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Legal Profession in China: Past, Present, and Future Hongming
XIAO I. The Evolution of Legal Profession in China after 1949 After 1949, legal profession in China underwent a tortuous route, and its development can be divided into three stages. First, in early 1950s, a large number of law offices termed "legal counseling services" ("Falu Guwenchu") appeared in various parts of China. Many talented people entered the practice of law in their effort to protect people's rights and interests, and they made a significant difference in the enforcement of law. However, by the end of the 1950s, under the influence of prevailing leftist ideology, popular opinion started to regard lawyering as speaking on behalf of "the bad guys" and therefore indicative of problematic political inclinations. As a result, many legal counseling services were disbanded and lawyers were designated to work in other work units. Legal profession in China entered a state of non-existence. Second, in 1979, along with the rectification efforts in the aftermath of the Cultural Revolution and with the initiation of reform and open-door policies, legal profession in China finally got to a new start. A legal foundation for the development of legal profession in China was specifically laid down in the "Provisional Law on Lawyering in People's Republic of China," which was passed during the Fifteenth Meeting of the Standing Committee of the Fifth National People's Congress on August 26, 1980. The name "legal counseling services" was again used for law offices around the country and lawyers were regarded as "state legal workers." The size of the legal profession began to grow as a large number of people, who were formerly involved in lawyering or worked in political or legal branches of the government, became lawyers. Since then, China's legal profession entered a period of gradual adjustment and reform. In 1982, the "legal counseling services" in many places changed their names to "law offices" ("Lushi Shiwusuo"). And in 1986, Chinese National Lawyer's Association was established in Beijing, followed by the formation of local lawyer's associations in many places. Also in 1986, the Ministry of Justice began to administer a unified national qualification exam for lawyers ("Lawyer's Exam"), which further clarified the professional standards required of lawyers. The Lawyer's Exam had been administered every two years before 1992, and annually afterwards. The number of candidates who registered for the exam has been increasing year by year, and in 1999 this number exceeded 110,000. Furthermore, the Ministry of Justice, responding to the need for changes, continuously experimented in reforming the organization of law offices. From wholly state-controlled legal services evolved cooperative, contract-based law offices; its first generation included Beijing's Jingwei Law Office, Junhe Law Office, Dadi Law Office and Beifang Law Office, all chartered in 1989. Since then, partnership law offices and law offices named after individuals have also been experimented. The promulgation of "Lawyer's Law in People's Republic of China" ("Lawyer's Law") ushered China's legal profession to the third stage of its development since 1949. After years of preparation and debate, the Nineteenth Meeting of the Standing Committee of the Eighth National People's Congress passed the Lawyer's Law on May 15, 1996. This is truly a landmark in the development of China's legal profession. The Lawyer's Law acknowledges the developmental needs of the legal profession and makes definitive rules based on results of years of experiments. For example, the law changes the definition of a lawyer from "a state legal worker" to "a professional who legally obtains a Lawyer's Certificate and who provides the society with legal services;" the law sets forth qualifications for practicing law; it stipulates a variety of organizational forms for law offices such as state-funded law offices, partnership law offices and cooperative law offices; the law outlines a lawyer's professional capacity, rights and duties; it establishes rules for legal aid, and so on. It should be noted that Lawyer's Law still contains flaws and carries limitations stemming from its time. But as the first major piece of legislation on China's legal profession, it is instrumental to the efforts to perfect the institution of legal profession, protect practitioner's vocational rights, and to standardize professional conduct. Legal profession in China has made ample progresses in twenty years. By now, there are altogether 8,500 law firms staffed with more than 100,000 lawyers. The practice of law has also gradually progressed from the traditional representation in civil and criminal litigation into new areas such as finance, stock and real estate. Lawyers have also been transformed from what the ordinary people used to regard as "litigation stick" to an indispensable and significant intermediary in China's socialist market economy. Needless to say, there still exist many problems in China's legal profession. For example, the professional environment for the practice of law needs to be improved; lawyers' own rights and privileges should be further protected; a professional liability insurance system is yet to be established; management of law offices should be improved; and more talents with training in both law and foreign languages are needed to meet the increasing volume of foreign-related transactions, and so on. II. The Opening-up of China's Legal Service Sector At the beginning of the 1980s, with the implementation of China's reform and open-door policies, China increased trade ties and technological cooperation with other countries. Many multinational corporations came to China to conduct business activities. These activities generated tremendous demand for legal services, and some foreign law firms followed their clients into the Chinese market. At that time, the Chinese government did not permit foreign law firms to set up branch offices directly inside China. Considering clients' needs and self-interest on the one hand and China's ban on branches of foreign law firms on the other, some foreign law firms showed up in China in a different identity -- they became consulting firms. Foreign law firms such as Coudert Brothers, Baker & McKenzie, Paul Weiss, Grahm & James, and Dewey Ballantine set up consulting firms in cities such as Beijing and Shanghai. The Chinese government noticed this phenomenon, conducted research and analysis, and was initially prepared to allow foreign law firms to establish offices in China starting in 1989. But after the "June Fourth" incident, foreign investment in China began to shrink and some foreign law firms already having consulting offices in China started to withdraw from the Chinese market. This brought the scheduled policy change to a stop. Three years later, on July 1, 1992, with permission from the State Council, the Ministry of Justice finally started its official experiment in allowing foreign law firms to open offices inside China. Up till now, eighty-plus law firms from more than a dozen countries and twenty three law firms from Hong Kong have obtained permissions from the Ministry of Justice, registered with the National Administration of Industry and Trade, and established offices in Beijing, Shanghai, Shenzhen, Haikou, Tianjin and Qingdao. These offices greatly facilitated China's cross-border business transactions and legal exchanges. In