It looks like in the midst of immigration reform by the Obama administration,things may be looking up for foreign lawyers. Under a resolution approved on Monday by the ABA House of Delegates, foreign lawyers will have limited authority to serve as in-house counsel in the United States.
Resolution 107A is among a series of proposed amendments to the ABA model ethics rules that acknowledge the globalization of law practice. It amends Rule 5.5(d) of the ABA Model Rules of Professional Conduct concerning unauthorized practice and multijurisdictional practice. The amendment states that foreign lawyers may work as in-house counsel in the United States, but they may not give advice on U.S. law unless it is based on the advice of a lawyer who is licensed in the appropriate jurisdiction. A related resolution, 107B, requires registration for foreign lawyers working as in-house counsel.
Seven states already expressly permit foreign lawyers to work as in-house lawyers in the U.S. offices of their clients. This will likely open the gates to foreign lawyers looking to practice in the U.S. But how does that bode with our current economic climate? The legal market has yet to bounce back, and employment numbers are still low. With thousands of U.S. lawyer unemployed and many more U.S. law graduates still seeking employment, how will this impact our market? The answer remains to be seen.
Established in 2009 with a legal staff of 22, Eastern China Airlines’ in-house legal department was awarded “Chinese Company In-house Team of the Year” at the 2010 ALB China Law Awards. This is quite an accomplishment for such a new legal department, especially considering the turbulent global aviation market. Eastern China Airlines Corporation Limited is the country’s top-three carrier listed on the Shanghai, Hong Kong and New York Stock Exchanges.
What’s made the difference?
General Manager, Lijun Guo, who joined the company in 1994, has had a lot to do with it. “The legal department is now regarded as critical as [the] finance and audit departments in our company. It’s a cost-effective and expert resource for all the company’s legal affairs. Its influence is on the rise in every stage and aspect of the company’s operations,” he says. His efforts in recruiting and taking more responsibilities to increase the legal department's profile within the company can be credited for much of its success.
What have been some of the highlights?
Raising RMB$14bn through A-share and H-share equity placements, the absorption of Shanghai Airlines via share swap – a high-profile and complex transaction involving RMB$16bn asset acquisition, over 50 aircraft transactions with a total value of US$10bn, the negotiation and preparation of the company’s merger with SkyTeam, compiling a comprehensive anti-trust and competition, and creating compliance manual for all of its employees, providing key information on antitrust and competition laws in major jurisdictions, including US, Europe, Japan, China and Australia. Not bad in less than two years with a relatively small legal staff.
How did that success evolve over time?
The airline’s expansion and adverse market conditions triggered a substantial increase in legal needs. As a result, the company increased its legal staff, and soon realized it capacity to handle major transactions, and ability to cut down cost by reducing its reliance on outside counsel.
While Chinese companies have traditionally relied on outside counsel to handle their legal needs, more and more are turning to in-house counsels to do the job, and growing their legal departments to handle increasing legal demands. This is a trend that is very likely to continue.
