Shanghai FTZ Releases Rules for Associates and Mutual Secondments of Chinese and Foreign Lawyers

The Shanghai Judicial Bureau has announced implementation rules for both reciprocal secondment of legal consultants and commercial associates of Chinese and foreign law firms in the city’s pilot free trade zone (FTZ) on 9 December, marking the liberalisation of legal services entering a material stage in the FTZ.

The two rules are to, firstly, expand to foreign legal firms the arrangement of Hong Kong and Macau firms for many years to be in association of or have lawyers seconded as advisers to Chinese law firms; and secondly, have mutual employment of lawyers as consultants between domestic and foreign legal firms. Previously, Hong Kong and Macau lawyers are allowed to be employed as legal consultants of mainland firms and not vice versa.

Wang Xie, deputy director of the Shanghai Judicial Bureau said that Chinese legal services can only be provided by Chinese lawyers while foreign legal firms and their representatives can only practice foreign laws under the existing legal framework, which has caused great inconvenience to the parties. After introducing these measures, clients only need to find Chinese and foreign legal firms in associates or signing parties of the reciprocal secondment and can get comprehensive legal services in both Chinese and foreign laws.

Under the reciprocal secondment mechanism, foreign legal consultants on secondment are not allowed to practise or claim to be able to practise Chinese laws, be in name or essentially a partner in a Chinese law firm, participate in internal management of a Chinese law firm or their branch office. Under the commercial associates mechanism, foreign law firms involved in the associate themselves and their representative offices, representatives and employees shall not handle Chinese legal affairs.