LegCo Paper No. CB(2) 343/96-97
(These minutes have been seen
by the Administration)
Ref : CB2/BC/47/95

Minutes of the First Meeting of the Bills Committee on the Legal Services Legislation (Miscellaneous Amendments) Bill 1996

held on Wednesday, 16 October 1996 at 8:30 am in Conference Room A of the Legislative Council Building

Members Present :

Members Absent :

Public Officers Attending :

Mr R C ALLCOCK: Deputy Law Officer, Attorney General's Chambers (AGC)
Mr Wesley WONG: Senior Crown Counsel, AGC

Clerk in Attendance :

Mrs Betty LEUNG: Chief Assistant Secretary (2)3

Staff in Attendance :

Mr Jimmy MA: Legal Adviser
Miss Flora TAI: Senior Assistant Secretary (2)3

I. Election of chairman and deputy chairman

II. Meeting with the Administration

III. Written submissions on the Bill

IV. Date of subsequent meetings

I. Election of chairman and deputy chairman

Mr Fred LI and Mrs Selina CHOW were elected chairman and deputy chairman of the Bills Committee respectively.

II. Meeting with the Administration

2. The chairman said that the Secretariat had issued a list of documents previously sent to members in relation to the Bill (issued vide LegCo Paper No. CB(2) 109/96-97). The chairman then invited members view on how to scrutinise the Bill. Miss Margaret NG said that she had suggested to split the Bill such that the more urgent matters (such as provisions relating to the appointment of "Senior Counsel" by reason of the change of sovereignty and the technical amendments to facilitate the functioning of the Barristers Disciplinary Tribunal) could be dealt with first, while the more fundamental matters (which included the scale fees, multi-disciplinary practices and solicitor corporation) could be discussed at greater length. Mr Ronald ARCULLI suggested that the Administration should be invited to indicate the urgency of individual proposals in the Bill for members reference. Ms Emily LAU opined that it might not be appropriate for the Bills Committee to set priority for different provisions at such an early stage, although the Bills Committee could consider postponing specific proposal if so warranted in due course.

Overview of the Bill

3. At the invitation of the chairman, Mr R ALLCOCK explained that among other things, the Bill sought to implement five of the several legislative proposals in the Report on the Consultation Exercise and Proposals for the Way Forward (the Report) published in February 1996. He briefly gave an overview of the Bill. These five proposals were: solicitors incorporated practices, interest on solicitors clients account, solicitors multi-disciplinary practices, invalidation of contractual requirement for buyers to pay vendors legal costs, and abolition of scale fees for conveyancing . The Administration had since the gazettal of the Bill received a submission from the Hong Kong Bar Association (the Bar) on the new criteria for admission as a barrister and would take action to add relevant provisions to the Bill by way of Committee Stage amendment, hopefully, within the next two months. He also briefed members on other amendments to the Legal Practitioners Ordinance as contained in the Bill. They related to the new status of Senior Counsel, minor amendments in respect of the Barristers Disciplinary Tribunal, broadening of the composition of the Costs Committee, and the prohibition of the Costs Committee from making new scale fees for conveyancing work. Mr ALLCOCK informed members that the Administration was actively considering whether or not to put forward the proposal on the extension of the solicitors rights of audience, since further studies on it had been completed. (Reports on the "Public Opinion Survey on Extension of Solicitors Rights of Audience" and on "The State of the Bar in Various Commonwealth Jurisdictions" had been submitted to the LegCo Panel on Administration of Justice and Legal Services (issued vide LegCo Paper Nos. CB(2) 1662/95-96 and 1843/95-96 respectively)). He stressed that most of the proposals in the Bill were well-received by the legal profession and the public. It would not be in the public interest to shelve certain proposals just because of their controversy. He also informed the meeting that since an authentic Chinese text of the Legal Practitioners Ordinance (Cap. 159) had been gazetted, the Administration would prepare the Chinese text of the relevant part of the Bill which would be ready for members reference in the next month.

Adm
Adm

4. The chairman then invited questions from members on the Bill, and asked Mr ALLCOCK to respond to them. The gist of the discussion is summarised in the following paragraphs.

Solicitors incorporated practices and multi-disciplinary practices

5. Mrs Elizabeth WONG asked whether the solicitors incorporated and multi-disciplinary practices as proposed in the Bill were inter-connected and if so, whether they would have an impact on the independence of the legal profession and the quality of its service. Mr ALLCOCK responded that these two proposals were related to the extent that the Administration believed that the greater variety of ways in which legal services were delivered, the more the public would benefit from greater choice and flexibility. It would also be in the interests of the legal profession itself, as it would be able to compete more effectively with other professions. Yet these two proposals could be adopted separately. As regards the quality of service, the importance of which the Administration was fully aware of, the Law Society of Hong Kong (the Law Society) would have to ensure that proper safeguards were in place by way of making rules to avoid the standard of legal services being eroded. Mrs WONG further asked and Mr ALLCOCK confirmed that the Law Society supported both proposals.

