International Law Article
The International Practice of Law: Chinese Lawyers in the United States
By Ping-Shan Li
Ping-Shan Li was a summer associate at Ulmer & Berne LLP and is currently a third-year law student at Case Western Reserve University School of Law
Globalization of world economy requires transnational legal services. Increasing numbers of clients need to retain lawyers with both geographic capability and local substantive expertise. These lawyers will assist in negotiating and documenting transactions involving parties in multiple countries that typically have different, and sometimes conflicting, legal, regulatory, and taxation environments. Lawyers play vital roles in international business transactions and consequently, these kinds of transactions become a very important sector of legal services. This is well-illustrated by the fast-growing cross-border transactions between parties from the U.S. and China . Many law firms are trying to foster China as the next “new continent” for legal work. Some of the American law firms, therefore, have found creative ways to get a share of the China market.
Several American law firms have established branch offices in China because of the unique advantages that branch offices enjoy . Even though long distance and real time communication becomes so readily accessible, face-to-face interaction in law practice is still irreplaceable. Most deals still have to be closed in person. Most court appearances require a lawyer's personal presence.
Some American law firms reportedly optioned to gain a foothold in China market by forming some kinds of alliance with local law firms. One kind of alliance is to have Chinese lawyers form a new independent entity to exclusively serve the alliance . This newly formed entity resembles a branch office, but it is legally and financially independent. This avoids the issue of unauthorized practice by a foreign law firm under the Chinese law, but the management and control of the entity could sometime be problematic. Another kind of alliance is to form either exclusive or non-exclusive collaboration agreement with existing Chinese law firms. The basic function of the alliance is to refer business to each other. This kind of alliance is relatively easy to manage and requires much less initial investment. It, however, does not work as effectively . Another kind of alliance is to become a member of an international lawyer referral network and members of the network will be able to refer work to other members. A very good example is the “LAW” network .
Some law firms may lack multiple international offices but they can deliver seasoned expertise in leading cross-border transactions and managing local counsel through the concept of “legal management office” or “LMO.” LMO provides project and transaction coordination services that a traditional project management office typically provides in other contexts. LMOs manage all of the constituent elements required to bring the transaction or project to a successful conclusion.
The “China Group” is a popular concept among many regional American law firms. A China Group is usually organized by a group of specialized business lawyers from different practice sectors, but all the lawyers have one thing in common: international background, ideally China or East Asia . A China group usually aims at those regional mid-market clients who are traditionally served by the regional law firms and have an urgent need for help to do business in China . The China Group is a very practical and efficient way to serve clients' China needs. A major problem for this kind of service group is to find the right person to lead the group and find the right participants because it is hard to find a lawyer who understands both American and Chinese systems.
More creative ways will emerge for American law firms to gain access to the China market, but no matter how creative the methods are, all these law firms face the same challenge: finding the right persons who can serve the U.S.-China sector well. There are plenty of lawyers from both the U.S. and China who are willing to work in the U.S.-China sector, but there are far and few lawyers who are capable of competently connecting the two different systems. This group of lawyers, however, is indispensable to the U.S.-China sector's development.
More and more Chinese lawyers come to study in U.S. law schools, and this particular group of lawyers would be uniquely situated candidates for serving the U.S-China sector. Most of these Chinese lawyers are in international LL.M. programs, but some are in regular JD programs. This lawyers (or future lawyers) should be able to play important roles in foreign branch offices, law firm alliances, LMOs or China Groups. This group of lawyers, especially those who had substantial legal experience in China , will expand U.S. law firms' capacity and expertise in multiple dimensions.
Unique Advantages over Chinese Counterparts
These Chinese lawyers' experiences will serve their clients' international needs well. Their learning experiences in U.S. law schools are unique and necessary. Thanks to their comprehensive training in American law schools, the group will enjoy a competitive edge that their Chinese colleagues lack.
Compared with Chinese legal education, U.S. legal education is more practical in many aspects. American law degrees are all at graduate level. A big portion of each law student body consists of those who have had substantial work and life experiences. The experiences bring into law classes real life comments and solutions besides academic arguments. The study itself is closer to real practice because of the pedagogical methods . Generally, law professors choose not to lecture extensively, and instead use the Socratic Method to force students to teach each other based on their individual understanding of legal theory and the facts of the case at hand. The cases used in class are adjudicated by real judges and usually compiled into "casebooks" for each course . Most casebooks used in law classes do not clearly outline the law. Instead, they force the student to interpret the cases and draw the basic legal concepts from the cases themselves. Through several years of training, law students are equipped with basic analytical skills needed for real practice. After graduation, law students often find themselves repeating what they did in law school class rooms. Law professors, especially those adjunct professors who have day jobs as practicing attorneys, always try to pass on their proven methodologies and practical tips of practicing law. Most law professors use Socratic methods also to cultivate law students for instantaneous response to hard questions and arguments.
Law schools usually help students to gain real life legal practice experience during school breaks by facilitating extern programs. Those programs enable law students to “practice law” at law offices or courts. Through these extern programs, law students can practice what they have learned from classes and improve their future learning.
Chinese lawyers who study in U.S. law schools would almost always have opportunities to practice law in some U.S. entities. Without real practice, law school study itself would not complete the knowledge about U.S. law. The experience of practicing law with U.S. entities will certainly give this group lawyers better understanding of the legal system. It has been said that the complex American legal system could only be understood by actually practicing in it.