- BofA's Outside Counsel Sings Two Different Tunes. Eric Roth, a litigation partner at Wachtell, Lipton, Rosen & Katz, apparently was telling the Bank of America Corp. leadership one story about how difficult it would be to escape from the merger with Merrill Lynch & Co. Inc., while singing quite a different tune to the federal government. On Dec. 19 Roth advised the bank's chief executive, Ken Lewis, and its interim general counsel, Brian Moynihan, on how difficult and financially risky it would be to try to invoke a so-called MAC -- or material adverse change -- clause, which would allow the bank to get out of the merger with Merrill. But another e-mail from associate general counsel Teresa Brenner to Moynihan, sent several hours later and on the same day as Roth's e-mail, says, "Eric made a very strong case as to why there was a MAC" during a conference call with some officials from the Federal Reserve. That's why you pay "beaucoup bucks" to lawyers like those working at Wachtell; so you can have your story spin both ways. Corporate Counsel
- Greedy Deputy GC Found Guilty in $12M Fraud - Used For Shopping Spree sand Comestic Surgery. Kate Johns, the former deputy head of legal at Bank of Tokyo-Mitsubishi, was paid a salary of 150,000 pounds ($250,000) in her role at the bank. For some, that would be considered a handsome salary, but for others like Johns, that was simply the tip of the iceberg. London's Southwark Crown Court ruled that Johns was guilty of having repeatedly conned colleagues into signing off large sums of money for investment. In total, the bank lost 7.4 million pounds ($12.3 million) as a result of the scam. The money was diverted to struggling Indonesian airline Air Efata, which was owned by her friend Frank Taira-Supit. Johns received personal payoffs from Taira-Supit totaling 1.95 million pounds ($3.2 million), which the court was told she used to fund a luxury lifestyle, including shopping trips, breast surgery and paying off the mortgage on a 1.1 million pound ($1.8 million) north London townhouse. Air Efata went bankrupt last year, after which Taira-Supit committed suicide. Johns' sentence will be handed in December. It's a sad story of greed and betrayal. The Legal Week
- New Kids On The Block: PetSmart Hires New GC Emily Disckinson, and Charter Communications Hires Gregory Doody as new GC. Dickinson, 50,comes to PetSmart from Hannaford Bros. Co., which runs a chain of grocery stores and supermarkets along the Eastern seaboard. (Hannaford is owned by Delhaize Group, which operates supermarkets in Europe.). The St. Louis–based company hired Doody to serve as its chief restructuring officer in March, when Charter filed for a prearranged Chapter 11 bankruptcy, but Doody originally joined last December to assist with the company's financial restructuring. In May, Doody, who is 44, also accepted the post of general counsel. He replaces former GC Grier Raclin, now Charter's chief administrative officer. Corporate Counsel
- Want to Know Top 25 In-House Counsels in Asia, Look Here: The ALB has identified 25 of the most outstanding legal counsel in Asia - from Hong Kong, Singapore, Japan, China and India. These lawyers represent the health, real estate, banking, technology, shipping, energy, and consumer good sectors. Some have worked on precedent-setting transactions, while others have quietly built up strong legal teams, ensuring continual compliance of their organization and also influencing the passage of legislation. ABL Legal News.
Well, if misery loves company, we may have found an ally in China.
Over the last few years, China’s legal was booming. International law firms we scrambling to stake a claim in the new promised land, opening offices, recruiting legal professionals, engaging in recruiting warfare, and trying to stay on top of a booming economy. As recently as August 2008, during the last Olympiads, we took a look at this bustling legal market, and discussed the opportunities for in-house counsels (See previous post: China's Growing In-House Market).
What was a boom is no more… at least for now.
China's booming economy, which was a bright spot amid global gloom, has been slowly weakening. Outward signs of trouble began in late November, when the economy began to contract, and hundreds of laid-off workers seeking back-pay went on a rampage, trashing police vehicles, and smashing the windows of their former factory in Dongguan. Over the last few weeks, the word has seen images of workers demonstrating, of unrest, and growing tension.
Most economists believe that to keep the Chinese economy going, China must maintain an annual growth rate of at least 8 percent. In 2008, China reached 11.9 percent, but according to the World Bank, China's economy is predicted to grow by just 7.5 percent in 2009.
Today, China has woken up to a new reality, one that economists say could make 2009 the most challenging period China has faced in years: declining exports, slower growth, rising unemployment, and the potential for social unrest across the country. The trickle down effect of this economic slump has seeped through China’s legal market. China has seen its first legal job casualties amongst legal professionals in real estate and capital markets.
International law firms that had been recruiting hand-over-fist over the last few years found themselves with a large workforce and a considerably slower work flow. Taking a cue from their U.S. home offices, they began to shed attorneys and legal staff, while looking for partners with strong books of business willing to make a jump during these uncertain economic times.
Is the recruiting war in China over?
