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Cablegate: Shanghai Bar Association President Concern About Competition

VZCZCXRO7817
RR RUEHCN RUEHGH
DE RUEHGH #0254/01 1840611
ZNR UUUUU ZZH
R 020611Z JUL 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6961
INFO RUEHBJ/AMEMBASSY BEIJING 1949
RUEHCN/AMCONSUL CHENGDU 1282
RUEHSH/AMCONSUL SHENYANG 1280
RUEHGZ/AMCONSUL GUANGZHOU 1253
RUEHHK/AMCONSUL HONG KONG 1422
RUEHIN/AIT TAIPEI 1091
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 7526

UNCLAS SECTION 01 OF 02 SHANGHAI 000254

SENSITIVE
SIPDIS

DEPT FOR EAP/CM, INR/B

E.O. 12958: N/A
TAGS: PGOV PHUM SOCI ECON CH
SUBJECT: SHANGHAI BAR ASSOCIATION PRESIDENT CONCERN ABOUT COMPETITION
FROM FOREIGN LAW FIRMS, BUT EAGER FOR INTERNATIONAL COOPERATION

REF: 2007 SHANGHAI 770

(U) This cable is sensitive but unclassified and for official
use only. Not for distribution outside of USG channels or via
the internet.

1. (SBU) Summary. In a June 26 meeting with ConGenoffs, newly
appointed Shanghai Bar Association (SBA) President Liu Zhengdong
expressed his concerns about the increase in the number of
foreign law firms operating in Shanghai in direct competition
with local Shanghai firms. He acknowledges, however, that
competition between foreign and local firms has improved the
quality of legal services in Shanghai and is open to allowing
foreign law firm lawyers to join the SBA. He also welcomes more
international exchanges and legal cooperation especially in the
area of IPR protection and legal issues connected with the 2010
World Expo in Shanghai. At 38 years of age, Liu is one of the
youngest people to serve as SBA President. He is also a
Shanghai Municipal Peoples Congress (MPC) representative and
appears to have close ties to the local government. End Summary.

Too Few Lawyers
---------------

2. (SBU) On June 26, Political/Economic Section Chief, PolOff
and FSN Rule of Law Coordinator (ROLC) met with Shanghai Bar
Association (SBA) President Liu Zhengdong. Appointed as SBA
President on April 20, Liu is eager to provide more
opportunities for SBA members to participate in international
exchange programs and increase the amount of legal expertise in
Shanghai on international economic legal issues, including
international trade, finance, IPR, and merger and acquisitions.
Liu noted that the Shanghai Government considers the development
of legal services as an important part of its overall goal of
turning Shanghai into a leading service provider center on par
with cities like New York. While there are numerous foreign law
firms providing high-level economic services, there are
relatively few local Shanghai lawyers, approximately 20 percent,
practicing in these areas, Liu said. In addition, the number of
Shanghai lawyers is relatively small in comparison to Beijing
and Guangzhou. There are 16,000 and 15,000 local lawyers in
Beijing and Guangzhou respectively, but only 9,000 local lawyers
in Shanghai. Liu attributed Beijing's high number to that
city's role as national capital and seat of law- and
rule-making, while Guangzhou is close to Hong Kong and home to
much of China's earliest economic progress in the 30 years of
reform and opening up.

Too Much Competition
--------------------

4. (SBU) Former SBA President Lu Hongbing was very aggressive
in trying to curtail the permitted activities of foreign law
firms in Shanghai. He issued a letter asking the Bureau of
Justice to be more active in policing foreign law firms. While
it is unclear whether Liu will be as active, he does harbor some
concerns about the increase of foreign law firms in Shanghai.
Many foreign firms are in direct competition with local Shanghai
firms for money and talent. Last year, of the 4 billion RMB
(588 million USD) in legal fees received by law firms in
Shanghai, half (2 billion RMB/ 294 million USD) was received by
foreign law firms. It is also difficult for local law firms to
compete with large foreign law firms for personnel. Liu also
noted that there are many Beijing-based and Guangzhou-based law
firms operating offices in Shanghai that also compete with local
firms. Pol/Econ Chief stressed the importance of being open to
foreign law firms and other professional services firms as their
expertise and the competition they provide can help propel local
economic development and support Shanghai's goal of becoming an
international services center. Liu admitted that the
competition from foreign firms improves the quality of legal
services available in Shanghai. Liu is eager for more
interaction between foreign law firms and local firms. He
indicated interest in allowing foreign law firm lawyers to join
the SBA and participate in SBA activities.

The New Lawyer Law
------------------

5. (SBU) Liu applauded the new Lawyer law that went into effect
from June 1 (reftel). He is particularly pleased by provisions
in the law that provides lawyers with more rights to interview
clients and protects the free speech of lawyers during court
trials. However, when asked about recent press reports that at

SHANGHAI 00000254 002 OF 002


least two lawyers in Beijing lost their licenses for agreeing to
defend clients involved in sensitive cases, Liu said that he did
not know about those cases or the reported loss of licenses to
practice. However, in his opinion, there is very little that a
bar association can do in these situations since the Bureau of
Justice, and not the local bar association, is responsible for
revoking licenses.

Increasing Political Influence of Lawyers
-----------------------------------------

6. (SBU) Liu told interlocutors that Shanghai lawyers are
playing a greater role in local politics and there are now 114
lawyers, including himself, who serve as representatives in the
Shanghai Municipal People's Congress (Shanghai MPC) and/or the
Shanghai's Chinese People's Political Consultative Conference.
These lawyers have been active in drafting laws and also provide
advice to the local government by submitting comments on drafts
or participating in Shanghai MPC committees. Liu predicted that
in the future lawyers will become even more active and play an
increasingly important role in the legislative process. The SBA
also regularly exchanges views with the Shanghai MPC.

Welcome More Training and Exchanges
-----------------------------------

7. (U) Every year the SBA spends RMB 4 million (almost USD
600,000 at the end-June exchange rate) on legal training
programs for its members. Shanghai lawyers are also required to
attend 40 hours of classes at an SBA training center. That SBA
training center has a cooperative relationship with the Shanghai
College of Politics and Law. Liu would like to strengthen these
programs and is interested in increasing exchanges and
cooperation with U.S. legal experts. He especially welcomes
training in connection with IPR issues and the Shanghai 2010
World Expo.

Biographic Information
----------------------

8. (SBU) At 38 years of age, Liu is one of the youngest persons
to serve as President of the SBA. He specializes in real estate
and is a senior partner of the Shanghai Junyue Law firm. He
graduated from East China University of Politics and Law in
1991. After graduation, he served as a prosecutor for three
years in the Shanghai Railway Prosecutor's Office. Liu appears
to have close ties to the government and has served as a
representative to the Shanghai MPC since 2003. He is a member
of the Communist Party. Liu has never been to the United
States, although he has visited Australia and Europe several
times. He does not appear to speak English.
JARRETT

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