• Hong Kong's exports of legal services amounted to US$121 million (HK$943 million) in 2006 as the earlier figures show, up by 17.3% from 2005. Asia was the most important region of destination, accounting for 47.3% of the total legal services exports in that year. In particular, the Chinese mainland was the largest market in Asia, contributing 32.6% of the total service export.
• Hong Kong's legal services sector plays a pivotal role in satisfying the professional services needs associated with mainland-related investment. Seven out of the top 10 legal advisors (in 2007) in Asia's M&A (ex-Japan) deals have a significant presence in Hong Kong. Six of them have set up their law firms in Hong Kong and one has a registered foreign law firm here.
• The special arrangements under CEPA and simplified procedures for mainland enterprises to set up offices in Hong Kong also help boost the demand for a wide range of professional services provided by Hong Kong law firms.

The Legal System in Hong Kong

Hong Kong has become a Special Administrative Region of the People's Republic of China (the PRC) since 1 July 1997. Under the principle of "One Country, Two Systems", Hong Kong's previous legal system has continued in place.

The Basic Law of the Hong Kong Special Administrative Region (the HKSAR) was enacted by the National People's Congress in accordance with the Constitution of the PRC. It is akin to a mini-constitution for the HKSAR, and took effect on the establishment of the HKSAR.

Under the Basic Law, all the laws previously in force in Hong Kong shall be maintained, except for any that contravene the Basic Law and subject to any amendment by the HKSAR legislature. National laws of the PRC shall not be applied in the HKSAR except for a number of such laws relating to defence and foreign affairs which are listed in the Annex III to the Basic Law.


The Legal Profession in Hong Kong

The legal profession in Hong Kong is divided into two distinct branches, namely solicitors and barristers. Solicitors have limited rights of audience before the courts, whereas barristers have unlimited rights of audience in all courts. Lawyers practising within one branch of the profession are not, at the same time, allowed to practise within the other. Organizations governing the professional standard of solicitors and barristers are, respectively, The Law Society of Hong Kong and Hong Kong Bar Association.

While the majority of members of the legal profession are engaged in private practice, a significant number work in one of the Government legal departments, or are employed as legal advisers to public or private companies, or engaged in teaching and research at one of Hong Kong's tertiary institutions.

Moreover, Hong Kong's legal market is no longer dominated by domestic players. Local firms employed more than half of the 1,041 registered foreign lawyers from 26 jurisdictions. In 2007, more than half of The Am Law Global 100 Law Firms (The American Lawyer, October 2007) had practices in Hong Kong, with some 30 of these firms having localized their practices as Hong Kong solicitor firms.


Number of Barristters

Source: Hong Kong Bar Association


Number of Solicitors and Firms

Source: The Law Society of Hong Kong

Exports of Services

According to the latest available figures, Hong Kong's exports of legal services amounted to US$121 million (HK$943 million) in 2006, up by 17.3% from 2005. In 2006, Asia remained the most important region of destination, accounting for 47.3% of the total legal services exports. This was followed by North America (23%) and Western Europe (23%). In Asia, the Chinese mainland was the most important market, contributing 32.6% of the total services export in that year and was up by 14.1% from 2005.


Performance of Hong Kong's Exports of Legal Services

Source: Census and Statistics Department


Hong Kong's legal services sector plays a pivotal role in satisfying the professional services needs associated with mainland-related investment. While China is the largest mergers and acquisitions (M&A) market in Asia, seven out of the top 10 legal advisors (in 2007) in Asia's M&A (ex-Japan) deals have a significant presence in Hong Kong. Six of them have set up their law firms in Hong Kong and one has a registered foreign law firm here.

In a recent survey of law firms in Hong Kong conduced by TDC, 83% of the respondents have conducted cross-border commercial transactions. Besides, almost 80% of the respondents indicated there are good and steady business prospects with regard to cross-border commercial transactions in the next three to five years.

Meanwhile, Hong Kong law firms have established a strong international-mainland business network and clientele. In the TDC survey, close to 70% of the respondents have served mainland clients, and 70-80% of the respondents have served foreign clients in other overseas markets.


Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA)

As a member of the WTO, China has improved market access conditions for foreign firms to the mainland's legal sector. Nevertheless, the special arrangements under CEPA and simplified procedures for mainland enterprises to set up offices in Hong Kong further boost the demand for a wide range of professional services provided by Hong Kong law firms.

Since the implementation of CEPA in 2004, the mainland has opened up its market to Hong Kong's legal service sector. Among the provisions, the residence requirement for representatives of representative offices of the Hong Kong law firm in the mainland has been relaxed; Hong Kong permanent residents are allowed to sit the National Judicial Examinations; Hong Kong lawyers are allowed to be employed as legal consultants by mainland law firms; and restrictions on association between Hong Kong and mainland law firms have been relaxed. Additionally, CEPA recently has waived the regional restriction on Hong Kong law firms in associations on the mainland.

As at end 2007, more than 10% of local firms had set up 75 representative offices on the mainland. Beijing, Shanghai and Guangzhou are the most popular destinations, accounting for about 80% of all representative offices. Besides, six of them had entered into association arrangements with their mainland counterparts, such as Woo Kwan Lee & Lo.

In 2007, 143 Hong Kong residents had sat National Judicial Examinations. Hong Kong legal practitioners who pass this examination are allowed to engage in non-litigation legal work in mainland law firms.