Foreign lawyers working in Shanghai are calling on the city to open its market for legal service markets further to the outside world.

Stephen Harder, a partner in Clifford Chance, said Shanghai should lead the nation in further loosening its limits on legal service business carried out by foreign law firms.

They should be given the "same treatment" as their Chinese counterparts if the city wants to become an international metropolis like Hong Kong and London, Harder said yesterday.

He was speaking at a roundtable seminar for chief representatives of foreign law firms in Shanghai, which was held by the city government.

The city government aims to establish a system of dialogue with foreign-funded ventures and intermediaries through the seminar to further improve its business environment.

Pan Longqing, director of the Shanghai Foreign Investment Commission, said: "The legal services provided by those foreign law firms are considered a stimulus to investment by multinationals in Shanghai."

The city approved 3,127 overseas-funded ventures with a combined contractual capital of about US$8 billion between January and August, up 35.4 per cent over the same period last year.

At present, foreign law firms on the Chinese mainland are not allowed to employ Chinese lawyers to provide legal services, according to the current government regulation.

If Chinese lawyers want to work as solicitors for China-based foreign law firms, they must first give up their Chinese lawyer certificates and then work abroad for at least two years.

Harder said: "It simply wastes time and why can't they work directly in the foreign law firms?"

Miao Xiaobao, director of the Shanghai Judicial Bureau, said the limit slows the business expansion of foreign law firms in China.

"But the opening of the legal service market will take time and it is a gradual process," he said.

He told foreign lawyers that the city must optimize its legal service environment if it wants to increase its competitive edge.

The director suggested that Chinese and foreign law firms should closely co-operate in providing legal services.

Chinese law firms can act as a liaison office for their foreign counterparts. They can also set up joint ventures or establish a partnership co-operation with foreign law firms to employ Chinese solicitors.

"The city is expected to have a try if the conditions are ripe," he said.

Shanghai now has 71 overseas law firms, accounting for 46 per cent of the Chinese mainland's total. Sixty come from 12 foreign countries and 11 come from Hong Kong.

Last year, their combined sales were 320 million yuan (US$38.7 million), giving an average of 4.5 million yuan (US$540,000) for each firm.

Vice-Mayor Zhou Yupeng said: "The figure is not big enough for the city of Shanghai. That means the city should take further measures to push forward the local legal service."

Zhou said Shanghai has the determination to further open its service and trade sector to the outside world, including legal services.

Under China's framework agreement with the World Trade Organization, the city government will try to get approval from the central government to experiment with some new measures in the sphere of legal services, he said.

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