ࡱ> ` R/ubjbj 6m&***8*+t&[T,T,"v,v,v,Q-Q-Q-ZZZZZZZ$\h2_jZCQ-Q-CCZv,v,ZEEEC$v,v,ZECZEES|EUv,H, @7T*8DITaYDZ0&[[T_D_$EU_EUQ-4hEK:T>uQ-Q-Q-ZZ~EXQ-Q-Q-&[CCCC\$\ Annex XXXX: EU Experience in the Liberalization of the Legal Services Market: May 2005 (A0034) Study Report on the Openness and Management of the Legal Service Markets in EU, UK, France and Germany In an effort to better understand the practices of UK, France and Germany in deregulating their legal service markets so as to better open up the domestic market to the outside, under the arrangement of the EU-China Trade Project (hereinafter referred to as EUCTP), the 14-member delegation of the Ministry of Justice led by Zhou Yuansheng, vice director of the Division of Directing Lawyers and Notarization of MOJ, paid a 12-day visit to UK, France, Germany and the EU Headquarters from May 18th to 30th, 2005, accompanied by the Program official Kangsibo. Thank to the deliberate arrangement and organization of the Program Office and the joint efforts of all the departments involved, the delegation fulfilled its tasks as expected. What follows is a detailed report of the visit: I. Profile The study tour was organized and arranged by EUCTP, with the support of Allen & Overy and its French branch, DLA & Partners and Beiten Burkardt (Germany). In UK, the delegation visited the Bar Council, the Solicitor Association and the School of Oriental and African Studies in UK, heard the court trials in these courts and the debate at the House of Lords and visited the office of solicitors, Allen & Overy and DLA & Partners; in France, they visited the Ministry of Justice, Barreau de Paris, the tribunal of appeal, Allen & Overys French branch and the French branch of LEBOUF, LAMB, GREENE&MACRAE (USA) in France; while in Germany, the delegation visited the Ministry of Justice, the Senatsverwaltung fr Justiz, Federal Bar Association and Beiten Burkardt; and paid visits to the EU Commission and the Council of the European Bar Association. The delegation presented 18 seminars during the study tour, and through extensive and multi-level communications and exchanges of views, gained an acute understanding of the legal systems governing the deregulation of the legal service markets of the three countries and conditions for the accession of lawyers from foreign countries as well as EUs relevant regulations. The delegation also held talks with judicial officials, bar association chairmen, scholars and licensed lawyers on issues involving lawyer management as lawyers accession to the practice, training, industrial management and penalties of lawyers. The delegation also obtained information on the deregulation and management of the legal service markets in UK, France, Germany and EU and their experience in doing so. On this basis, it has set forth suggestions on how to deregulate and manage the Chinese legal service market. The visit enhanced the mutual understanding between China and these countries, introduced to the outside the Chinese lawyers system, and was of great significance for fuelling the deregulation of the Chinese legal service market, reinforcing the market management and sharpening the competitive edge of Chinese lawyers in the international legal community. II. Deregulation and Management of Legal Services in EU, UK, France and Germany UK, France and Germany are indeed the most representative member states of EU, by holding the balance both politically and economically. The legal service markets in these countries, especially the UK market, are all open, mature and well-managed, and lead to the legal service development in EU. (I) EU Commission and Council of the European Bar Association The EU Commission does not exercise direct administration over lawyers (respectively administered by their home countries) and is only responsible for the negotiations on lawyer capability and the temporary cross-border services by lawyers. The Council of the European Bar Associations was founded in 1960, representing the bar associations of all MS. It has 28 members now. Unattached with the governments, the Council derives the funds for its operation from its member bar associations. It focuses upon formulating laws on lawyer management and shall not exercise direct administration over lawyers. Thanks to the joint efforts of two decades by the EU Commission and the Council of the European Bar Associations, the directives based upon mutual recognition and trust were adopted in an effort to adapt to the accelerating economic globalization and the European integration, including: Service Directive 77/249/EEC adopted in 1977: it stipulates that lawyers of member states may provide temporary legal services in other member states, but cannot appear in court for lawsuit); Directive 89/48/EEC in 1998: it stipulates the mutual recognition of higher education among member states; Directive 98/5/EC of 1998: it further promotes the permanent practices of lawyers in other member states than their home countries. These three directives establish a system of free flow of lawyers within EU, rendering the legal service markets of member states fully open to each other. (II) Profile of the Legal Service Market in UK The UK has a highly-open legal service market, and treats EU lawyers and lawyers from other countries than the EU MS on an equal footing. There are almost no restrictions on the accession of foreign lawyers to the UK market. Ordinary citizens can get involved in legal service in England and Wales. Foreign lawyers, whether having the qualifications of UK lawyers or not, can provide