particular, the management models and professional practice of these foreign law firms set up examples for the growing Chinese legal profession. The legal profession in China, however, is still at its fledgling stage and distantly behind in comparison to its counterparts in developed countries. While the Chinese government wishes that the admission of foreign lawyers would facilitate the influx of foreign investment and help develop domestic economy, it fears, in view of the relatively backward mode of management dominating the domestic law firms, that an overflow of foreign practitioners will lead to chaos in the domestic legal service market and retard the development of the domestic legal service industry. Among Chinese lawyers, while some look forward to starting businesses with foreign partners, others worry about the loss of talented people and market share. Due to these reasons, the Chinese government currently adopts a partial open-door policy in the market for legal services. During the course of joining the World Trade Organization (WTO), the Chinese government will compromise on things such as locations for foreign-operated law offices, the number of such law offices, and the requirements for foreigners to practice law in China. It will further encourage foreign attorneys to cooperate professionally with Chinese lawyers. But the Chinese government will not grant in the near future certain wishes of foreign law firms such as hiring Chinese lawyers and having the government to explain or clarify Chinese laws. While China is opening its legal services market to the outside world, it is also actively seeking foreign markets. Right now, more than a dozen Chinese law firms have opened branch offices in the United States, Canada, Singapore, Russia and other countries. III. The Future of China's Legal Profession After China Joins the WTO 1. Why Should China Join the WTO? After thirteen years of difficult negotiations, China is finally getting close to joining the WTO. Why was China able to strike a series of deals with the United States and other countries at the final stage of negotiations before the WTO's new round of meetings in Seattle? A more preliminary question is, why should China join the WTO in the first place? The Chinese government has clearly expressed its answer to this preliminary question, which is, "China needs the WTO; the WTO needs China." My understanding on both this preliminary question and the timing issue is as follows. On the Chinese side, first, the WTO is the largest international economic organization; its rules and standards are the default models for current global economic and trading activities. As a developing country fully committed to economic reform and open-door policies, China cannot afford being an outsider forever because then it would not be able to learn and use the WTO rules and standards for developing its domestic economy. Another downside of being an outsider of the WTO is that member countries will demand China to perform the duties stipulated by WTO rules without rewarding China with accompanying privileges enjoyed by insiders. Examples of this kind of abuse have been widely observed. Second, time was ripe for China to join the WTO. The Seattle Round was scheduled to take place at the end of November, 1999, which presented an optimal chance for member countries to consider China's candidacy. It was predicted that the price tag for a new membership is only going to be higher after each round of negotiations in the WTO. That was the hard lesson learned by China when it missed joining the WTO before the previous Uruguay Round of negotiations. Also, while some of the requests from WTO member countries seemed impossible to meet back when China was negotiating to be reinstated as a signatory to the General Agreement on Tariffs and Trade, time has proved that China actually made enough progress to meet these requirements while outperforming by far in some aspects. Third, history has shown that not a single member country or region has seen the collapse of its domestic economy as a result of joining the WTO. Quite on the contrary, such collapses have been seen in non-member nations that did not have a healthy operating system for its economy. Fourth, China's economy has made enough progresses after the twenty-year reform and opening-up so as to be able to sustain some of the immediate shocks after joining the WTO. The negative shocks will also be countered by stimulation from increased foreign investments. On the U.S. side, China is indeed an enticing massive market and the United States has been trying to use WTO membership to force China to open its market further, to increase transparency in its economic and trading policies, and to move more aggressively towards rule of law. But if the United States put too high a price tag on China's WTO entry, it would risk an "all-or-nothing" situation where China might withdraw all concessions. The resulting denial of access to China's market is not acceptable to American corporations. Therefore, it was also in America's interest to reach a compromise before the Seattle Round. 2. Effects of Joining the WTO on China's Legal Profession It is said that joining the WTO means both opportunities and challenges to China. I want to add that the same is true for China's legal profession. After China joins the WTO, the lowering of tariffs and opening up of numerous economic sectors will attract many overseas corporations to increase their investments in China. International trade will soar in volume, which will create more work for Chinese lawyers. Meanwhile, China's domestic enterprises will face reorganization and other challenges, which also calls for legal services from Chinese lawyers. These increased opportunities require Chinese lawyers to equip themselves with knowledge in both laws and foreign languages. As long as a lawyer is well-equipped, he or she will find opportunities after China's entry into the WTO. It was just reported on the Internet that lawyering has become one of the hottest career choices in China ever since the hope of joining the WTO becomes more grounded. After China joins the WTO, there will be ample room for foreign lawyers to develop their business in China as well. First, their clients, large corporations from their home countries, will have more legal work for these foreign attorneys as the volume of business in China increases. Second, the Chinese government will remove restrictions on the number and location of branch offices that a foreign law firm can have in China. Qualified foreign law firms can, after obtaining permissions, open branch offices in all cities including the early experimenting cities. Foreign law firms can also open more than two branch offices in China. These policy changes offer more business opportunities for foreign lawyers. Third, as Chinese lawyers gaining more experience, there will be more occasions for professional cooperation between Chinese and foreign attorneys. IV. Conclusion With twenty years' reform effort, the legal profession in China has indeed achieved tremendous progress. Its prospect after China's WTO entry will only become better. (This essay was written by the author in 1999 upon the twentieth anniversary of the revival of the legal profession in China. Mr. Xiao is currently a visiting scholar at New York University Law School. Before that, he was the chief of Legal Practitioner's Division in the Ministry of Justice of China. This essay is translated from Chinese by Duan WU.) |