2. Mr Alan AU explained the position of the Action Committee on MDPs, the outline of which had been issued to members vide LegCo Paper No. CB(2) 453/96-97. The drawbacks of introducing MDPs, as the Action Committee saw it, were: (a) it would be difficult for a solicitor to give priority to his clients interest over those of his MDP; (b) it was doubtful whether the solicitors professional responsibilities could outweigh his responsibilities to his MDP, in case of conflict; (c) access to clients information by non-solicitor members in a MDP would threaten a solicitors duty of confidentiality and privilege towards his clients; (d) a solicitor might refer a client to other office members of the MDP without proper regard to the best interest of the client, and could therefore jeopardize the consumers freedom of choice of service; (e) the solicitors practices might not be compatible with those of other professions; and (f) due to the indirect influence of non-solicitor members in MDPs, the independence of legal profession would be undermined and the rule of law in Hong Kong would be jeopardized ultimately. Ms Emily LAU asked why implementation of MDPs, as submitted by the Action Committee in its paper, would decrease the number of solicitors in private practice. Mr AU explained that MDPs would enable multinational legal corporations to establish business in Hong Kong, which could out-compete local law firms because of their resources. Mr Winston CHU then said that the Action Committee viewed that the interest of clients could not be effectively protected in MDPs because they would be deprived of an independent legal advice and the solicitors loyal service.

3. Mr Alan AU commented that the Administration was irresponsible in advocating the removal of statutory prohibition against MDPs, especially when it had acknowledged the need to resolve important issues before they could be allowed to operate. In response to Mrs Selina CHOW, Mr CHU clarified that the Action Committee opposed to the implementation of MDPs because the idea seemed basically wrong. The Action Committee maintained that the whole issue should be examined fully by an independent commission, with proper expertise and resources. At the request of the Chairman, Mr AU agreed to provide detailed information on the issue for members consideration after the meeting.

Action
Committee

4. Mr Rupert SKRINE drew members attention to the report on MDPs by the Standards and Guidelines Committee of the English Law Society (which was attached to the letter dated 18 November 1996 from the Attorney Generals Chambers and issued vide LegCo Paper No. CB(2) 470/96-97). He highlighted for Members reference that the English Law Societys decision to conduct a fresh review on MDPs was based on commercial considerations (i.e. competition from an increasing number of unqualified persons setting up business to provide legal services) and increasing demand from US lawyers, accountants and actuaries etc., rather than on demand from the consumers. If there was a legal framework for removing prohibition against MDPs in Hong Kong, the Law Society might be forced to implement them even if it was not ready to do so. In this connection, Ms Margaret NG asked and Mr Winston CHU responded that the pressure would come from multinational corporations, and not from local law firms of small to medium sizes.

5. Mr David GLYNN cautioned that MDPs might facilitate opportunities for corruption in view of the increase of corruption activities in the legal and accounting professions, and the estate agencies during the last two years. Messrs. Winston CHU and Alan AU supplemented that it would be likely that more law firms would be controlled by large estate agents if MDPs were to be implemented.

Composition of Costs Committee

(LegCo Paper No. CB(2) 483/96-97)

6. Mr Benjamin CHANG outlined the functions, membership and the proposed composition of the Costs Committee. Mr CHANG said out that the Action Committee did not support the proposed changes on the grounds that: (a) solicitor members would be out-numbered by non-solicitor members; (b) remuneration for solicitors would then be controlled by non-solicitors whose interests might be in conflict with providers of legal services; (c) it showed a distrust of solicitor members in the Costs Committee that they would give proper regard to public interest; (d) it allowed the Government to have undue influence on the legal profession which would undermine its independence and the rule of law in Hong Kong; (e) the proposed changes to the Costs Committee had not undergone any public consultation exercise; and (f) there was no demand for the existing Costs Committee system to be changed. The Action Committee therefore submitted that an independent commission should be set up to carry out an in-depth study of the matter. In this regard, Mrs Selina CHOW asked and Mr CHANG responded that it was acceptable to the Action Committee if there were equal numbers of solicitors and non-solicitors in the Costs Committee.

7. Mr Winston CHU said that every rule made under section 74 (Costs Committee) of the Legal Practitioners Ordinance (Cap. 159) had to be approved by the Chief Justice who was entrusted to give proper regard to public interest. Mr Albert HO remarked that a comprehensive statutory mechanism might be a better solution to safeguard public interest. Mr CHU took the view that the existing system had been working smoothly and the Government ought to have intervened earlier if it considered the present amount of fees charged under the Scale Fee Scheme excessive in the light that it was well-represented in the Costs Committee. In this regard, Mr HO opined that the legal profession, being self-regulatory and independent, could initiate action too if remedy was deemed necessary. Mrs Selina CHOW remarked that the Law Society would not have proposed a reduction of 20% across the board to the present Scale Fee Scheme if the Costs Committee had been working well. It proved that the present composition of the Costs Committee even with Government members could not properly safeguard the interests of the consumers. She maintained that user input was necessary in deciding the structure of the Scale Fee Scheme. Mr HO shared the view by saying that it was the trend to allow consumer participation in monitoring the provision of professional services.

Information about overseas jurisdictions

8. At Mrs Miriam LAUs request, Mr Winston CHU undertook to provide a copy each of the Singapore Conveyancing Fees Review Committee, an executive summary of the Report on Legal Services of the Australian Trade Practices Commission if available, and other relevant information about overseas jurisdictions for members reference. Action

Committee

II.Dates of future meetings

9. The next meeting would be held on Tuesday, 10 December 1996 at 4:30 pm (a) to meet the Administration on whether provisions for the solicitors rights of audience were within the ambit of the Bill; and (b) to continue discussion with the Action Committee on solicitor corporations and foreign lawyer corporations, and on invalidation of contractual provision requiring purchaser to pay costs of vendor. The Bills Committee would meet Mr Robert SAYER, the then Vice-President of the English Law Society at the following meeting scheduled for Tuesday, 7 January 1997. Mr Winston CHU undertook to inform Mr SAYER accordingly. The Bills Committee also would meet the Action Committee on invalidation of scale fees at a future meeting to be scheduled. Mrs Selina CHOW suggested and Mr CHU agreed to provide any written information on the Action Committees presentation to members in advance, if possible.

Action
Committee

10. The meeting ended at 6:35 pm.

LegCo Secretariat
3 December 1996

Last Updated on 27 October 1997

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

held on Monday, 25 November 1996 at 4:30 pm in Conference Room A of the Legislative Council Building

I.Meeting with the Action Committee

Multi-disciplinary practices (MDPs)

Composition of Costs Committee

Information about overseas jurisdictions

II.Dates of future meetings

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

held on Monday, 25 November 1996 at 4:30 pm
in Conference Room A of the Legislative Council Building