As with every economic cycle, there are both ups and downs. While we can expect the type of aggressive recruiting we had seen over the last few years slow down in 2009, some legal employers – including firms and in-house legal departments – may be looking to take advantage of this new economic landscape. Law firms will focus on the recruitment of partners with books of business, to join their ranks. While partners may have been more difficult to woe during the economic boom, with some firms experiencing signs of trouble, some of these rainmakers may be more apt to look at firms offering more stable environments.
Also, while some practice areas may be slowing down, others may be picking up. As in the U.S., practice areas that could be busy in China in the coming year are expected to include employment, litigation, and bankruptcy. Law firms may look to refocus their recruiting on attorneys in these practice areas.
In-house legal departments in China may also see this downturn as an opportunity to upgrade their legal staff. Whereas competition for legal talent was tipped in favor of law firms with deep pockets and an insatiable appetite, companies may now have an opportunity to recruit top legal talent within their budget. As we have seen in the U.S., companies in China may also look for cost cutting measures, including the reduction of outside counsel fees, and turn to in-house counsels to handle more of its legal work.
What about salaries in 2009?
In light of a weakening economy and a generally slower recruiting market, it is very unlikely to expect legal salaries in China to rise in 2009. Performance-based compensation will be the most at risk in the coming year. As a result, attorneys making a move in 2009 will be more focused on base pay when evaluating their offers than they had been in the past.
The in-house legal marketplace – just like many other industries in China – has undergone an incredible transformation in the last decade. Where less than ten years ago in-house lawyers in China were almost nonexistent, as most legal work was handled by law firms, today companies are growing their in-house legal ranks at an unprecedented rate.
The leader of the pack is Alibaba – the world's largest online B2B marketplace. With 14 lawyers among its 2,000-plus employees, and plans to add at least another 6 in-house counsels, including a new chief legal officer, the company is at the forefront of this hot in-house hiring trend.
Today, companies in China – both domestic and multinational – are no longer rushing to costly international law firms for help every time a question comes up. Increasingly, they're grooming their own legal team to compete in the heated China market.
Bilingual American lawyers with international law firm experience are the hot tickets for U.S. companies conducting business in China. That said, American corporations are not the only ones that are seeking American talent, especially for top legal jobs.
Certain Chinese companies prefer the rigor and specificity of American legal training, and are increasingly looking to hire U.S. trained attorneys. One of the draw: U.S-trained lawyers tend to have a greater familiarity with the Sarbanes-Oxley corporate governance reforms – that's a skill that Chinese companies – with an eye to an overseas stock market listing need.
With the growing uncertainty of the domestic legal market, a number of U.S. attorneys have made the in-house leap to China. Are you ready to make your move?
If you have, then you are no alone. The idea of living and practicing law overseas has become very popular. However, the actual steps of making your international dream into a reality often appear to be impractical and difficult.
The good news is that it has become increasingly easy, as well as common, for lawyers to be licensed to practice in foreign jurisdictions.
So, where do you start?
Permission To Work.
The first thing you need to determine when considering a job abroad is whether you can work legally here, and the steps you need to take to obtain working permission.
For the purpose of this post, I will not provide an exhaustive review of the requirements in a large number of jurisdictions. I will focus on the admissions process for American lawyers in England, Australia, and Hong Kong, where a candidate in these jurisdictions does not face a language barrier, and the process is simplified for a lawyer with prior training in common law.
Admission in England.
Second, England is a common law jurisdiction; hence English lawyers approach problems in a fashion similar to their American counterparts. Third, the process and requirements are far from onerous. That being said, however, it is essential to remember that England has a distinctly different legal system. One of the most notable differences is that the legal profession is divided into solicitors and barristers.
Solicitors: The solicitors are, by far, the larger of the two professional groups. They do almost everything that we normally associate with ‘‘lawyer’s work’’ except in-court advocacy in front of the higher courts and the presentation of appellate cases. Solicitors and barristers are not permitted to work together as a law firm. Solicitors’ offices and barristers’ chambers are always completely separate and distinct. Barristers are not hired by the client. The client retains a solicitor and when the services of a barrister are necessary, the solicitor retains a barrister to argue the case.
