Hong Kong: The Legal Profession
Structure and Regulation of the Profession
The legal profession in Hong Kong bears a strong resemblance to that of the UK, on which it is modelled. Thus, it is a split profession, with barristers and solicitors. It is largely autonomous, and its rights to be self-regulating were explicitly preserved in the Basic Law introduced in 1997 when Hong Kong reverted to Chinese rule.
Hong Kong is home to over 7,000 solicitors and over 1,100 barristers. In addition, there are nearly 1,300 registered foreign lawyers from 28 jurisdictions. Barristers have a right of audience in all courts, whereas solicitors' rights of audience have traditionally been limited to the lower courts; a client must approach a barrister through a solicitor; and a solicitor must be present when a barrister is in court, takes instructions from a client or interviews a witness.
As in the UK, this antiquated system needs loosening up, but the lawyers who benefit from it will not accept change very readily. A relaxation of the differences between solicitors and barristers would increase competition, improve access to barristers and lead to reduced costs. New laws have begun to break down these traditions to the benefit of litigants, however.
While recognizing that there is a need to retain and develop a strong group of specialist advocates, the Administration thinks that rights of audience should be based on competence, not on whether a lawyer is a barrister or solicitor. There are proposals for change:
- to allow solicitors to acquire rights of audience in all courts, if they have relevant experience and have passed necessary examinations;
- views are to be sought as to whether any limitations based on years of experience should be imposed on barristers' rights of audience in the higher courts;
- as in some other jurisdictions, members of recognised professional bodies and employed barristers should have direct access to barristers;
- barristers should be able to decide whether the interests of the lay client or the interests of justice require the attendance of a solicitor in court; and
- the two-counsel rule which prevents Queen's Counsel (senior barristers) from appearing in court without a junior barrister should be abolished.
Retaining the two branches of the profession but eliminating the practices that can no longer be justified would both benefit consumers and continue to provide a choice for legal practitioners. However, barristers have continued to oppose modernisation of the profession, and so far these proposals have only been adopted to a small extent.
In January 2010, the Hong Kong Legislative Council passed the Legal Practitioners (Amendment) Bill 2009, which allows solicitors to apply for higher rights of audience before the Court of First Instance, Court of Appeal and Court of Final Appeal, in civil and criminal proceedings. Solicitors who have at least five years' post-qualification experience and who satisfy other eligibility requirements may apply to the Higher Rights Assessment Board for higher rights of audience. The changes will allow litigants to choose between instructing barristers or engaging suitably qualified solicitors to appear for them in court. It was expected that the Higher Rights Assessment Board would begin accepting applications from solicitors in early 2011.
In addition to its structural problems, Hong Kong's legal sector is plagued by under-capacity. The average waiting time between a request for a court date and the actual hearing is 216 days in the civil court, although time spent on preliminary matters means that the average litigant will have to wait for about 400 days to have a case heard.
A recent paper on civil justice reform said the number of judges in Hong Kong had not changed significantly in the past decade despite sharp increases in workload.
The caseload of the High Court has increased 82% since 1991, so that judges have thus had to cope with higher pressure and bigger workloads. The panel of Masters will deal with work in the High Court that encompasses summary judgments, where a case is instantly disposed of, and interlocutory applications, ie technical queries that don't require a court hearing as such. They will also deal with so-called 'taxation', meaning the scrutiny of legal bills to allocate costs between litigants.
Under the Hong Kong judiciary's 'Performance Pledge,' the Court of First Instance aims to set a hearing date for criminal cases within 120 days from the filing of an indictment, and within 180 days from the application to fix a date in civil proceedings. The Judiciary has stressed, however, that these are "targets" and they may fluctuate according to the year's particular circumstances.
Evidently wanting yet more work, in September, 2003, the Hong Kong Bar Council met with the Chinese Ministry of Justice, in order to attempt to persuade the Chinese authorities to allow Hong Kong's barristers the same rights to practice on the mainland as have been afforded to the territory's solicitors.
Under the auspices of the Closer Economic Partnership Agreement (CEPA), Hong Kong lawyers will be permitted to study for qualifications as mainland lawyers with a view to practicing there. However, SAR-based solicitors are prohibited from practising any kind of litigation work, and barristers have been excluded from the agreement altogether.
Alan Leong SC, head of the Bar Council's mainland practice relations committee suggested that there were several reasons, both socio-economic and political, why barristers have been excluded from the draft agreement thus far. He observed that: "Litigation is the bread and butter for most mainland China lawyers," and went on to explain that: "The Chinese mainland does not practice adversarial or hostile litigation like we do. I do not rule out that our style and concepts of litigation would have an impact." However, he added that in light of the fact that the SAR is prepared to allow mainland lawyers to practice litigation in the territory, a degree of reciprocity should be expected.
In December, 2003, it was announced that, as from January 1, 2004, Hong Kong law firms will be permitted to form alliances with Chinese firms. Major international law firms took great notice of this development, which was expected to lead to a major increase in the size and prestige of the Hong Kong legal profession. However, only lawyers born in Hong Kong are allowed to re-qualify to practice local law on the mainland, and even they are only permitted to practice commercial law. Many US and UK law firms were nonetheless said to be looking to register locally as Hong Kong practices in order to take advantage of the opening-up of the Chinese legal sector.
