(Viewpoint) Ronald Sum: What move will Hong Kong Lawyers make for themselves? A buffet for the legal professionHong Kong | 30 Jun 2021 1:09 pm
Many would agree that Hong Kong has seen great success in positioning itself as an international legal hub – when it comes to global law firms, accredited institutions, high-profile transactions, legal professionals, an established legal system, all the boxes can be ticked. However, is the above a longstanding success formula, which Hong Kong’s status and competitiveness has long been steadily built upon, starting to crack under the pressure of persistent tug of war from both external and internal forces?
How will the city’s legal professionals make their mark in a time where the world is shifting under their feet?
Undeniably, the legal landscape of Hong Kong has changed dramatically, and will continue to change in such a manner. One of the most notable changes is the ratio of lawyers to (potential) clients. Compared to around 1,000 legal practitioners 50 years ago, the number has now multiplied by almost 10 times, however, the population has only increased by about 3 times from 2.5 to 7.5 million. From a purely statistical standpoint, the supply of legal services has outgrown the demand. Moreover, with an ongoing immigration wave and the problem of ageing population, this decreases further both the existing and potential client base for legal services derived from the local Hong Kong market. The main pillars of Hong Kong’s economy have also seen dramatic changes. Before 1997, the property market was the talk of the town. As development projects and transactions skyrocketed, so did transactions and disputes. As the market matures, transactions become standardized and simplified with less disputes. It is not difficult to see how lawyers that have witnessed the prime of the legal industry, need to adopt to changes to the legal landscape.
How should the legal industry counter a slowly declining client base? With a continuously growing supply of legal professionals in Hong Kong, the answer is fairly simple – to level the demand - supply proportion. When the local market cannot sustain the demand, the solution is to look beyond Hong Kong, strategically casting our nets to other jurisdictions by making use of the locational and diplomatic advantages of Hong Kong.
Unsurprisingly, the Greater Bay Area (‘GBA’) plan is a force to be reckoned with. The ambitious GBA plan aims to cluster 9 Chinese cities, Macao SAR and Hong Kong SAR. With a population of over 70 million, a combined GDP of about US $1.6 trillion, which could rival top economies in Asia, and a GDP per capita nearly double that of many cities in the Mainland, the potential of the GBA cannot be denied. As one of the most prominent and designated core cities in the GBA plan, Hong Kong is uniquely positioned to not only play a pivotal role in boosting overall economic development in the GBA, but also capitalize on the opportunities available. With the advantages of a common law jurisdiction, low tax rates and highly skilled labor best known for their efficiency flexibility and hardworking culture. Hong Kong is perfect for the role of a springboard in and out of the GBA, not to mention its geographical location also, in which Hong Kong has been well-placed to connect the West with the booming 10 mainland cities. By encompassing the skyrocketing volume of trade and economic activity that occurs between the two, Hong Kong is expected to play a significant role in facilitating and capitalizing on these opportunities. Just to illustrate the immense potential of the GBA, in 2018, the total Initial Public Offering (‘IPO’) related legal services fees had exceeded HKD1.3 billion, with the list of companies choosing to list in Hong Kong, up to approximately 100 counties awaiting their listing in 2020 collectively valued at over USD120 billion. With various multinational companies acknowledging the strengths of Hong Kong as a springboard, the trend of a more high-profile deals and frequent transactions will bring about an elevated status for Hong Kong, attracting more companies to do business here in Hong Kong. This should offer some solace to legal professionals.
The market opportunities brought by GBA truly cater to legal professionals of various levels and sectors. If multi-million dollar deals are not "your cup of tea", or the businesses that are coming in from GBA just do not seem to hit the spot, there is another option: Hong Kong legal professionals can always go to the GBA to seek for their own opportunities. Numerous corporate bodies, NGO’s and especially government bodies (such as the Trade Development Council, Department of Justice) have rolled out funding and employment opportunities and schemes with big Chinese names such as Alibaba, Tencent, to subsidize the talent in Hong Kong to acquire insight and knowledge by working in the GBA. The Greater Bay Area Youth Employment Scheme offered by the HKSAR government provides placement schemes for youth to explore their own career pathway, offering not only financial certainty but also a sense of familiarity to help those who are interested settle down in the GBA. The legal qualifying exams for Hong Kong legal practitioners to obtain GBA practicing status initiated by the Hong Kong Government and the Department of Justice provide a pathway to practice GBA laws in the GBA.
