Hong Kong law firms for the first time will be able to incorporate as limited liability companies, as part of legislation to be gazetted today. The move generally has been greeted with enthusiasm by solicitors, who believe it will give important new powers and options to the profession. It caps an historic week of changes that will fundamentally alter the faces of both the legal and accounting profession in Hong Kong. Other reforms introduced this week will allow the establishment of 'one-stop shop' legal firms, after the Attorney-General approved moves towards multi-disciplinary partnerships. Additionally, the Legal Services Legislation (Miscellaneous Amendments) Bill 1996 - which abolished scale fees on property conveyancing - was unveiled on Tuesday and was expected to lead to significant rationalisation in the legal profession. The incorporation option mirrors similar legislation for accountants already passed by Legislative Council. Initial reactions from lawyers have been positive - in contrast to the generally lukewarm response from the accountancy profession. The secretary-general of the Law Society, Patrick Moss, said the change would remove important flaws in current partnership arrangements. 'It is unfair that in this present day and age that a professional man should put assets at risk for something another officer has perpetrated,' he said. Limited-liability partnerships were 'the shape of things to come in the profession', and would ensure its viability in the future. However, he said there needed to be safeguards to ensure features such as adequate cover were maintained. The legislation was subject to rules being formulated by the Law Society which would help ensure such safeguards, he said. Mark Roberts, the senior partner of Deacons, said there were a growing number of international precedents for the incorporation of legal firms, particularly in the US and increasingly, in Britain. However, the firm needed time to think through the issues before committing itself to incorporation. 'I guess you have to balance out whether clients will still use you even though they are still protected by a limited company,' he said. On the other hand, incorporation would allow firms to save on premiums, and still ensure the protection of individual partners, according to Mr Roberts. The generally warm reaction of legal firms to the incorporation contrasts sharply with that of accounting firms - who have felt the brunt of major legal action deriving from corporate problems. They generally have argued that incorporation was only a partial solution to the problems they have encountered, and that it was the principle of proportionate liability which will help to save professionals from prohibitive damages suits.
