Recently a delegate of the Law Society of Hong Kong made a visit to Chengdu to exchange views and information with the local lawyers and government officials. As WTO membership is becoming imminent, the focus was on how legal professionals from the two completely different jurisdictions can cooperate to generate more business opportunities and improve the quality of legal services. Both groups agree that ideally it would be most convenient, efficient and cost effective if one law office within Chinese borders, whether it is located in the mainland or Hong Kong, can provide a one-stop legal service on all matters within the country. To achieve this, the ideology of "one firm, two principles" was discussed.

At a conference held during the visit, Mr. Anthony Chow, former president of the Law Society of Hong Kong, spoke about the reasons underlying the necessity for greater cooperation, and why the implementation of "one firm, two principles" would be mutually beneficial. The following points were made in his speech:

Over the last 20 years, the world's economy globalized, and cross-border business activities became no longer restricted by any geographical limitations. The work of lawyers shifted and they are now in need of adapting to the changes and familiarizing themselves with the rules of law of foreign jurisdictions.

Hong Kong began to open up its legal services in 1971. At the time, foreign lawyers were allowed to set up practices locally, but they were only allowed to provide services in relation to the jurisdiction from where they originally obtained their qualification. In 1995, phase one of the reform began, and foreign lawyers were required to register with the Law Society. They had to comply with the code of professional conducts and were required to be indemnified against any professional negligence. Phase two began in 1996 and the rules relaxed. They could be admitted to practice as a local solicitor through an overseas qualifications admission test.

Since the reform, quite a few foreign lawyers have been admitted this way, and this has brought competition to the local market. It is foreseeable that once China enters the WTO, more foreign firms will use Hong Kong as a base to target at providing legal services in the PRC.

Hong Kong's legal services will open up even further in the future, and new multi-national partnerships will form as a result of the globalization of the world's economy. This will lead to more opportunities for foreign and local lawyers to work together to adapt to the changing economic environments, and each party may make up the shortcomings of the other. Through cooperation, each lawyer can also improve on his own professional knowledge and skills, while at the same time lobby for more business opportunities. Overall speaking, the results will be positive.

Looking at China, the Chinese government made an agreement with the US in 1997, the terms of which stated that upon its accession to the WTO, China would open up it legal services industry. No doubt this move will encourage foreign investments and stimulate the Chinese economy.

To meet the needs of increasing business activities, the Chinese legal profession needs to be able to deal with cross-border matters, and operations have to be on a much bigger scale. This can be achieved by adopting the following 4 notions: (1) specialization; (2) expansion of scale; (3) integration and (4) internationalization.

1. "Specialisaion" promotes professionalism and at the same time increases competitiveness.
2. "Expansion of scale" increases efficiency, smoothens operation, broadens scope of services provided and gives client greater confidence.
3. "Integration" is in fact the essence of the notion of "one firm, two principles", in which practices from the two jurisdictions will integrate with each other. This way, the uniqueness of a practice to provide local services remains, while it also provides cross-border services to any investors.
4. "Internationlisation" will take place soon after the rest have taken place. It will enhance China's international image.

At the moment, Hong Kong and mainland lawyers cooperate through many means, these include:

1. Opening up of an office in the mainland by a Hong Kong firm to provide Hong Kong legal services - By this means, a Hong Kong firm can set up an office in China, but it is only allowed to advise on Hong Kong matters, and it may not hire a local lawyer to provide PRC services.
2. Instructing a mainland firm to perform PRC related tasks - Since China is a vast country, working in partnership with a single firm is restrictive. It would be more beneficial to instruct the most appropriate firm or specialist to perform the task on a case to case basis.
3. Hiring a PRC lawyer in Hong Kong to provide PRC legal services.

Last year, the PRC judiciary made some proposals on how to promote cross-border legal services. It includes:

1. removal of the restriction that Hong Kong law firms can only have one office in China;
2. allow Hong Kong lawyers to take part in the mainland's qualification test; and
3. To allow PRC firms to hire Hong Kong lawyers to provide Hong Kong legal services, and to allow those lawyers to practise locally after a certain number of years.

These proposals are beneficial to lawyers at both ends, but they are not without problems. It is still much easier, faster and cheaper for investors from Hong Kong, China and overseas to be able to obtain advice from one single law firm (whether it is located in China or Hong Kong). The adaptation of "one firm, two principles" will provide a solution, whereby partnerships made up of both classes of lawyers can provide so-called "Chinese Law Legal Services". The new establishments should be governed by professional rules of both systems, so that client interests are protected, information are kept confidential, and practices are properly insured against professional negligence. It should also help to refine the operation of law firms, and better allocate resources for expanding business.

In conclusion, Hong Kong's open door policy of the legal profession has attracted many foreign investments. In the forseeable future, it may be necessary to open up further to cooperate with mainland lawyers to face foreign competition. This will help the profession to gain competitiveness and prepare it for the challenges and opportunities brought upon by China's entry to the WTO.