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Sunday, September 20, 2020

Revising the law on foreign lawyers’ organizations and foreign lawyers

Updated: 15:24’ - 28/09/2011

Lawyer Vu Le Bang
Ho Chi Minh City Bar Association

The Law on Lawyers, which was passed on June 29, 2006, and took effect on January 1, 2007, has codified numerous provisions on professional practice in Vietnam by foreign lawyers’ organizations and lawyers, which had previously been scattered in different sublaw documents. With a whole chapter (Chapter VI) devoted to law practice by foreign lawyers’ organizations and foreign lawyers, it has removed limitations in the relationship between Vietnamese lawyers and foreign lawyers practicing in Vietnam.

Unlike some Asian countries such as the Republic of China and the Republic of Korea, where the legal service market is somewhat protected for domestic lawyers, Vietnam has opened up this market even before it joined the World Trade Organization (WTO).

As a result, since Vietnam became an official member of WTO, activities of foreign lawyers’ organizations in the country have strongly developed. According to the Ho Chi Minh City Department of Justice’s statistics, 45 foreign lawyers’ organizations from different countries are now operating in the city, most of which are prestigious and experienced in legal consultancy services.

With their long development history, large scale, abundant capital sources and good management, foreign lawyers’ organizations have reaped a lot of successes from the wave of foreign investment in Vietnam and its international integration. Most foreign investors come to law firms of their respective nationalities as they are well familiar with these clients’ culture and able to overcome the language barriers. So, it is understandable that when more and more foreign investors come to Vietnam, a lot of law firms, including such giants as Baker & McKenzie (the US), Freshfields Bruckhaus Deringer (the UK) and Nishimura & Asahi (Japan), follow suit. These foreign lawyers’ organizations have not only better satisfied the legal consultancy needs of foreign investors but also actively participated in the legal system building, administrative reforms and policy transparency in Vietnam. Moreover, the legal service market in Vietnam has been seething with higher and higher professionalism.

Foreign lawyers’ organizations in Vietnam are entitled to provide consultancy on foreign and international laws under the Law on Lawyers. In addition, foreign lawyers’ organizations in Vietnam can provide consultancy on Vietnamese laws through their Vietnamese lawyers or foreign lawyers who are qualified to advise on Vietnamese laws.

The operations of foreign lawyers’ organizations in Vietnam are highly appreciated. In its 2008 inspection report, the Ministry of Justice assessed that foreign lawyers’ organizations and branches operating in Hanoi such as Baker & McKenzie branch, Duane Morris Vietnam LLP, Freshfields Bruckhaus Deringer branch, and in Ho Chi Minh city such as Mayer Brown JSM and Gide Loyrette Nouel A.A.R.P.I. branch, had strictly observed Vietnamese law, had scientific working styles, yielded fairly high turnovers and fulfilled their financial obligations.

The Law on Lawyers permits foreign lawyers to directly provide consultancy on Vietnamese laws provided that they graduate from a Vietnamese law university and meet all requirements set for a Vietnamese lawyer (Article 76), in addition to their traditional practice of advising on foreign and international laws.

Foreign lawyers in Vietnam largely work in foreign lawyers’ organizations or branches. Some work for top Vietnamese law firms where their advantages in languages and professional working styles are brought into play. And only foreign lawyers who have graduated from prestigious law schools and practiced law for many years in countries with a developed judicial system can participate in complicated international transactions which are quite new to Vietnamese lawyers. Of course, they also badly need the local legal knowledge of their Vietnamese colleagues.

According to the Ministry of Justice’s figures, by the end of July 2011, some 85 foreign lawyers have been licensed to practice law in Vietnam. Yet, the actual number can be much higher as a number of foreign lawyers have not yet registered their practice with the Ministry of Justice or are working as in-house lawyers for businesses other than law firms, where they only need work permits and do not have to register their practice.