Barristers: Transfer admission as a barrister is done through the Bar Council. However, at the practical level, given the ethical constraints of the barrister’s profession and the serious difficulties of establishing a practice, it would be almost pointless for an American lawyer to obtain a professional qualification as a barrister unless he or she intends to relocate to England and practice full time as a barrister.
Admission as a Solicitor follows a three-step process:
- you have graduated from law school;
- you hold a license to practice law;
- you have actively practiced law for at least two years;
- you have not been in bankruptcy or convicted of a crime; and
- you have not previously been disbarred or subject to professional discipline.
- Litigation (civil or criminal procedure)
- Professional Conduct and Solicitor’s Accounts
However, rather than a completely separate track for the admission of foreign lawyers, the external lawyer is admitted under the same standards and procedures as a novice domestic lawyer but with a system of exemptions from various requirements. Like England, New South Wales has both solicitors and barristers. The requirements for admission as a solicitor follow.
A person seeking to qualify as a solicitor in New South Wales must meet certain educational and experience requirements.
For a domestic applicant, they must either graduate from an Australian law school or independently pass a series of examinations on various legal topics such as contracts and torts given through the Legal Practitioners Admission Board. An American applicant who attended law school in the United States can readily obtain an exemption for most of the educational requirements.
The second requirement is that of practical training. An Australian law student, after completing school, is required to have a period of on-the-job training with a law firm. This period of ‘‘articles’’ or apprenticeship normally lasts several years. An American lawyer with at least five years of general practice experience will normally receive a complete exemption from this requirement as well.
It is important to bear in mind that the education and experience requirements are not prerequisites to take a bar examination. New South Wales does not have a bar examination; meeting the education and experience requirements is sufficient.
An American lawyer with the training and experience suggested above would take the following steps to become admitted in New South Wales:
- First, apply to the board for academic exemptions by furnishing the board with U.S. law school transcripts and asking them to make a formal determination whether any further course work is required. For U.S. applicants, usually all academic requirements except real property and Australian constitutional law are exempted.
- While taking these courses, you will also want to file with the board to obtain exemption from the practical training requirement. If you can show that you have had at least five years of general practice, you will be exempted from the training requirement.
- With the academic and training exemptions in hand, you would then file the formal application, with supporting documents, with the board to obtain actual admission to practice as a solicitor in New South Wales.
Admission in Hong Kong more closely resembles the process in England than Australia. Like England and Australia, the profession in Hong Kong is divided into solicitors and barristers. In Hong Kong, like England, there is a system in place specifically designed for the admission of foreign lawyers as solicitors. This system is administered by the Hong Kong Law Society.
Admission as a Solicitor follows a three-step process:
The threshold requirements for admission as an overseas lawyer are minimal; there is no express educational requirement, but you must be admitted to practice in another jurisdiction and have practiced for a minimum of two years.
A lawyer applying from a common law jurisdiction is required to pass up to four examinations:
- Conveyancing and Landlord and Tenant
- Civil and Criminal Procedure
- Commercial and Company Law
- Accounts and Professional Conduct
Due to the unusual nature of land law in Hong Kong, only those having significant experience in dealing with real estate in Hong Kong are eligible for a waiver of the real property examination.
Filing the Overseas Lawyer Qualification Application Form begins the process, with a letter requesting exemptions for which you may be entitled, supporting documentation showing your domestic licensure, length of practice experience, and such evidence as would support your request for exemptions, together with the application fee. The Department of Standards and Development of the Hong Kong Law Society will evaluate your application and advise you regarding which examinations you must take.
The second step is to prepare to take the examinations. There are two accredited preparatory course providers who offer both classroom instruction or distance learning programs:
- Info-Cite/LexisNexis Butterworths
- The School of Professional and Continuing Education
The third step is to actually sit for the examinations, after submitting an application for examinations to the law society and paying the examination fee, based on the number of exams. The exams are given only in Hong Kong. The various exams are offered within a few days of each other and each exam lasts 3 1/2 hours.