6. Mr Albert HO said that the proposals would bring about fundamental change to the legal profession and he was concerned that the Bill did not even provide for a broad framework of governance, fundamental rules or basic safeguards for these practices. Mrs Selina CHOW and Mrs Elizabeth WONG shared the concern. Mr HO queried whether it was appropriate to leave these matters to the Law Society simply on the grounds that (a) the Chief Justice had the ultimate authority to approve the rules and (b) the LegCo had the power to veto the rules by way of negative legislative procedure. He stressed that it was of primary importance to ensure that the public interest, besides the legal professions interest, was properly represented. Mr ALLCOCK suggested that positive legislative procedure could be adopted to ensure LegCos control over these matters. He informed members that the proposed provisions for solicitors multi-disciplinary and incorporated practices were similar to the provisions in the existing legislation of the United Kingdom. In this regard, Mr HO suggested the Administration to provide information on the form of legislation in other common law jurisdictions in respect of these practices. Mrs Elizabeth WONG further asked and Mr ALLCOCK agreed to inform members of the outcome of the enactment of legislation on solicitor corporations and multi-disciplinary practices in other jurisdictions. Miss Margaret NG also requested the Administration to provide information as to whether the legislature of the United Kingdom (UK), before enacting the enabling legislation, had discussed and reached understanding with the UK Administration on all related key issues, safeguards and dangers.

Adm
Adm
Adm

7. Miss Margaret NG then put forward a number of questions regarding the solicitors incorporated and multi-disciplinary practices for the Administration to reply in writing and for future discussion, as follows :

whether the proposed provisions for solicitor corporations in the Bill followed the pattern of the provisions and the form of rules of the Professional Accountants Ordinance (Cap. 50);
whether the proposed provisions would have the same effect as those provisions of the Professional Accountants Ordinance;
what were the perceived advantages of the proposed multi-disciplinary practices from the angles of the professions and the public;
what professions would be allowed to form partnership with solicitors and who would decide on these professions;
how would such partnership affect the solicitors indemnity insurance and whether the existing solicitors indemnity insurance would cover liabilities incurred by the solicitors or solicitor corporations in multi-disciplinary practices;
whether the Law Society would have the power to investigate and discipline the solicitors multi-disciplinary practices;
who would decide and what would be the fees and rules of these practices;
how would these practices affect the current rule that solicitors were not allowed to share fee and profit with unqualified persons; and
what were the conceived structure, rules and general safeguards regarding the governance of the operations of the proposed practices.

Mr ALLCOCK assured members that there were general safeguards to protect the public interest. The rules would not be a matter for the Law Society and the Administration only. They had to be approved by the Chief Justice and would have to be tabled at the LegCo in the form of subsidiary legislation. However, it would be of primary importance at the present stage to reach consensus regarding the governance of these practices in principle.

Adm

Foreign lawyer corporations

8. Miss Margaret NG enquired about mandatory indemnity insurance for foreign lawyers corporations so as to protect the interest of the consumers. Mr ALLCOCK responded that the matter would be dealt with in the rules to be made. He would further comment on the issue in his written reply.

Adm

Appointment of Queens Counsel

9. Miss Margaret NG asked about the progress of discussion between the Bar and the Administration regarding the status of Queens Counsel and the gist of discussion and differences about the criteria for appointment of senior barrister. Mr ALLCOCK informed members that the Administration differed from the Bar regarding some principles. He explained that the Bar proposed : (a) a requirement of ten years experience as a barrister before admitted as a Senior Counsel; (b) different appointment criteria for practising Senior Counsel and practising Honorary Senior Counsel; (c) that visiting Queens Counsel in the future would not be given honorary status; (d) inclusion of the years of standing as one of the expressed criteria for appointment; and (e) whether rules needed to be made in relation to appointment. He added that the Judiciary took the same view as that of the Administration on these matters.