Aside from the GBA, a discussion on Asia as an economic giant would be amidst without including the Association of South East Nations (‘ASEAN’). The 10 nations involved, including Singapore, Malaysia, Thailand, Vietnam etc., in this economic integration amass a population of 630 million and a combined GDP of $2.4 trillion, which would make it the 5th largest in the world. It would be inappropriate for Hong Kong to overlook our ASEAN neighbours. In 2019, ASEAN was Hong Kong’s 2nd largest trading partner in merchandise trade, and the 4th in services trade in 2018. With a total trade between Hong Kong and the ASEAN amounting to HKD1,018 billion in 2019, this brings about a foreseeable expansion in agreements made between the two to accommodate for increased economic activity. With more trade in services, investment, technical co-operation, demand for legal services will undoubtedly increase, such as dispute resolution, compliance and general corporate and commercial works. As many of these ASEAN countries are involved in the "Belt and Road" initiative, in which Hong Kong is also poised to play a crucial role, such "interconnectedness" and the familiarity of Hong Kong with the ASEAN countries creates a favorable and conducive environment for the legal industry to thrive. The career possibilities are endless.
Conversation on the prospect of legal development in Hong Kong would be incomplete without mentioning the qualities of the legal professionals themselves. Despite the everchanging circumstances, the admirable quality of flexibility and efficiency and hard work culture is shared and ingrained among the Hong Kong people. These characteristics has allowed a small, yet mighty, city of Hong Kong to transform itself from a quiet, unassuming fishing port to one of the most competitive global economies. As Hong Kong displays firmness and resilience against the test of economic downturns and competing economies, the crucial qualities of flexibility, efficiency and hardworking nature has not been given its due credit in sustaining Hong Kong’s reign in the legal industry.
Given that the ‘flexible, efficient, hardworking’ brand is pivotal to Hong Kong’s success at various stages of economic development, legal professionals should pride themselves on these qualities, harnessing these strengths as legal service providers and ultimately, Hong Kong’s international legal hub status. Hong Kong should be active in sourcing economic opportunities externally, extending their 'customer base' by expanding their services scope to all jurisdictions.
A successful brand does not, in itself present economic opportunities on a silver platter – effective marketing goes hand-in-hand with branding. This poses two important considerations:
How should the Hong Kong legal professions 'open up more doors'; and Who will 'lead the change' for the Hong Kong legal practitioners?
Given that our competitors continue to excel in the services sector, it is necessary for the Hong Kong legal profession to act fast and take the lead in establishing and reaffirming Hong Kong’s leading status in the provision of legal services. The Department of Justice, The Law Society of Hong Kong, The Hong Kong Bar Association, Invest HK, The Hong Kong Trade Development Council, The 23 Hong Kong Economic and Trade Offices, to say just a few, should co-ordinate further to promote the Hong Kong legal professions in all areas of the law. As competition in the legal industry remains intense, no city wishes to play a game of catch up. Combining a good rule of law system with "top of the class" legal professionals, such environment will no doubt attract businesses to Hong Kong and thereby extending the 'customers base' even further.
Being a Hong Kong solicitor, the Hong Kong Law Society consisting of around 12,500 legal practitioners can be tasked to sustain the long-term marketing and developing plan. The Hong Kong Law Society enjoys a high degree of representation, and are equipped with the capacity to communicate, seek and provide benefits for their members, such as negotiating and sourcing deals, as well as connecting clients that are most relevant to the members best interests. From hosting networking opportunities, conferences and discussion panels, these activities provide both immediate and long-term advantages to members of the legal industry in Hong Kong. Not only will practitioners be presented with opportunities to cast a wider net over a bigger pool of potential clients, these networking opportunities allow them to further establish, refine and thus market their niche practice areas to the global markets.
With uncertainty consistently looming over Hong Kong, some people are compelled to take the easy way out by passively ‘hoping for the best’. However, Hong Kong is no ordinary city. Succumbing to the raging storms was never a chapter in the history books of Hong Kong, and there will not be one in future installments. Throughout the years, Hong Kong has always embraced the uncertain, and ultimately continuing to march on in face of adversity, boats against the tide, weathering one storm after another. By adopting the legacy so unique to the people of Hong Kong, the Hong Kong legal profession will no doubt "ride out the storm" and emerging to become even more powerful and stronger. The Hong Kong legal professionals should be proud of themselves.
About Ronald Sum
Ronald is a senior partner of Addleshaw Goddard. He is qualified as a solicitor in Hong Kong, England and Wales and Australia. He is a fellow member of the Hong Kong Institute of Arbitrators and the fellow member of the Chartered Institute of Arbitrators. He is the immediate past chairman of the International Chamber of Commerce: Arbitration and ADR Sub-Committee. He is also a council member of the Hong Kong International Arbitration Centre.