The overall pass rate for the exams ranges from 50 percent to 70 percent and the pass rate on the exams that an experienced American Lawyer would most apt to be required to take (property and ethics) are around 70 percent. When a candidate passes the required exams, he or she can apply for admission as a solicitor.
Aside from a simple formal application form and the fee, there is also a residency requirement that can be satisfied by:
- residing in Hong Kong 90 days prior to admission
- residing in Hong Kong 90 days after admission
- being ordinarily a resident of Hong Kong
Of course, after you have met the country's various licensure requirements, the next crucial step is to find employment overseas. "How to Conduct a Succesful Search Overseas" is a topic we will cover in a future blog post.
July 14, 1789 started the French Revolution that toppled King Louis XVI and the aristocracy. The Bastille Day holiday in France symbolizes the overthrow of the old monarchy and the beginning of the French republic.
Each July 14th, the citizens of France celebrate to remember the price that was paid and the courage of those people who dared to change their lives.
Today and every day, people of this country and others, are making such sacrifices. They go on unheralded – they are the forgotten heroes of our time, and on this day in the spirit of Bastille Day, we should pause to remember them.
The fast pace of globalization and the complexity and diversity of risks and demands were the top issues for more than 100 senior corporate counsels polled at a conference entitled “Wake Up to the Future: How Global Corporate Legal Services Must Change.” The ACC’s NY Chapter and Eversheds LLP organized the New York City conference.
Leading heads of legal from many Global 500 companies provided concrete approaches and tools for in-house counsels to adapt and put into practice.
- 38.2% of in-house lawyers attending the event saw the pace and scope of global growth as having the biggest impact on corporate legal functions today.
- 20.6% viewed the rising costs of outside counsel as their number one concern.
- 14.6% viewed the economic downturn was the number one issue.
An audience response system was used to survey the conference attendees, of whom 36% were counsels of companies with more than $10 billion in revenues, and 34% with $1-10 billion in revenues. 85% of the respondents were corporate counsels, with 62% in a chief legal officer (CLO) role or as a direct report to the CLO.
Though 84% of the counsels viewed their companies as very global, most said their legal department was ill prepared to meet their company’s global demands (More than 40% responded with 1 or 2 on a scale of 1 to 5, 5 highest). When asked which countries or regions caused the most concern for management of risks and disputes, China was the top choice for 35%, followed by the U.S. for 17%, and Russia for 14.5%. Aggregated, the BRIC countries (Brazil, Russia, India and China) represented the greatest concern for 61% of the corporate lawyers.
“Our struggle is neither unique nor insurmountable—globalization has brought many opportunities to our businesses. As in-house lawyers, we need, and want, to be fully integrated with the business and provide the legal infrastructure required to be successful in all markets in which we operate, " said Tom Sabatino.
Though global issues led the agenda, in-house counsels were critical of their law firms. 44.6% said their law firms rated a ‘3’ in understanding their business and their constraints (with 1 being the lowest score, and 5 the highest). Another 38% gave their law firms a “1” or “2” rating on the same issue.
Respondents resoundingly found their law firms to be highly inefficient, with 87% giving their law firms a “1” or “2” rating on efficiency – not a single in-house lawyer rating his or her law firms as “4” or “5” for efficiency. 50% rated their law firms as “1” or “2” in preparing comprehensible estimates and budgets; 18% gave their law firms a “4” or “5” score on the same issue.
“It is time to engage our firms in meaningful dialogue about how to get back to providing value. We need our law firm partner/providers to be successful and profitable -- they need to change their business model to focus on profits as opposed to top line revenue growth in a cost-plus world,” said conference speaker Jeffrey Carr, General Counsel of FMC Technologies.
Despite concerns about law firms inefficiency and discussions that the billable hour is often the culprit, when asked if the billable hour would disappear during their career, 71% said “No, because it is simply too ingrained.” Only 21% answered yes, that it would disappear.