The opening up of the legal service market for foreign lawyers’ organizations and foreign lawyers has brought about precious opportunities for Vietnamese lawyers to further their profession, work in major international law firms and come into contact with foreign lawyers right in Vietnam. Meanwhile, professional activities of foreign lawyers’ organizations and foreign lawyers have contributed to boosting the competitiveness of the domestic legal service market and created a motive force for local law firms to develop themselves to be on par with foreign ones.

The Law on Lawyers has been appreciated as progressive, spurring the legal service market in Vietnam to constantly develop up to international level. However, its provisions, especially those on foreign lawyers’ organizations and lawyers, should be revised to attract more foreign investment and create a momentum for the Vietnamese economy to further develop. Such revision should focus on the following:

Forms of practice

The Law on Lawyers contains no provisions permitting foreign-invested law companies to be established in the form of partnership, which is very peculiar and common in the field of legal consultancy services. Meanwhile, it is provided in the Schedule of Specific Commitments in Services that foreign lawyers’ organizations may set up partnerships with Vietnamese law partnerships.

To ensure consistency, the Law on Lawyers should be added with provisions on the form of partnership between foreign lawyers’ organizations and Vietnamese law partnerships.

Moreover, it also needs to permit foreign lawyers to set up law firms in Vietnam so that clients can themselves select the ones they trust. It is true that the prestige, professional qualifications and professionalism of a law firm depend largely on the professional prestige and capabilities of its managing lawyer.

Financial capabilities of law firms

Under the Law on Lawyers, foreign law firms other than partnerships shall only bear limited liability for their operations. In order to ensure its conformity with the law on investment and guarantee foreign law firms’ minimum liabilities (in addition to compulsory professional liability insurance), the Law should set the minimum capital level for foreign lawyers’ organizations operating in Vietnam. Or it should require a report in the dossier of application for establishment of a foreign lawyers’ organization in Vietnam on the financial capability of the parent organization.

Transformation of unlimited liability firms into limited liability ones under Decree No. 87

The Law on Lawyers fails to define the transformation of foreign unlimited liability law firms set up under Decree No. 87 (Government Decree No. 87/2003/ND-CP of July 22, 2003, on professional practice by foreign lawyers’ organizations and foreign lawyers in Vietnam) into foreign limited liability law firms to operate under the Law on Lawyers. In reality, to carry out this transformation, a foreign law firm must submit a dossier of application for dissolution and the establishment of a new limited liability law company. Such procedures are complicated and time-consuming and entail legal consequences on contract liquidation, tax finalization, etc. Hence, the Law on Lawyers should be added with provisions permitting the direct transformation of foreign unlimited liability law firms set up under Decree  No. 87 into limited liability ones under the Law on Lawyers.

Scope of practice

By mid-2010, the Rouse Legal branch (a Vietnam branch of a law firm headquartered in the UK) proposed the Ministry of Justice to clarify the scope of its activities. It has been licensed to practice law in the fields of intellectual property, civil procedures, companies and commerce, finance and banking, and labor. Yet, when referring to Article 70 of the Law on Lawyers and Resolution 71 (the National Assembly’s Resolution No. 71/2006/QH11 of November 29, 2006, ratifying the Protocol on Vietnam’s Accession to the Agreement on Establishment of the WTO), the Rouse Legal branch hesitated about whether to take up cases related to the field of legal procedures because they thought that the legal provisions on the scope of practice by foreign law firms in Vietnam remained inconsistent.

Article 70 of the Law on Lawyers permits foreign lawyers’ organizations in Vietnam to “nominate Vietnamese lawyers in their organizations to advise on Vietnamese law or participate in legal proceedings in the capacity as representatives or defense counsels of the rights and legitimate interests of their clients before Vietnamese courts in cases or affairs on which branches of foreign lawyers’ organizations or foreign lawyers’ organizations provide legal consultancy, except criminal cases.”

Yet, under Resolution 71, branches of foreign lawyers’ organizations and foreign lawyers’ organizations in Vietnam “may not nominate foreign and Vietnamese lawyers in their organizations to participate in legal proceedings in the capacity as representatives or defense counsels of the rights and legitimate interests of their clients before Vietnamese courts.”