Finally, in June, 2004, a working party was established to examine the ending of the monopoly held by the territory's barristers on conducting trials in the High Court. Although the announcement that a think-tank was to examine the issue was cautiously welcomed by solicitors, many within the legal community were doubtful that this new initiative would yield positive results, or even cover new ground compared to earlier reviews. Among other concerns, solicitors feared that the choice of appointments to the working party was likely to influence its conclusions, with the possible appointment of more traditional judges likely to swing the debate in favour of barristers retaining their monopoly.
In August, 2004, Hong Kong law firm Woo Kwan Lee & Lo became the first SAR-based organisation to create an alliance with a Chinese law firm under the auspices of the Closer Economic Partnership Arrangement (CEPA) between the jurisdiction and the mainland. Under the alliance, Woo Kwan and the Beijing-based Grandall Legal Group were to share office costs, resources, and staff. The move was closely watched by the various international law firms who see the alliances permitted under CEPA as a potential gateway into the Chinese market, which has traditionally been off-limits to them due to restrictive practice rules.
Chinese law firm Duan and Duan, the first independent partnership law firm to establish itself in China, announced its expansion into the Hong Kong market, with the opening of its first office in the city in May 2007. The main focus of the firm's business will be to help international companies wishing to invest in China to navigate the country's complex legal, cultural and linguistic environment. It plans to provide advice in the fields of corporate law, international investments and trade, finance, mergers and acquisitions, arbitration and litigation.
Duan Duan has partnered with J. Lai and Company, an established Hong Kong law firm, to further enhance their cross-border strengths and connections.
Speaking at the opening, Mr Duan Qi-hua, a partner in Duan and Duan observed that: “Hong Kong is the ideal base to set up operations. The city provides a platform for the international community to gain access to opportunities in China. Equally Chinese companies are able to use Hong Kong to launch themselves globally.”
Duan observed that since China’s accession to the World Trade Organisation, a greater number of foreign companies have been looking to invest in the Mainland. The country’s new found confidence was also reflected in the number of Chinese companies looking to expand on to the international stage.
CEPA Supplement IX was signed on June 29, 2012 and further relaxes market access rules for trade in services, including legal services. Under the changes, which take effect from January 1, 2013, Hong Kong law firms that have set up representative offices in mainland China will be permitted to operate in association with one to three Mainland law firms.
In June 2010, an amendment was introduced into the Legislative Council that would introduce the limited liability partnership (LLP) for solicitors firms, bringing Hong Kong into line with other major financial centres such as London and New York. The proposal changes the existing law under which every partner in a solicitors firm is liable jointly and severally with other partners for all partnership obligations, including those arising from any wrongful act of other members of the firm.
A spokesman for the Department of Justice said, "the bill is not intended to change the common law position with respect to the general principles of negligence. A partner in an LLP may still be held responsible under the common law for vicarious liability arising from a default of an employee who is under the supervision of the partner. Besides, a failure to establish a proper system of staff supervision can be the basis for a claim that all partners of an LLP are collectively liable for negligence."
On May 28, 2012, the Law Reform Commission published a report proposing that a mechanism for class actions should be adopted in Hong Kong. The proposal was put forward after consideration of the responses to the Commission's consultation paper.
The Commission believes that the introduction of a comprehensive regime for class actions would enhance access to justice and would provide an efficient, well-defined and workable mechanism.
The Chairman of the Commission's Sub-committee on Class Actions, Mr Anthony Neoh, SC, said that the Commission recommended phasing the implementation of a class action regime by starting with consumer cases, which would bring within the net potentially the largest segment (or even the majority) of cases suited to class actions. This cautious approach was to avoid the risk of unduly encouraging litigation.
The overwhelming message received through the public consultation of the Sub-Committee was that whilst a class action regime should be welcomed so that there may be increased access to justice, the regime should not be a charter for unnecessary and unmeritorious litigation. The Commission therefore recommends that in accordance with all class action regimes elsewhere, class actions should only be allowed to continue as class actions if they have been so certified by the court. In addition, the proposed regime should be introduced first in the Court of First Instance and its extension to the District Court should be deferred for five years until sufficient experience is accumulated through the establishment of a body of case laws on the new procedures. If the regime is eventually extended to the District Court, judges should also be given the power to transfer complex cases to the Court of First Instance.
The Commission recommends that the proposed regime should adopt an "opt-out" approach. In other words, once the court certifies that a case is suitable for a class action, members of the class, as defined in the court order, would be automatically bound by the class action, unless they "opt out" of the class action within the time limits prescribed by the court order. Where the proceedings involve parties from outside Hong Kong, an "opt-in" procedure should be the default position (that is, persons will not be included in the class action unless they take active steps to "opt in" to the action), and the court has the discretion to adopt an "opt-out" procedure if the particular circumstances of the case warrant it.