services such as UK law, EU law, international public and private law, local law services and arbitration services in UK. However, foreign lawyers shall not get involved in the following four kinds of legal services: 1. Appear in court for speech, litigation or draft up legal documents; 2. real estate and heritage service; 3. financial services; 4. immigrant consulting (except foreign lawyers with UK lawyer qualifications). When it comes to the obtainment of UK lawyer qualification, UK puts in place different rules for EU and foreign lawyers: After practicing in UK for no less than 3 years under the supervision of UK solicitors, the lawyers from EU member states might automatically obtain the UK lawyer qualification without taking any test; The lawyers from Hong Kong, Portugal, Brazil and other former member states of the Commonwealth of Nations could almost automatically obtain the qualification; The foreign lawyers from other countries than the EU member states must pass the Qualified Lawyer Conversion Test. Besides, the foreign lawyers might apply through relevant procedures in UK for the qualification of UK solicitor or barrister. Considering there is no department in UK equivalent to the Ministry of Justice, the Bar Council and the Solicitor Association take over the management over legal practice. Lawyers from EU, EEA or Switzerland need to register at the Law Society for practice in UK, and, according to the same conditions applicable to UK solicitors, they can obtain the membership free of charge and get registered as ROL entitled to the right of voting and election. In other cases, the foreign lawyers do not have to register at or report their practice to the Law Society for practice in UK. They are under the management of their home countries rather than the Law Society in UK, but they need to go through the entry formalities. One exception is that, if foreign lawyers and UK lawyers are to establish transnational partnership or conduct transnational legal practice, they need to register at the Law Society as RFL. The UK Solicitor Association welcomes the joining of foreign lawyers. After paying a certain amount of annual fee, the foreign lawyers can apply for membership, but this membership does not award any professional title or bring with it the right of voting and election. It only entitles the members to the use of the Associations facilities (such as library), its weekly journal and participation in the activities organized by the Association. Foreign lawyers may practice independently or establish branches in the name of foreign law firms, or establish with UK solicitors transnational partnership or conduct transnational practice, but there is no precedent for establishing a foreign law firm in the absolute sense in UK as a result of the stringent management by UK immigration bureau, which requires a minimum investment of 200,000 and at least two local employees for legal practice by foreign lawyers in UK. Moreover, foreign lawyers can practice in UK as lawyers of their home countries with their professional title there, or practice as UK lawyers after getting the qualification, or employ or get employed. (III) Profile of the Legal Service Market in France The French legal service market is fully open to the EU member states but restrictively open to other countries. The EU lawyers with the French lawyer qualification is allowed to provide legal services in the same way as local French lawyers; those EU lawyers without the French lawyer qualification can provide legal service in such fields as their local law, EU law, international law and French law. Foreign lawyers having obtained the French lawyer qualification have the same scope of service as their French counterparts; those without the qualification can sign a labor contract with French law firms and work only as legal advisers, and shall not get involved in legal service or provide consulting services on the national laws concerning the qualification. Arbitration is open to all lawyers. Restrictions on all foreign lawyers: 1. Drafting of such documents on the right of management over the estate of the dead or the documents used to establish or transfer rights and interests; 2. Appearing in the court of appeal and highest court where a professional lawyer is required; 3. When practicing in other EU member states, foreign lawyers have to practice jointly with the local lawyer. Like UK, France puts in place different rules for EU and foreign lawyers for the obtainment of French lawyer qualification: EU lawyer is allowed to practice in France after getting registered at French Bar Association, and after practicing in France for no less than 3 years, the lawyer can automatically obtain the French lawyer qualification without taking any test. The foreign lawyer has to meet the following requirements to obtain the qualification and register as a French lawyer in France: 1. Providing evidence to prove that his (or her) home state has signed the reciprocal agreement with France; 2. Holding the master degree of law or the equivalent or any other academic degree required for the obtainment of qualification of lawyer in the home country; 3. Having obtained the qualification of lawyer in the home country; 4. Having passed the competency test and gone through the French lawyer qualification accreditation procedure. But one exception is that, if the foreign lawyer can provide evidence to prove that his (or her) home country has signed a reciprocal agreement with France on qualification and practice, he or she may apply for French