Shanghai will further open its legal service sector to foreign companies as a lack of qualified lawyers is impeding the city's development, Vice Mayor Zhou Yupeng said Wednesday.

"A developed legal service is essential for Shanghai to attract foreign investment and help domestic companies expand abroad," Zhou told more than 30 representatives from overseas law firms with offices in the city at a round-table discussion yesterday.

"The city will relax some of the restrictions ahead of other cities in the country," Zhou said.

Currently, foreign law firms are barred from litigating in Chinese courts, among other restrictions. They can, however, consult clients on foreign investment, finances, securities, real estate, trade, maritime affairs and intellectual property rights.

"We will gradually relax the restrictions," said Miao Xiaobao, director of Shanghai Justice Bureau. He added that the approval processes for foreign law firms looking to open offices in Shanghai will be simplified and cooperation between overseas and domestic law firms will be allowed in the future.

"Domestic law firms will be allowed to act as a liaison or member office of an international law firm when conditions mature," he said.

Miao also said overseas firms will eventually be allowed to hire local lawyers, and the city will make it easier for domestic companies to hire foreign law professionals.

Foreign firms are pleased by the announcement, saying current regulations put too many restrictions on their activities.

"If foreign law firms can cooperate with domestic counterparts in conducting business in the future as the city government promised, that could help us expand a large part of our business," said Danian Zhang, a partner with the Shanghai Office of Baker & McKenzie, a US-based law firm.

Some domestic lawyers seem unconcerned about the increased competition eased regulations could create.

"They (foreign firms) are prohibited from litigating in Chinese courts, which I believe won't be changed as it involves the country's sovereignty," said a lawyer with Shanghai-based All Bright Law Offices, who only gave his surname Zhang.

Currently, half of All Bright's clients are multinational companies.

"Maybe some of our foreign clients will go to law firms from their own country, which may hurt part of our business. But the competition will benefit domestic law firms as the whole service level is improved," he added. "Who knows, maybe we will get more business as the whole legal environment improves."

(Shanghai Daily September 11, 2003)