The People’s Republic of China (PRC) is preparing to enact new rules governing law practice that will have significant impact on how law firms represent their clients’ interests within the PRC. In late June, the PRC Ministry of Justice (MOJ) submitted to the Standing Committee of the National People’s Congress draft revisions to the PRC Lawyer’s Law, China’s principal statute regulating lawyers that was originally enacted in 1996. The MOJ’s draft revisions to the Lawyer’s Law are expected to help strengthen the growing independence of legal practitioners and to enhance the quality and diversity of legal services available in China.

Professional Self-Governance

Under current law, all lawyers, law firms and lawyer associations – the national and regional professional associations to which PRC attorneys and law firms must belong, and which supervise foreign law firms maintaining offices in China – are under the direction of the MOJ, which is part of the executive arm of China’s government. The draft revisions will retain this language while adding the stipulation that the lawyer associations shall exercise professional self-regulation with respect to lawyers and law firms in accordance with the Lawyer’s Law and their charters. (Article 4.) If enacted, this would recognize in official terms the increased autonomy that lawyer associations have been exercising in practice for some time. (In this connection, it should be noted that a number of other provisions of the draft revisions also reflect what is already current practice.)

Protections for the Attorney-Client Relationship

The draft revisions include several practical measures that would help protect the attorney-client relationship. Specifically: 

  • The draft revisions provide that – except in cases involving state secrets – a lawyer retained by a suspect would be permitted to meet with his client from the time when the client is subject to initial interrogation or compulsory process by investigative authorities. The draft revisions stipulate that meetings between the client and his lawyer shall not be monitored. (Article 32.) 
  • From the time an investigative case is commenced against a client, the client’s lawyer would have the right to inspect and make copies of documentation of the proceedings and the case files supporting the allegations against the client. From the time a court accepts the case, the client’s lawyer would have the right to inspect and make copies of all materials that are in support of the allegations. (Article 33.) 
  • A lawyer representing a client in a proceeding would be permitted to apply to the prosecutor or the court to gather evidence or notice witnesses to appear in court to provide testimony. The lawyer would, upon application, be able to conduct his own fact finding. (Article 34.) 
  • Lawyers would not be subject to legal action for advocacy viewpoints expressed in court. This exemption would not apply to speech that threatens national security, defames others, or disrupts the order of the court. The draft revisions provide that if a lawyer, while participating in legal proceedings, is subject to arrest, his family, firm and the lawyer association to which he belongs must be notified within twenty-four hours. (Article 36.)

Legal Ethics, Law Firm Governance, and Lawyer Liability

The draft revisions would strengthen currently existing legal ethics and law firm governance requirements. For instance: 

  • Judges and prosecutors would be prohibited from serving in the capacity of advocate or agent in legal proceedings for two years from the time they leave office. (Article 40.) 
  • Law firms would be required to put in place comprehensive procedures for such basic internal governance as managing conflict checks, fee collection and finances, and annual assessments to ensure that firm attorneys are adhering to professional ethics and discipline. The draft revisions would require that firms terminate lawyers not in compliance with the annual assessments. (Article 22.) 
  • Law firms would be prohibited from pursuing business activities other than legal services. (Article 26.)

The draft revisions would also address in comprehensive fashion the liabilities that lawyers and law firms face for not fulfilling their professional responsibilities or for otherwise violating their duties.

  •  Lawyers could face fines of up to 5,000 Renminbi (roughly US $650) and in serious cases suspension for up to three months for such offenses as simultaneously practicing in more than one law firm, using inappropriate methods to attract business (e.g., by paying introduction fees or defaming other law firms), representing both sides of a case, not fulfilling pro bono obligations, and, in the case of judges and prosecutors, serving as advocate or legal agent within two years of leaving office. (Article 46.) 
  • Fines of up to 10,000 Renminbi (roughly US $1,310) and, in serious cases, suspension for three to six months could be meted out to lawyers who undertake private representations (i.e., in secret from their firms), refuse without legitimate reason to carry out their duties with respect to a representation that they have agreed to undertake, appropriate opportunities gained by virtue of their legal position, and divulge business secrets or individual confidences. (Article 47.) (Article 31 of the draft revisions indicates that legitimate reasons to refuse to carry out a representation once accepted would include client demands to engage in illegal activity or to conceal material information in the course of a case.) 
  • Lawyers could face suspension for six months to a year, fines of up to 50,000 Renminbi (roughly US $6,600), and criminal prosecution for offenses related to improperly influencing judges, prosecutors or arbitrators (for instance, improper ex parte meetings with judges, prosecutors or arbitrators, engaging in bribery and attempted bribery). These penalties would also extend to such conduct as colluding with the opposite side against the interests of a client, disrupting the order of the court, publishing speech that is harmful to national security, and divulging state secrets. (Article 48.) 
  • Law firms could face fines of up to 100,000 Renminbi (roughly US $13,200) and suspension for one to six months for such offenses as engaging in business activities other than legal services, accepting conflicting representations, not fulfilling pro bono obligations, paying introduction fees or defaming other law firms to solicit business, providing false information to or hiding material information from the government, or engaging in other deceptive behavior. (Article 49.)

Lawyer Qualifications

The draft revisions address concerns regarding the quality of legal education by adding a requirement that all applicants for law licenses must have one year of law firm training before they may practice. (Article 6.)

Solo Practice

In tandem with international practice, the draft revisions would permit the establishment of solo practitioner firms. (Article 15.) If enacted, this would afford consumers of legal services in China far greater diversity with respect to the services available to them, and permit foreign law firms operating in China much greater flexibility in drawing upon assistance of PRC counsel.

General Observations

The MOJ’s proposed revisions to the Lawyer’s Law are well-drafted and, if enacted, will mark a significant step forward in the development of China’s legal profession. The revised statute would offer greater protection for the attorney-client relationship and set clearer guidelines for lawyer conduct. This in turn should enable lawyers to represent the business interests of their clients in China in more effective fashion. We offer a few observations as consideration of the draft revisions moves forward: 

  • Some of the misconduct addressed by the draft revisions should be punished more severely than currently contemplated. For example, improperly influencing judges, prosecutors or arbitrators perverts the course of justice and for that reason it is quite common in international practice for offenses of that nature to be punished by disbarment, which goes well beyond the six-to-twelve month suspension set forth in Article 48. On the other hand, clarifying the scope of certain other offenses addressed by the draft revisions is an issue of concern. For example, the draft revisions would retain the prohibition against divulging state secrets, which under current PRC law is defined in broad terms (anything that implicates national policy, national defense, the conduct of foreign policy, economic development, activities related to protecting national security, and certain scientific and technological issues could all be state secrets, as could anything designated secret by a state agency). Lawyers have been prosecuted for offenses in this area. The prohibition against hiding material information from the government poses similar issues.
  • The wording of the prohibition against practicing in more than one law firm is wellintentioned but the certificate requirements potentially pose difficulties for PRC lawyers who work for foreign law firms, either in Hong Kong or outside China. (Article 10.) 
  • The prohibition against lawyers representing both sides of a case should make clear that in non-adversarial and non-criminal matters lawyers may act for both parties if the parties consent. (Article 38.)
  •  The prohibition against undertaking private representations (in secret from the firm) should recognize an exception for solo practitioners. (Article 39.)