The American system is unique in that it consists of 51 independent legal systems. The 50 American states are separate sovereigns with their own state constitutions and state governments . The federal government is independent from states governments and has authority only in matters that are authorized by the U.S. Constitution. The 50 states retain plenary power to make laws covering anything not preempted by the federal Constitution, federal statutes, or international treaties ratified by the federal Senate. The structure of the American system is so different compared with the highly centralized Chinese system that it is nearly impossible for Chinese lawyers to truly understand the American system without actually practicing in the system.
The United States is a country built on the notion of rule of law. American lawyers have helped in forming the doctrine of rule of law and continuously protect the doctrine through their practice. Legal rules reach almost every aspect of a person or an entity's life. Americans, by tradition, have more serious attitude towards their legal system. As a result, American people are confident in legal enforcement mechanisms so that they hardly ignore legally binding resolutions.
Unique Advantages over American Counterpart
In 1999, China amended its Constitution. Article 5 of the Chinese Constitution states: "The People's Republic of China shall practice ruling the country according to law, and shall construct a socialist rule-of-law state." Most likely, this amendment came as a result of the WTO's requirement for admission. Instituting the rule of law (“Fazhi”) is probably the most important step China can take to ensure economic growth and attract global business, but this, on the other hand, shows that rule of law, a doctrine that has been taken for granted by many westerners, has only been formally “adopted” since 1999. In such a short period of time, the doctrine has yet to become a permanent part of Chinese social structure. To some extent, rule of man still plays important role in China . How does a system ruled both by law and by man work? There is no easy answer.
The Chinese legal system (and the social structure as well) could be dauntingly confusing and mysterious to many American lawyers who do not have any real life experience with the system. In addition, to practicing Chinese business law, an American business lawyer must be Chinese business savvy – knowing Chinese business culture well. The group of Chinese lawyers who have extensive living and working experience in China would understand the Chinese system well enough to confidently serve American and Chinese clients.
“With the advent of a truly globalized world, it is not only markets but entire cultures that are coming into contact." The Chinese legal system could not be well understood without a thorough understanding of Chinese legal tradition which is squarely built on the unique Chinese culture. Chinese culture cannot be learned in a short period of time. It takes tens of years living in China and being a member of the society to learn the Chinese culture well enough to understand the legal system. The following three typical characteristics of the Chinese culture have immense influence over the forming of Chinese legal system as well as the practice of law in China .
For two thousand years, Confucianism has dominated Chinese people's mind, one way or the other. The establishment by Confucianism of a rigid hierarchy, in which the role of each person is relative and comparative to another's role, provides the bedrock notion that “Guanxi” (relationships) forms the basis of society as well as interaction with each other. Under the influence of Confucianism, which is still implicitly dominant in modern China, Guanxi (relationships, such as family, friends) and hierarchy (preexisting social relationship determined by one's role in the society) are the most important factors in forming any kind of social relationships, including legal relationships.
Another deeply rooted Chinese philosophy, Taoism (“Daojia”, by “Laozi”), has particular important influence over the development of Chinese legal system. Taoism emphasizes that governmental intervention through rules and laws is not only unnecessary, but also detrimental to the society. “No-Action” (“Wu-wei”) is a central concept in Taoism. It promulgates that, among other things, business should not be conducted by detailed planning and it is unwise to rely on government's protection of legal rights. This thinking is probably totally foreign to western concepts of law.
Sun Zi (author of The Art of War , an immensely influential ancient Chinese book on military strategy ) did not have as deep influence as Confucian or Laozi on Chinese people, but The Art of War has been applied, with much success, to business and managerial strategies. The book teaches how to fight wars without actually having to do battle: tricks to outsmart one's opponent so that physical battle is not necessary. As such, having explored and extended the spirits of The Art of War , many Chinese business people believe that they could (and should) outsmart others by playing the “Arts” (tricks). Honesty, sometimes, is less respected by those people.
All in all, understanding of Chinese culture is crucial to a player in the Chinese system but it is not an easy task to appreciate such a long-lived and unique culture. China has such a complicated social system, including its legal system. It takes admirable courage for American lawyers to even just try to understand it.
Chinese Lawyers in the United States
The U.S.-China market sector is a unique one that never existed before. The healthy growth of the sector will bring multiple benefits to legal professionals from both the U.S and China . The economies of the two countries will benefit from the growth. The people living in the two counties will benefit from the growth.
Equipped with unique experiences and broadened visions, Chinese lawyers who have studied and worked in both Chinese and American legal systems will contribute to both the American legal market and Chinese market alike. This group of Chinese lawyers will not only facilitate the economic exchanges but also help build constructive relationships between the two countries.
The nation's largest 250 law firms had 12,942 attorneys working in their foreign offices in 2004. See , Chasing the Sun: The 24-Hour Firm , The National Law Journal, November 15, 2005.
See , www. MarketWatch.com , Jan 29, 2007 article reporting that the US law firm McDermott, Will & Emery has recently formed this kind of alliance with a newly formed Chinese law firm
A partner in one of Jones Day's China offices has expressed his disfavor of this kind of alliance because it can be problematic: "You're committing each other to exclusivity, which hurts both law firms in the long run. Most Chinese law firms don't have that much work to send to U.S. firms."
Ming-Jer Chen, Inside Chinese Business 181 (2001 ).
See generally , Patricia Pattison, The Mountains Are High And The Emperor Is Far Away: Sanctity Of Contract In China , 40 Am. Bus. L.J. 459 (2003).