One of China's top legal associations is turning up the heat on foreign law firms in the mainland, accusing them of effectively practising Chinese law illegally by hiring qualified local attorneys as consultants or legal assistants.
However, foreign lawyers suspect their local counterparts are concerned mainly about the sharp rise in industry wages and the dwindling pool of talent which the presence of outside firms has exacerbated.
Foreign law firms have been allowed to operate in China since 1992. According to the group behind the protest, the Shanghai Lawyers Association, 98 foreign law offices were doing business in the city last year.
Consulting firm Hildebrandt International says there are 811 foreign lawyers resident on the mainland and some 250 foreign offices on the mainland and Hong Kong combined. And there are undoubtedly many more lawyers who regularly fly to the mainland to work.
'The legal services offered by foreign law firms in China have far exceeded what is allowed and the situation is becoming more and more severe, which not only has deterred the creation of a fair and sound legal environment in which Chinese law firms can develop, but also poses a threat to the justice and economic safety of China,' the Shanghai Lawyers Association said in a memo to the government in April. 'Shanghai, one of the most progressive cities in terms of economic reform, is suffering seriously from these activities.'
Although the memo says the issue is 'crucial to the majesty of our nation', foreign practitioners suggest the protest is driven more by economics than by nationalism. It is no secret that aggressive hiring by outside firms has raised salary expectations among young mainland lawyers.
'Law firms are having trouble recruiting, and the same applies to the accounting industry. They're competing for staff in a very shallow talent pool,' said Guy Himsworth, a consultant at Hildebrandt.
