LegCo Paper No. CB(2)1894/96-97
(These minutes have been seen
by the Administration)
Ref : CB2/BC/47/95
Minutes of the Thirteenth Meeting of the Bills Committee
on the Legal Services Legislation (Miscellaneous amendments) Bill 1996
held on Monday, 24 March 1997 at 4:30 pm
in Conference Room A of the Legislative Council Building
Members Present :
Hon Fred LI Wah-ming (Chairman)
Hon Mrs Selina CHOW, OBE, JP (Deputy Chairman)
Hon Mrs Miriam LAU Kin-yee, OBE, JP
Dr Hon Philip WONG Yu-hong
Hon Howard YOUNG, JP
Hon Ambrose LAU Hon-chuen, JP
Dr Hon LAW Cheung-kwok
Hon Bruce LIU Sing-lee
Hon Margaret NG
Members Absent :
Hon Ronald ARCULLI, OBE, JP
Dr Hon LEONG Che-hung, OBE, JP
Hon Emily LAU Wai-hing
Hon James TO Kun-sun
Hon Christine LOH Kung-wai
Hon Andrew CHENG Kar-foo
Hon Albert HO Chun-yan
Hon IP Kwok-him
Hon Mrs Elizabeth WONG, CBE, ISO, JP
Public Officers Attending :
- Mr R C ALLCOCK
- Deputy Law Officer
Attorney Generals Chambers (AGC)
- Mr Wesley WONG
- Senior Crown Counsel
Clerk in Attendance :
- Ms Doris CHAN
- Chief Assistant Secretary (2)3
Staff in Attendance :
- Miss Flora TAI
- Senior Assistant Secretary (2)3
Solicitor corporations (clause 2)
The Chairman drew members attention to two letters dated 13 November 1996 and 7 January 1997 from Mr R ALLCOCK (issued vide LegCo Paper Nos. CB(2) 427/96-97 and 891/96-97 respectively) which answered various questions raised at the second meeting of the Bills Committee and responded to a number of submissions on solicitor corporations. He then invited views from members.
2. Mr Howard YOUNG referred to the concern of the Consumer Council that if solicitor corporations were permitted, the rules to be made by the Law Society of Hong Kong (the Law Society) should adequately protect consumers. He therefore asked and the Chairman confirmed that no further view had been received from the Consumer Council as to what rules should be in place in order to protect the consumers. Mr YOUNG further remarked that the proposal was to permit solicitors to incorporate their practices only and it would be up to individual solicitors to assess whether it would be beneficial to do so. He therefore would not object to the proposal. Miss Margaret NG said that she tended to support the proposal too. However, it was important to ensure that proper safeguards for consumer protection were in place by way of making rules. Mr Ambrose LAU and Mrs Selina CHOW shared a similar view. Dr LAW Cheung-kwok said that the Association for Democracy and Peoples Livelihood had no objection to the proposal which only provided a new mode of business operation. He opined that unlimited liability did not exist in practice in the light that many professionals had set up trust funds under companies registered overseas so as to limit their personal liability. Yet, Mr Bruce LIU shared the concern of the Consumer Council that there should have adequate safeguards to ensure that consumers who suffered any loss as a result of the wrongdoing of their solicitors or their solicitors partners would be properly compensated if the proposal was to be implemented. In response, Mr ALLCOCK pointed out that it was clear from models in other jurisdictions that safeguards could be imposed particularly in relation to insurance level. In view of the fact that unlimited liability only existed in theory, the protection offered toconsumers by solicitor corporations for practical purposes was no different from that offered by a sole practice or a partnership provided the insurance arrangements in the rules were adequate. In addition, these rules would need to be tabled at the LegCo in the form of subsidiary legislation. LegCo could reject or amend these rules if they did not offer adequate consumer protection. The Chairman then asked and Mr ALLCOCK confirmed that there was no timeframe for the Law Society to implement the proposal even if the legislation was enacted.
3. Mrs Miriam LAU referred to the position paper of the Law Society issued to individual members which submitted that solicitor corporations should be considered with the utmost care in order not to undermine the integrity and independence of the legal profession. She indicated her support for the proposal but wondered what the Law Societys concerns were as it would be empowered to make rules governing incorporation of a solicitors practice and to control the pace of implementation. She therefore suggested that Law Society be invited to clarify its concerns regarding solicitor corporations.
4. Mr Philip WONG held a different view. He considered that all professionals including solicitors, accountants and doctors etc should be personally liable to their clients without limit. To limit the solicitors liability would bring about fundamental change which he found difficult to accept. He urged members to consider carefully the implications of incorporation on other professions. He therefore would not support the proposal and the same applied to foreign lawyer corporations. In this connection, the Chairman asked and Mr R ALLCOCK informed members that accountants had been permitted to incorporate their practices two years ago and the rules governing their incorporation were already in place.
5. After consideration, a majority of members present supported the proposal of solicitor corporations provided adequate safeguards for consumer protection were subsequently put in place.
Foreign lawyer corporations (clause 5)
6. Miss Margaret NG said that although the Law Society had reservation on the proposal, she found it difficult to explain as a matter of principle why foreign lawyers could not incorporate their practices if local lawyers were allowed to do so. However, Miss NG appreciated the complication for foreign lawyer corporations in the light of the differences in various disciplinary codes and policies of the different jurisdictions where the foreign law firms came from. Relevant rules should therefore be carefully scrutinized to ensure that they provided adequate safeguards. In this regard, Miss NG also suggested that the Law Society should explain its concerns regarding foreign lawyer corporations for members reference. Mr Bruce LIU and Dr LAW Cheung-kwok agreed that it would be unfair if only foreign lawyers were not permitted to incorporate their practices. Dr LAW also cautioned that to prohibit only foreign lawyers to incorporate their practices might be against the spirit of the World Trade Organization.