Scale fees

10. Mrs Miriam LAU referred to the fact that the Law Society had proposed a new scale of fees for discussion by the Costs Committee in the following month and asked whether this recent development would have any bearing on the scrutiny of the Bill. Mr ALLCOCK responded that these were separate issues, since the jurisdiction of the Costs Committee was limited to making or amending rules and it had no power to abolish the scale fees. In response to Miss Margaret NG and Miss Christine LOHs enquiries, Mr ALLCOCK said that the Director of Lands represented the Administration as a member of the Costs Committee. However, only the Law Society was in a position to collect empirical data to back up any review of the scale fee. He informed the meeting that the Administration had never said that the present Scale Fee Scheme was excessive because it did not have the necessary empirical basis to make such a judgement. He further agreed to reply in writing as to (a) how the Costs Committee operated; (b) its terms of reference, membership, functions and role; and (c) the convenor for its meetings. He said that the Administration took the view that the proposed scale fees were still anti-competitive and consumers would not have the benefit of real competition until scale fees were abolished. He cautioned that (a) the amount of competition within the proposed scale structure was very narrow; (b) the new proposal was less generous to consumers than previous proposals put forward by the Law Society; and (c) it involved increase in certain fees. Mrs LAU asked for the basis on which the Administration had reached such conclusion. She also asked about the acceptable level of competition. Mr ALLCOCK replied that it was a matter of judgement. Although the scale fees were based on property prices, he pointed out that the Law Society had not provided any empirical data to demonstrate that the fees were realistically and reasonably linked to the amount of work done.

11. Miss Christine LOH asked and Mr ALLCOCK remarked that scale fees for conveyancing work could not be compared with the rates of stamp duty, since the latter was taxation and not a fee for service provided. At Miss Margaret NGs request, Mr ALLCOCK undertook to provide information on the fees of estate agents and on whether any survey had been done on the consumers opinions on the fees. He added that estate agents fees were not statutory. Mr Ambrose LAU asked whether the Administration would accept a new Scale Fee Scheme which allowed a level of competition. Mr ALLCOCK said that the Administration would give serious consideration to any proposal which could satisfy the two criteria of competitiveness and fairness to consumers. Mrs Selina CHOW asked whether the Administration would consider the concept of scale fee as anti-competitive. Mr ALLCOCK replied that there was no definite answer to the question although he would regard a Scale Fees Scheme which had no reference to overheads as being unfair. He stressed that the Administration was not negotiating with the Law Society to lower the scale fees. Miss Margaret NG, supported by Mrs Elizabeth WONG, commented that the Administration should strike a right balance between the desire for competition and the protection of consumer interest. Miss NG urged the Administration to consider what system of safeguards should be put in place if the Scale Fee Scheme was abolished. Mr ALLCOCK remarked that the Law Society as the professional body had the obligation to control the standard and quality of services in the profession.

Adm
Adm

12. Mrs Selina CHOW asked about the basis of the Administrations decision to abolish the scale fees since the decision would lead to a fundamental change for the legal profession. She queried whether there was any empirical data to demonstrate that consumers strongly desired such direction. Mr ALLCOCK pointed out that about half (46.6%) of the respondents to the public opinion survey (p.15 of the Report) who had consulted lawyers before were dissatisfied with the Scale Fee Scheme. Apart from those submissions from the Law Society and individual solicitors, only four written submissions rejected the proposal.

13. Mr ALLCOCK undertook to provide the requisite information in paragraphs 6, 7, 8 & 11. Miss Margaret NG also agreed to provide a list of the questions she had raised at the meeting for members information.

(Post-meeting notes : Miss Margaret NG provided the list of questions on26 October 1996, which was issued to members vide LegCo Paper No. CB(2) 251/96-97.)

Adm
Miss Margaret NG

III. Written submissions on the Bill

14. Members agreed that the Clerk should write to the institutions which made submissions on the Consultation Paper on Legal Services (as listed in the Annex to the Report) to invite their written submissions and oral representations to the Bills Committee. Members further agreed that the Clerk should issue a press release to invite public submissions as well.

(Post-meeting notes : Twenty letters were issued on 18 and 19 October1996 and the press release on 20 October 1996.)

Clerk
Clerk

IV. Date of subsequent meetings

15. At the chairmans suggestion and to facilitate scrutiny of the Bill, members agreed to discuss the Bill in appropriate grouping of the provisions as set out in para. 20 of the LegCo Brief. Members agreed that the next meeting should be held on Monday, 28 October 1996 at 4:30 pm to meet representatives of the Law Society and the Administration to consider the following provisions of the Bill :

clause 2 which added a new Part IIAA relating to solicitors corporations;
clause 5 which added a new section 39BA relating to foreign lawyer corporations; and
clauses 14 and 15 which added new sections 43B and 49A providing for notaries public and solicitors to enter into multi-disciplinary practices.

16. Members also agreed to schedule another meeting for Thursday, 7 November 1996 at 4:30 pm to meet deputations.

17. The meeting ended at 10:35 am.
LegCo Secretariat
28 October 1996

Last Updated on 15 December 1998