghai Municipal Justice Bureau and the Price Bureau, were released to lawyers last month. The aim of the devolved Shanghai municipal authority is to standardise legal fees and make them more transparent. The notice sets out a complex schedule of rates for work charged on an hourly basis and work done on fixed fees.
Some Shanghai government officials have claimed that access to the legal profession is becoming prohibitively expensive for Chinese people. The Shanghai Bar Association, however, opposes any price controls for Chinese lawyers and wants to let the market decide the rates.
Head of Asia at Freshfields Bruckhaus Deringer Ruth Markland and head of China Tom Jones are confident that the notice is not actually intended to apply to foreign firms. Andrew Godwin of Linklaters in Shanghai also believes that it is local firms that are the target of the notice, but said it is not clear to whom the notice could apply.

“It&#39s possible that the notice has been left in the air because the local authorities want it that way”

Godwin believes that it is intended first and foremost to deal with lawyers involved with litigation, but pointed out that it does not explicitly exclude other legal services. Linklaters' Shanghai office has made inquiries with the government as to the status of the notice.
A partner in a Shanghai firm told The Lawyer: “It's also possible that the notice has been left in the air because the local authorities want it that way.”
Price controls aimed at foreign law firms would have to be cleared by the national government of the People's Republic and this would require a change of heart from the broadly reformist regime.
The likely explanation is that it is still relatively common for different government agencies to release completely contradictory regulations for their own political reasons.