lawyer qualification according to the agreement and register at the bar association. In practice, as long as the home country of the foreign lawyer is a member state of the WTO, the French competent authority of profession can reckon that the reciprocal agreement is signed. The lawyer management office under the Ministry of Justice is responsible for stipulating laws and regulations, and keeping macro management over lawyers. The French lawyers are managed by the bar association, and the same applies to EU lawyers (including those who have not obtained the French lawyer qualification), and the foreign lawyers without the qualification do not fall into the scope of management by the bar association. The EU lawyers can practice in diverse ways in France, such as employed by law firm, bar association or companies. The EU and foreign lawyers who have obtained the French lawyer qualification can be employed through labor contract or individual/joint contract to practice as French lawyer, while those who have not obtained the French lawyer qualification can use their non-translated professional title obtained at home to practice as lawyer from their home countries; the foreign lawyers who have not secured the French lawyer qualification can only be employed through labor contract to work as legal adviser. Foreign law firms is allowed to employ registered EU and foreign lawyers, but cannot recruit the EU and foreign lawyers who do not practice in their own name and have not secured the French lawyer qualification. Foreign lawyers may enter into partnership with French lawyers, but have to be brought under control. (IV) Profile of the Legal Service Market in Germany Germany is similar to France in its policies on market openness, with its legal service market fully open to lawyers from EU member states, partially open to the lawyers from WTO member states and restrictively open to lawyers from other countries. 1. The EU lawyers with German lawyer qualification can provide legal services the same way as their German counterparts; EU lawyers without the qualification can provide legal services in such fields as their local law, EU law, international law and German law. 2. The WTO lawyers who have obtained the French lawyer qualification enjoy the same scope of service as their French counterparts; those without the qualification are allowed to practice as lawyers of their home countries and can only provide services on the law of peoples and their home laws, and are prohibited from rendering services on international law, EU law and laws of third countries or representing clients. 3. According to the stipulations in the 1(2) clause of Article 1 of Germanys Law of Legal Counseling, citizens from other countries can only provide services on their home laws as legal adviser and shall not provide counseling services on international law. The field of arbitration is open to all the lawyers. Like UK and France, Germany puts in place different rules for EU and foreign lawyers for the obtainment of German lawyer qualification: 1. According to the Law of Acts of European Lawyers in Germany, EU and EEA lawyers can provide temporary or permanent legal services in Germany without securing the German lawyer qualification (under such circumstances, the lawyers have to practice with the professional title obtained at their home countries). Under the guarantee of the three directives, the lawyers are allowed to provide legal services and practice within EU freely. EU and EEA lawyers can automatically obtain the German lawyer qualification after more than three years of valid and normal practice in Germany. 2. According to Article 206 of the Federal Lawyer Law, the lawyers from other countries than the EU and EEA member states are classified as WTO member states and non-WTO-member states and shall be treated differently. As for the lawyers from WTO member states, if their professional training and right of practice at their home countries are the same as their German counterparts, they may obtain the lawyer qualification in where they practice in Germany, but they have to prove that they possess equal qualifications with German lawyers. As for the lawyers from other countries than the WTO member states, they must meet the stipulation as mentioned above and their home countries have to sign the reciprocal agreement with Germany, and they are only allowed to provide counseling services on their home laws. So far, Germany has not signed reciprocal agreement with any non-WTO-member state. Foreign lawyers can obtain the German lawyer qualification after passing the class-one and class-two nationwide test. The Section of Lawyer Notarization Management under the Department of Justice Management, Ministry of Justice, Germany, is responsible for formulating laws and exerting macro management over lawyer notarization. According to the stipulations in (1) of Article 8 of the Federal Lawyer Law, the provincial judicial department shall decide whether to approve the application for legal practice. As introduced by the provincial justice administration bureaus and bar associations, the state judicial authority only has macro management over lawyers, and entrusts the provincial bar associations to fulfill the functions as specified in the Federal Law. Article 2 and Article 3 of the Law of Acts of European Lawyers in Germany stipulate that, the EU lawyers practicing in Germany must join the German Bar Association. As stipulated by Article 207 of the Federal Lawyer Law, the lawyers from WTO member states and the non-WTO-member states