(Post-meeting note : The Law Society has clarified its concerns and reservations regarding solicitor corporations and foreign lawyer
corporations in its letter dated 27 March 1997 which has been issued to members vide LegCo Paper No. CB(2) 1685/96-97)
7. Mrs Miriam LAU agreed with the Law Society that it was pre-mature to introduce legislation permitting foreign lawyer corporations because there was insufficient information available. She therefore suggested to adopt a step-by-step approach so that foreign lawyers would only be permitted to incorporate when the Law Society was confident that it could cope with the problems envisaged by way of making rules in allowing foreign lawyer corporations. Mr ALLCOCK explained that the Law Society Council was empowered to make separate rules governing foreign lawyer corporations. Miss Margaret NG therefore asked and Mr ALLCOCK confirmed that it was possible to adopt a two-stage approach so that solicitor corporations and foreign lawyer corporations could be implemented at different times in the light that the implementation was subject to rules being in place. Miss NG remarked that it was reasonable if different rules and different stages were allowed, if necessary. Mrs LAU agreed that it was an improvement. However, she needed more time to formulate her position on the matter. In this connection, the Chairman asked and Mr ALLCOCK responded that the consequential amendments in the Schedule might have already allowed a two-stage approach. If not, the Administration would ensure that it was in place. Mr ALLCOCK further agreed to provide the Administrations view in writing on the matter for members reference.
8. Mr Ambrose LAU said that he shared the Law Societys concern about the proposal on foreign lawyer corporations because: (a) it was difficult to conclude, in the absence of relevant comments from the majority of foreign law firms, whether the proposal would be beneficial to these firms and offer adequate protection to the public interest; and (b) it would be very difficult for the Law Society to make rules governing foreign lawyer corporations in the light of the fact that they came from eleven jurisdictions with varied disciplinary codes and policies. He therefore needed more time to consider the issue too.
9. Mr Philip WONG expressed concern that the proposal on solicitor corporations might only be a tactic adopted by the Administration in order to permit foreign lawyers to incorporate their practices. He doubted whether it was beneficial to the interest of Hong Kong in term of commitment if foreign firms could limit their liability by incorporation. In response to the Chairman, Mr ALLCOCK said that it was envisaged that foreign lawyers had to comply with the rules to be made by the Law Society in governing incorporation if they wished to incorporate their practices.
10. After consideration, members present agreed that the Bills Committee would not make a decision on the proposal of foreign lawyer corporations for the time being.
Multi-disciplinary practices (clauses 14 and 15)
11. Miss Margaret NG said that she opposed the proposal on multi-disciplinary practices (MDPs) because she failed to see the need to do so and it might bring about many dangers. She was particularly concerned about its possible impact on the codes of professional conduct and the confidentiality in the lawyer-client relationship. Mr Bruce LIU was also concerned that the proposal might undermine the independence of the legal profession which was very important to the rule of law in Hong Kong. He was of the view that MDPs, being a new concept, should not be allowed at the present stage. Mr Ambrose LAU shared his view. Mrs Miriam LAU and Mr Philip WONG also opposed the proposal.
12. In the light of members negative views on the proposal, Mr ALLCOCK suggested to amend the Bill by providing a statutory prohibition of MDPs which would remain in force until such time as the Law Society, if it wished, made rules in relation to MDPs and the LegCo approved those rules by way of positive resolution. He explained that the advantage of this alternative was that it would allow the Law Society to make rules if it so wished, but would be under no pressure to make such rules. However, members present did not accept such an alternative. They maintained that the matter should be left to the future Administration to consider, if necessary, having regard to the circumstances at that time. In this regard, Mrs Miriam LAU suggested to delete Part V (Multi-disciplinary Practices) from the Bill. If the Administration wished to leave a public record that MDPs had been proposed, the proposal could be mentioned in the speech by the Attorney General when the Second Reading debate on the Bill was resumed in the LegCo. Mr ALLCOCK cautioned that notaries public were not prohibited from entering into MDPs under the current law If Part V of the Bill was deleted, notaries public could continue to enter into MDPs without any special rules governing their activities. He also referred to the submission from the Law Society of Hong Kong on "Multi-disciplinary Practices and Notaries (issued under cover of LegCo Paper No. CB(2) 1408/96-97) which submitted that not all notaries were practising solicitors. Members present opined that these notaries public who entered into MDPs with other professionals only practised as notaries and not as solicitors. They therefore remained of the view that Part V of the Bill. including clause 14 which provided for notaries public to enter into MDPs should be deleted. In light of the consensus of the Bills Committee on the proposal of MDPs, the Chairman then asked and Mr ALLCOCK undertook to consider whether the Administration would move a Committee Stage amendment to delete Part V from the Bill.
II.Any other business
13. Mr ALLCOCK informed members that the Administration would provide a paper responding to the submission from the Hong Kong Bar Association on Part IV of the Bill (issued under cover of LegCo Paper No. CB(2) 970/96-97). The Administration would also provide papers on the Costs Committee and invalidation of contractual provisions shortly.
III.Dates of future meetings
14. Members agreed to schedule the following meetings for discussion on other outstanding topics -
- Thursday, 17 April 1997 at 8:30am;
- Thursday, 24 April 1997 at 8:30am; and
- Friday, 9 May 1997 at 12:30pm
15. There being no other business, the meeting ended at 6:05 pm.
10 April 1997
Last Updated on 27 October 1997