According to the Law on Promulgation of Legal Documents, Resolution 71 prevails over the Law on Lawyers. In a joint meeting to settle the problem, a representative of the Ministry of Justice affirmed that it was conformable to apply the provisions of Resolution 71 and later state management agencies would consider whether or not to permit Vietnamese lawyers in foreign lawyers’ organizations to participate in legal proceedings before Vietnamese courts.

This has once again prompted worries related to activities of foreign lawyers’ organizations in Vietnam. Is it necessary and reasonable to restrict Vietnamese lawyers working in foreign lawyers’ organizations in Vietnam from participating in litigation? Is it the main reason for “protecting” the service of representing clients in legal proceedings for domestic law firms? So, concerned ministries and sectors should early consider the possibility of permitting Vietnamese lawyers working in foreign lawyers’ organizations in Vietnam to participate in legal proceedings, thus contributing to the development of Vietnamese lawyers’ capability.

Time limit for grant of permits for foreign lawyers to practice in Vietnam

Under Article 82 of the Law on Lawyers, the time limit for grant of a professional practice permit to a foreign lawyer is 30 days after the receipt of a complete dossier and a fee. However, this duration proves to be too short in reality as the Ministry of Justice has to consult the Ministry of Public Security before granting a permit. So, it is necessary to set a time limit for consultation between the two Ministries or extend the permit-granting duration suitable to the reality in order to ensure enforcement of the Law.

The grant and management of seals

Many foreign lawyers’ organizations in Vietnam are still unclear about the grant and management of their seals, because foreign lawyers’ organizations or branches in Hanoi have their seals granted by the Ministry of Public Security while those in Ho Chi Minh City have their seals granted by the municipal Department of Public Security. So, is there any difference in the effect of these two types of seals?

For this reason, the Law on Lawyers or its guiding documents should clarify this matter in order to remove worries of foreign lawyers’ organizations about the effect of their seals.

Provisions on foreign lawyers working in Vietnamese or foreign-invested enterprises

The concept “in-house counsels” has become popular in Vietnam. Actually, they are lawyers working under labor contracts for companies or organizations other than law firms to advise these companies or organizations on legal matters. The demand for in-house foreign counsels in Vietnam has been on the increase, especially in multinational companies.

Yet, at present, Vietnamese law does not permit foreign lawyers to practice in this form but only to work in professional legal service-providing organizations while recognizing that lawyers practice law individually “by providing legal services for clients under legal service contracts or working for agencies or organizations under labor contracts” (Article 49) of the Law on Lawyers.

This restriction proves to be irrational as in reality foreign lawyers usually avoid such restriction by applying for work permits and sign labor contracts so they can work without the Ministry of Justice’s management.

For this reason, such unnecessary restriction should be removed as soon as possible to ensure that all practicing activities of foreign lawyers in Vietnam are licensed and uniformly managed.

Provisions that foreign lawyers may guide trainee lawyers

The Law on Lawyers does not specify whether or not foreign lawyers already licensed to practice law in Vietnam may instruct trainee lawyers. However, to create opportunity for trainee lawyers to learn international experience in the field of legal consultancy, the Law should contain specific provisions permitting foreign lawyers who have already been licensed to practice law in Vietnam and advise on Vietnamese law to instruct trainee lawyers.

Foreign lawyers’ compulsory presence in Vietnam

As per Point c, Clause 2, Article 77 of the Law on Lawyers, foreign lawyers must be “regularly present in Vietnam.” The question is that what does regular presence in Vietnam mean? Are foreign lawyers practicing law in Vietnam residents under the Law on Personal Income Tax (namely, living in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the date they appear in Vietnam)? Or do they have to be present in Vietnam throughout the period they are licensed to practice law indicated in their practice permits.

Such unclear provisions cause difficulty not only to management agencies themselves in the supervision of foreign lawyers but also to foreign lawyers in the observance of Vietnamese law. So, this matter should be clarified in the revised Law on Lawyers which is expected to be passed by the National Assembly at the end of next year.-

VNL_KH1 

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