have to apply to the provincial judicial department for joining the German Bar Association before establishing practice agencies, and are members of the Association under its management after approved. The foreign lawyers who have obtained the German lawyer qualification must join the Association as well. Foreign lawyers can establish partnership with German lawyers or employ German lawyers, but the partnership has to be in line with the stipulations of German laws. The law firms from WTO member states can set up branches in Germany. The EU and foreign lawyers with German lawyer qualification can practice as German lawyers, while those without the qualification can use their non-translated lawyer title to practice as lawyers of their home countries, but they are only allowed to practice as legal adviser. NationPopulation Number of native lawyers Number of EU lawyersNumber of foreign lawyersMarket opennessObtainment of qualificationManagement over foreign lawyersUK (England and Wales)59.2 million1,5000 (barristers), 10,0000 (solicitors)244No differentiation, restricted opennessNon-UK lawyers are classified into EU and foreign lawyersAlmost no management, but there is exception.France61 million4,084749346Differentiated, restricted openness Non-French lawyers are classified into EU and foreign lawyers. The Reciprocal Agreement is needed.Differentiated managementGermany82.264 million12,1420196233Differentiated, restricted openness Non-German lawyers are classified into EU, WTO and foreign lawyers. The Reciprocal Agreement is needed.Strict managementNote: The lawyer-related data are collected up to February 2004 from the European Bar Association Council. (V) Final Remarks In order to learn from the EU practices and experience in the opening of its legal service market, it is crucial to further deregulate the Chinese domestic market. Considering the short timing of the study tour, there is still a need to gain a better understanding of particular institutional issues, as suggested below: Full preparation and sufficient attention ensured positive results. The Ministry of Justice attached great importance to this visit. In an effort to guarantee the result of the study tour, the delegation, before leaving for Europe, set forth to the EUCTP an outline in light of the conditions on the opening of the domestic legal service market, covering the following 10 aspects: How did the EU deregulate its legal service market based on WTO rules? What were the major problems throughout this process? How were these problems addressed? Was there any difference between the internal openness of EU and the openness of EU member states to other countries? How did EU member states manage foreign legal service providers in terms of market accession? What were their requirements? How did EU member states manage the branch offices established in foreign countries by their own legal service providers? Has EU promulgated any policies or regulations to protect its legal service providers against the competition from their foreign counterparts? What were the special stipulations of EU member states concerning the legal service qualification that Foreign Service providers should obtain through tests? What was the difference between the scope of practice by foreign lawyers and that of their local lawyers? How did EU manage the legal services provided by telecommunication approaches? How did EU manage foreign legal service providers? With regards to foreign lawyers practicing in EU member states, were they managed under the bar association both at their home state and in the country where they practice? If any conflict occurs in the management, how is this conflict solved? Each one of these aspects was handled by relevant members of the delegation. In an effort to strengthen communication and ensure efficiency, the EUCTP convened a preparatory workshop in light of these issues, and invited all the members of the delegation to attend the lectures delivered by experts from the related countries on their fundamental lawyer system and openness of their local legal service market. The workshop laid a solid foundation for the study activities by not only providing the delegation members with an opportunity to gain a preliminary understanding of related countries and their legal systems, but by helping them to focus upon the specific issues during the study tour. The deregulation of the legal service market is a sequential process. Fueled by the booming economy in China and the accelerating economic globalization, the legal service market serving the overall economic development will be increasingly accessible. Given that legal service is proprietary, location-sensitive and closely associated with jurisdiction, it took EU more than two decades to usher in an open legal service market in aspects of lawyer, legal practice and qualification recognition. Even so, each member state has their special stipulations on the openness of their domestic legal service market. UK, for instance, which boasts the highest degree of openness, forbids foreign lawyers to seek legal practices in four specific fields: real estate, inheritance, immigration and consulting; France sees the reciprocal agreement as a must and also limits the scope of business accessible to foreign lawyers; Germanys Ministry of Justice shall review the professional training and law practice rights of the foreign lawyers wishing to provide legal service in Germany back at their home countries and whether they possess the equivalent qualifications as their German counterparts. China