“In-house counsel forums such as this one give us useful feedback, and while many of the attendees didn’t see the billable hour going away, the ACC is committed to developing a set of best practices that include alternatives to the much-reviled billable hour. We have a group of leading in-house counsels from around the country considering a number of options, including alternative fee structures, early case assessment, and better use of technologies, ” explained ACC President, Frederick J. Krebs.
The following are additional significant findings from the event related to corporate counseling on cross-border transactions and disputes:
- The most challenging or frustrating feature of international M&A transactions was differing legal systems and principles (36%) with poor teamwork in second place (28%).
- 56% of corporate counsel surveyed said their international transactions could benefit from a formal project management system, with another 40% saying they could ‘maybe’ benefit.
- 57% have seen a rise in litigation in the past two years.
- 67% expected to see an increase in “U.S. style litigation” in Europe.
Brazil – the B in the so-called Bric emerging economies forecast by Goldman Sachs (the others are Russia, India and China) – has the most open financial market of the four countries and there has been a lot of capital markets activity in the past couple of years. The ultimate tribute to the strength of this market was Standard & Poor’s investment-grade rating, awarded to the country earlier this year.
In São Paulo, there is also a significant demand from the software development side and widespread support for everything open source, from Linux as the operating system to ODF as the document format of choice. The government of Brazil has gotten behind open source in a big way, and it has invested heavily in open source technology for public sector organizations.
There is also a great need for those with skills in networking, communications, collaboration, and mobility. "Mobility particularly because the telecommunications infrastructure on the mobile side is more advanced in Brazil because they don't have the same restrictions that we have here in the U.S.," says Debbie Guerra, vice president of operations for see Yahoo news article).Global Outsourcing and Infrastructure Services(
Outsourcing spans everything from IT to distributed infrastructure, application outsourcing, and business process outsourcing for the financial service industry. "Payment skills are real hot," Guerra says.
All the major tech companies -- including Accenture, Hewlett-Packard, Infosys, Satyam, Softek, Tata Consultancy Services, Unisys, and Wipro -- have their headquarters in São Paulo. The bulk of telecom firms are also in São Paulo (See more below), though there are a few in Rio as well. The major local IT services firm is CPM Braxis. The university town of Campinas, 61 miles away, is also a major hub for tech companies, including IBM.
A rush of investment capital, coupled with surging commodity prices, oil and gas exploration and a wave of new construction, have also prompted U.S. law firms to open offices in Brazil, reports the National Law Journal.
Many have been swept up in the country's thriving capital markets climate, particularly in São Paulo, which has enticed international banks and other foreign investors to finance countless emerging companies.
Only a few international firms – most notably White & Case – have maintained an office in South America’s largest market for much of the past decade. But the last 18 months have seen a wave of firms rushing to establish or consolidate their presence.
The list of foreign firms in São Paulo is long...
Simpson Thacher & Bartlett (2008)
Skadden Arps Slate Meagher & Flom (2008)
Squire Sanders & Dempsey (2008)
Mayer Brown (2007)
Proskauer Rose (2007)
Shearman & Sterling (2004)
Clifford Chance (1998)
Uría Menéndez (1998)
White & Case (1997)
Baker & McKenzie (1959)
... and getting longer.
Thompson & Knight (2008, planned)
Chadbourne & Parke (2008, under consideration)
Allen & Overy (2008, rumored)
In addition, about 100 legal process outsourcing companies employ between 600 and 800 Indian attorneys per year, offering their services abroad at bargain prices, the ABA Journal reported in an October 2007 story, "Manhattan Work at Mumbai Prices." While that number is still a tiny percentage of India’s legal sector, which is estimated to have 80,000 new law graduates every year, it can only increase based on estimates of how big outsourcing is expected to become.
Globalization is increasingly placing pressure on the value of legal services, forcing law firms and in-house legal departments to redefine and reevaluate their value proposition to remain competitive. With basic legal work being outsourced at an increasing rate, what does this mean in terms of training opportunities for junior associates in law firms? Is this work being handled as a commodity by in-house legal departments? What are the long-term effects of this new trend?