VZCZCXRO7817
RR RUEHCN RUEHGH
DE RUEHGH #0254/01 1840611
ZNR UUUUU ZZH
R 020611Z JUL 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6961
INFO RUEHBJ/AMEMBASSY BEIJING 1949
RUEHCN/AMCONSUL CHENGDU 1282
RUEHSH/AMCONSUL SHENYANG 1280
RUEHGZ/AMCONSUL GUANGZHOU 1253
RUEHHK/AMCONSUL HONG KONG 1422
RUEHIN/AIT TAIPEI 1091
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 7526

UNCLAS SECTION 01 OF 02 SHANGHAI 000254 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM, INR/B 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM SOCI ECON CH
SUBJECT: SHANGHAI BAR ASSOCIATION PRESIDENT CONCERN ABOUT COMPETITION 
FROM FOREIGN LAW FIRMS, BUT EAGER FOR INTERNATIONAL COOPERATION 
 
REF: 2007 SHANGHAI 770 
 
(U) This cable is sensitive but unclassified and for official 
use only.  Not for distribution outside of USG channels or via 
the internet. 
 
¶1.  (SBU)  Summary.  In a June 26 meeting with ConGenoffs, newly 
appointed Shanghai Bar Association (SBA) President Liu Zhengdong 
expressed his concerns about the increase in the number of 
foreign law firms operating in Shanghai in direct competition 
with local Shanghai firms.  He acknowledges, however, that 
competition between foreign and local firms has improved the 
quality of legal services in Shanghai and is open to allowing 
foreign law firm lawyers to join the SBA.  He also welcomes more 
international exchanges and legal cooperation especially in the 
area of IPR protection and legal issues connected with the 2010 
World Expo in Shanghai.  At 38 years of age, Liu is one of the 
youngest people to serve as SBA President.  He is also a 
Shanghai Municipal Peoples Congress (MPC) representative and 
appears to have close ties to the local government.  End Summary. 
 
Too Few Lawyers 
--------------- 
 
¶2.  (SBU) On June 26, Political/Economic Section Chief, PolOff 
and FSN Rule of Law Coordinator (ROLC) met with Shanghai Bar 
Association (SBA) President Liu Zhengdong.  Appointed as SBA 
President on April 20, Liu is eager to provide more 
opportunities for SBA members to participate in international 
exchange programs and increase the amount of legal expertise in 
Shanghai on international economic legal issues, including 
international trade, finance, IPR, and merger and acquisitions. 
Liu noted that the Shanghai Government considers the development 
of legal services as an important part of its overall goal of 
turning Shanghai into a leading service provider center on par 
with cities like New York.  While there are numerous foreign law 
firms providing high-level economic services, there are 
relatively few local Shanghai lawyers, approximately 20 percent, 
practicing in these areas, Liu said.  In addition, the number of 
Shanghai lawyers is relatively small in comparison to Beijing 
and Guangzhou.  There are 16,000 and 15,000 local lawyers in 
Beijing and Guangzhou respectively, but only 9,000 local lawyers 
in Shanghai.  Liu attributed Beijing's high number to that 
city's role as national capital and seat of law- and 
rule-making, while Guangzhou is close to Hong Kong and home to 
much of China's earliest economic progress in the 30 years of 
reform and opening up. 
 
Too Much Competition 
-------------------- 
 
¶4.  (SBU) Former SBA President Lu Hongbing was very aggressive 
in trying to curtail the permitted activities of foreign law 
firms in Shanghai.  He issued a letter asking the Bureau of 
Justice to be more active in policing foreign law firms.  While 
it is unclear whether Liu will be as active, he does harbor some 
concerns about the increase of foreign law firms in Shanghai. 
Many foreign firms are in direct competition with local Shanghai 
firms for money and talent.  Last year, of the 4 billion RMB 
(588 million USD) in legal fees received by law firms in 
Shanghai, half (2 billion RMB/ 294 million USD) was received by 
foreign law firms.  It is also difficult for local law firms to 
compete with large foreign law firms for personnel.  Liu also 
noted that there are many Beijing-based and Guangzhou-based law 
firms operating offices in Shanghai that also compete with local 
firms.  Pol/Econ Chief stressed the importance of being open to 
foreign law firms and other professional services firms as their 
expertise and the competition they provide can help propel local 
economic development and support Shanghai's goal of becoming an 
international services center.  Liu admitted that the 
competition from foreign firms improves the quality of legal 
services available in Shanghai.  Liu is eager for more 
interaction between foreign law firms and local firms.  He 
indicated interest in allowing foreign law firm lawyers to join 
the SBA and participate in SBA activities. 
 
The New Lawyer Law 
------------------ 
 
¶5.  (SBU) Liu applauded the new Lawyer law that went into effect 
from June 1 (reftel).  He is particularly pleased by provisions 
in the law that provides lawyers with more rights to interview 
clients and protects the free speech of lawyers during court 
trials.  However, when asked about recent press reports that at 
 
SHANGHAI 00000254  002 OF 002 
 
 
least two lawyers in Beijing lost their licenses for agreeing to 
defend clients involved in sensitive cases, Liu said that he did 
not know about those cases or the reported loss of licenses to 
practice.  However, in his opinion, there is very little that a 
bar association can do in these situations since the Bureau of 
Justice, and not the local bar association, is responsible for 
revoking licenses. 
 
Increasing Political Influence of Lawyers 
----------------------------------------- 
 
¶6.  (SBU) Liu told interlocutors that Shanghai lawyers are 
playing a greater role in local politics and there are now 114 
lawyers, including himself, who serve as representatives in the 
Shanghai Municipal People's Congress (Shanghai MPC) and/or the 
Shanghai's Chinese People's Political Consultative Conference. 
These lawyers have been active in drafting laws and also provide 
advice to the local government by submitting comments on drafts 
or participating in Shanghai MPC committees.  Liu predicted that 
in the future lawyers will become even more active and play an 
increasingly important role in the legislative process.  The SBA 
also regularly exchanges views with the Shanghai MPC. 
 
Welcome More Training and Exchanges 
----------------------------------- 
 
¶7.  (U) Every year the SBA spends RMB 4 million (almost USD 
600,000 at the end-June exchange rate) on legal training 
programs for its members.  Shanghai lawyers are also required to 
attend 40 hours of classes at an SBA training center.  That SBA 
training center has a cooperative relationship with the Shanghai 
College of Politics and Law.  Liu would like to strengthen these 
programs and is interested in increasing exchanges and 
cooperation with U.S. legal experts.  He especially welcomes 
training in connection with IPR issues and the Shanghai 2010 
World Expo. 
 
Biographic Information 
---------------------- 
 
¶8.  (SBU) At 38 years of age, Liu is one of the youngest persons 
to serve as President of the SBA.  He specializes in real estate 
and is a senior partner of the Shanghai Junyue Law firm.  He 
graduated from East China University of Politics and Law in 
¶1991.  After graduation, he served as a prosecutor for three 
years in the Shanghai Railway Prosecutor's Office.  Liu appears 
to have close ties to the government and has served as a 
representative to the Shanghai MPC since 2003.  He is a member 
of the Communist Party.  Liu has never been to the United 
States, although he has visited Australia and Europe several 
times.  He does not appear to speak English. 
JARRETT