only has 26 years of history in developing its legal system, and lags far behind EU. Its market openness to legal services has only evolved in the last 13 years. The measures that EU exercises in either EU members or WTO member states or Non-WTO countries are of much value for the opening of Chinas legal service market. Thus, the opening of Chinas legal service to the outside must take a steady and sequential approach from a global perspective and based upon Chinas current circumstances. It is urgent to provide more training to Chinas local lawyers on foreign practices and to enhance their levels of rendering foreign legal services. The bar associations and law firms in EU member states have put in place a complete set of education and training mechanisms to keep the qualifications of their lawyers at a high level. The bar associations or some specific non-governmental agencies provide on-job training to lawyers; veteran lawyers of law firms take a hand in fostering young lawyers by regularly holding training courses; sufficient legal reference materials are offered, and libraries and computer database are established for lawyers. With Chinas accession to WTO, the scope of its opening policy has inevitably expanded. As a result, China has witnessed a sharp increase in its international trade, which in turn has raised higher requirements for the lawyers engaged in foreign legal services. The Chinese lawyer industry needs to learn from EUs training system in order to establish an efficient training mechanism to groom high-profile lawyers familiar with WTO rules and international trade practices, as well as proficient in foreign languages. Moreover, while reinforcing the training for practicing lawyers, we need to improve the qualifications of the management personnel, sharpening their management level and administration abilities according to law. The management of lawyers in Germany features a model of joint management by bar association and the law industry. In Germany, it is the Ministry of Justice and provincial-level justice departments that produce specific policies meanwhile transfer some management authority to the provinces. The provincial justice departments may also release the specific management authority to provincial bar associations. These management methods can act as a valuable source of experience for further improvement of the joint management system over lawyers both by bar association and the industry in China. In order to promote a joint development of the legal service markets, there is a need for further communication and cooperation. All the delegation members have highly praised this study tour: it has helped them not only to get a better understanding of EUs open legal service system, but also to have a close watch at the gap between China and EU in legal services. All members were impressed with the sound lawyer practice system in EU, the large-scale and professional operation of local law firms and the high qualifications of EU lawyers. They hope that, apart from the training for the personnel in charge of the lawyers management, more training should be rendered to practicing lawyers to sharpen their expertise. It would also be appropriate that China and EU further enlarge their communication in terms of legal practice and enhance a mutual understanding of each others legal system so as to help incorporate the Chinese lawyers into the international legal service market. The continued expansion of China-EU trade volume will give rise to an increasing demand for legal services. Chinese firms need access to services on EU laws when entering the EU market, and vice-versa, which opens up huge possibilities for cooperation and communications in the field of legal services between China and EU. Having lagged much behind EU in the lawyer system, China needs to make more efforts to introduce its lawyer system and legal system to foreign countries, including EU member states, and therefore help their governmental institutions and law industry to have a better knowledge of Chinas lawyer system. To promote the restructuring of the lawyers management system. As China develops and reforms, it becomes necessary to establish and improve the lawyer system. Since its promulgation in 1996, the Law of the Peoples Republic of China on Lawyers has played an important role in boosting the Chinese lawyer industry. However, the Chinese economy and society have also undergone profound changes during this period, which pushes to the top of the agenda the amendment of the Law. The measures adopted by UK to reform its lawyer system provide a valuable source of reference for our ongoing reform. It was interesting for the delegation to find out that despite its long history, the UK lawyer system also faces significant reforms. The Review of the Regulatory Framework for Legal Services in England and Wales (by Sir David Clementi) sets forth reform steps in three aspects: regulatory framework, complaint system and restrictions on the practice organization. On this occasion, we would like to express our heartfelt thanks to the EU for their great support for this initiative, especially Counselor SERGIO BALIBREA, Mr. PHILIP BARTLEY, Ms. HUANG DANHAN, Ms. LEILA FERNANDEZ-STEMBRIDGE and Mr. CASPER JACOBSEN, who accompanied us and took good care of our delegation all the way throughout our tour. We would like to seek further cooperation with EU, promote our communications and drive the domestic legal service market towards greater liberalization.     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