Thursday, June 28, 2007

Time to Raise the Professional Ethics Bar for Chinese Lawyers?

You bet!

Undoubtedly, many Chinese lawyers adhere to their code of professional conduct, and they operate with utmost ethical conviction. Co-existing with such honorable professionals in China is, however, an often times unclear set of ethical rules insufficient in regulating a fast growing profession—lawyering. At the end of 2006, China had more than 130,000 lawyers and 13,000 plus lawyer firms. Law on Lawyers of the P. R. China (“Current Lawyer’s Law”) was last amended in 2001. Rules of Professional Ethics and Discipline (“Ethics Rules”) was accordingly revised in 2001 to reflect the changes in the law. On June 24, 2007, amendments to the Old Lawyer’s Law were discussed and some higher standards might be adopted for Chinese lawyers.

Duty of Loyalty

Under the Current Laywer’s Law and Ethics Rule, a lawyer is forbidden to represent both sides of the same conflict. Similar to the American Bar Association Rules (“ABA Rules”), the Chinese rule is a bright line rule, disallowing representation where a concurrent conflict of interests is present.

The new proposed law adds some more restriction to a lawyer’s scope of representation. It requires a lawyer to avoid conflict of interests in joint representations, and to shun conflicts between the lawyer, his close families, and the lawyer’s clients. See Article 43 Draft Amended Law on Lawyers 2007. Obviously, this is a big problem in China where family ties are stronger than those of some other countries, and a close relationship generates a higher possibility for conflict of interests where the lawyer and his client’s interests diverge if the lawyer’s family members are involved in the same transaction in question. This additional requirement is, to my mind, a bold step toward clearly drawing the line in the sand for the lawyer where conflict of interest might surface in his/her practice.

Furthermore, the new amended law expressly calls for lawyers to conduct conflict checks prior to representation. In actual practice, many lawyers probably have already been doing this to avoid conflicts. However, an affirmative duty to run a conflict check sets a bright line rule easier for all to see and follow.

Unfortunately, this amended law still does not address loyalty to former clients. The ABA Rule 1.9 states that a lawyer shall not represent new client in the same or substantially related matter whose interests are materially adverse to a former client absent written informed consent from a former client. Without the affirmative duty of loyalty to former clients, a lawyer can turn on his own clients while not offending his duty of confidentiality to them. Hopefully, this issue would be raised before the formal adoption of the new Law.

Duty of Confidentiality—(to be continued…)

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