Hainan’s legal market white-hot under free port plan

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Hainan has seen 81 new law firms set up office since the province liberalized its legal services sector in October last year, according to Hainan Lawyers Association (HLA) data shared exclusively with China Business Law Journal.

Zhang Xiaohui President of Hainan Lawyers Association
Zhang Xiaohui
President
Hainan Lawyers Association

The relaxed regulations, along with the country’s plan to develop the island on China’s southern coast into an international free-trade port by 2050 under the Hainan Free Trade Port Plan, has attracted national and international law firms to the province.

“Hainan has a vast legal market of high-end and foreign-related businesses including finance, medicine, aviation and education,” said Zhang Xiaohui, the president of HLA.

Liao Hui, director of Zhong Lun Law Firm’s office in Haikou, the province’s capital city, said: “The new regulations relax the requirements for the admission of partners in special general partnership law firms, lower the requirements of setting up law firms, and allow qualified law firms to set up corporate-type law firms.”

Wu Lei Jingtian & Gongcheng
Wu Lei
Jingtian & Gongcheng

The regulations allow representative offices of Hong Kong, Macau and other foreign law firms to deal with certain Hainan-related non-litigation legal matters, and to set up legal partnership associations with mainland law firms in the special economic zone.

The Hainan Free Trade Port Plan, issued by the State Council in June this year, is to be implemented in the entire province and involves institutional innovations in 11 aspects including the legal system, entry-exit management and taxation.

“It is foreseeable that Hainan Free Trade Port will generate great demand for legal services,” Wu Lei, the director of Jingtian & Gongcheng’s office in Sanya, another major city in Hainan, told China Business Law Journal.

The free port plan also calls for building a risk prevention and control system to prevent significant risks in trade, investment, finance, data safety, ecology and public health.

Liao Hui Zhong Lun Law Firm
Liao Hui
Zhong Lun Law Firm

“The legal services needed [for the free port plan] are foreign-related and complicated,” said Liao, who is also a former president of the HLA. “Lawyers need to strengthen their abilities in foreign-related areas to provide more professional legal services.”

The influx of lawyers and law firms from outside Hainan has also impacted the local legal industry. Zhang, who was a former director of Hainan Zhong Bang Law Firm, said local firms had in the past mainly focused on traditional business because Hainan’s economic growth was relatively slow, with nearly no foreign-related business.

Wang-Hangbing-Hainan-Changyu-Law-Office
Wang Hangbing
Hainan Changyu Law Office

“The newly set-up national law firms brought advanced management and business models,” said Wang Hangbing, the director of Hainan Changyu Law Office. “These firms’ strengths in talent, professionalism and marketing will beat the local firms.

“In contrast, the local firms have solid relationships with local clients, [and] they can counter the national firms by improving their capabilities and service standards.”

As of 31 August, Hainan had 220 law firms (including joint ventures and foreign firms) and in total nearly 4,000 lawyers, according to the HLA.