6月10日，海南自由贸易港法正式颁布实施，此时距离中国发布海南自贸港总体方案已一年有余。过去一年海南经历了快速发展，当地执业律师数量更是增加了近一倍。这篇区域报道将一览海南的变化，以及法律服务市场面临的机遇与挑战。
6月10日，海南自贸港法经表决通过，标志着中国将“分步骤建立自由贸易港政策和制度体系，实现贸易、投资、跨境资金流动、人员进出、运输来往自由便利和数据安全有序流动”。
一方面，自贸港法将一年前颁布的自贸港总体方案以法律形式固定下来，为海南未来建设提供了法治保障；另一方面，自贸港法也对总体方案进行了个别修补，例如增加了内地货物进入海南后退还已征收的增值税、消费税规定，并细化了货物流通规定等。
“海南自贸港法类似于香港的《基本法》……海南将来是什么样子，不是自己去设想，而是要依据中央对海南的整体长期规划，并且用法律的形式把它固定下来。”
- 汤尚濠，大成律师事务所
“海南自贸港法类似于香港的《基本法》。”大成律师事务所海口办公室主任汤尚濠说，“这部法律有划时代意义。海南将来是什么样子，不是海南省自己去设想，而是要依据中央对海南的整体长期规划，并且用法律的形式把它固定下来。”
在确定自贸港为发展方向的一年中，海南经济实现了快速增长：2020年，海南GDP增长3.5%；今年一季度，海南GDP同比增长19.8%，增速位列全国第二。
虽然取得大幅进步，但海南经济的现实依旧“骨感”。“这一段，很多国内外的朋友都同我们讲：海南就要成为新加坡、迪拜、香港了。”浩天信和律师事务所海口办公室主任吴昊律师坦言，“但我们也清楚认识到：海南2020年的GDP只有5532.39亿元人民币，远远落后于其它兄弟省市，全国排名倒数第4位，仅高于宁夏、青海和西藏。”
不过，海南正借着政策红利迎头赶上。“仅2020年，海南自贸港11个重点园区实现营业收入5067.82亿元，同比增长49.8%。”吴昊律师说，“自2020年6月《总体方案》发布至今年5月底，海南省新增市场主体约37.5万户，同比增长44.33%；新增企业近18万户，同比增长132.11%。增长率是惊人的。”
其他数据也支持了这样的观察：疫情下国际旅行受限，海南离岛免税购物成为新热潮，2020年7月到2021年3月购物总额达336亿元人民币，同比增长241%；去年6月以来，海南引进人才16.8万余人，同比增长425%；受惠于缩短的外商投资负面清单，去年海南实际利用外资超30亿美元，在琼投资国家和地区达80个，今年第一季度新设外资企业达419家。
与此同时，海南的法律服务主体数量也出现惊人增长。根据南国都市报报道，截止今年4月初，海南律师事务所从139家增至277家，律师人数从2500人增加到4186人。“在海南自贸港建设大背景下，海南法律服务也迎来黄金发展期。”该报感叹道。
更清晰的道路
由于海南曾经的发展起点较低，中国为其设定的自贸港身份又直接对标国际最高标准——自贸港总体方案中一共出现了155次“自由”，在过去一年中，各级政府加速出台政策法规，将海南的“自由”落到实处，据不完全统计，一年来，有关方面出台的政策文件达110余份。
“总体方案发布以来，一大批核心及配套政策密集出台、落地。”大成律师事务所三亚办公室的王进律师告诉ALB，“配套政策囊括了税收、人才、贸易、投资、金融、运输、产业、园区、营商环境等重点领域，同时出台了知识产权、反走私、多元化解纠纷、生态保护等法规规章。”
据路透社报道，4月以来，各部委先后在海南释放政策“礼包”。发改委和商务部推出了涵盖医疗、文旅、商业航天、新能源等领域的22条具体开放措施；随后，央行和银保监会发布《关于金融支持海南全面深化改革开放的意见》，“在跨境资金流动自由便利、投融资汇兑便利化、金融业对外开放等方面先行先试；支持在海南自贸港就业的境外个人开展各类境内投资”，并支持海南设立金融与破产专业审判机构等。
4月底，商务部再发关于货物贸易和服务贸易的“28项便利措施”；5月中旬，海南省政府则公布“自贸港投资新政三年计划”，要求路网、光网、电网、气网、水网等基础设施每年社会投资增速10%以上。
在君合律师事务所合伙人、管委会成员张平律师看来，上述“法规政策对律所业务的影响是系统而全面的……将带来海南投资和营商环境的全面创新，会催生众多行业涉及海南的投资或合作项目，为律所带来直接的增量业务机会”。
除了产业政策，王进律师还指出了一系列影响重大的法律政策，例如全国人大《设立海南自贸港知识产权法院的决定》——该法院于2020年底设立，实行知识产权刑、民、行政审判“三合一”，并于今年4月底庭审了第一案；此外还有最高院《关于人民法院为海南自贸港建设提供司法服务和保障的意见》，以及海南省人大常委会《海南省多元化解纠纷条例》等，“为律所业务发展提供了有力保障”。
伴随海南产业发展方向在一系列新政下愈发清晰，律所也展开了相应布局，浩天信和海口办公室就是一例。吴昊律师告诉ALB，海口办几乎和总体方案同步落地，最初以诉讼业务为主，逐渐扩展到非诉和涉外等领域。
吴律师说，过去一年，浩天信和在海南重点布局了医疗大健康、知识产权、涉外等领域。在医疗大健康方面举办了产业法律服务创新论坛，并被聘为海南博鳌乐城国际医疗旅游先行区管理局常年法律顾问；在知产领域，举办了首届崖州湾知识产权论坛，并深入研究知产海关保护、水稻知产和品牌保护、外企在华商标保护等课题；在涉外领域，则“试水”为海南首届国际消博会提供了涉外和知产服务。
与此同时，君合的张平律师指出了律所在海南的另一项“职责”——参与自贸港法治建设，以及在自贸港相关业务中践行新的制度。“海南自贸港政策制度体系的核心是制度创新，自贸港法的出台将进一步推动自贸港更加灵活、高效的监管模式和管理体制的探索，并在此基础上形成配套的、各领域的地方立法。”张律师指出。
不久前，新华社在一篇文章中指出，作为一部框架法，海南自贸港法要落地实施，必须做好配套工作，“完善与自贸港建设匹配的法治体系，海南仍任重道远”。
文章进而指出，自贸港法授予海南更大的立法权限。和海南已经拥有经济特区立法权相比，自贸港法规制定权的权限更高，可以触及立法法中的国家立法保留事项；此外立法权更加聚焦，限定于贸易、投资及相关管理活动领域。
未来，预期海南将展开大量的地方立法及修法，而自贸港建设能否有序进行，也很大程度倚赖新法能否提供充足的法治保障。张平律师告诉ALB，君合目前已经参与了海南部分领域创新政策的探讨。
与此同时，“已有一些海南自贸港外商投资准入负面清单新政催生的，或结合海南已出台或预期将出台的创新政策的交易项目正在推进中。此前，君合也代表国际知名企业参与了海南免税行业的重大合作项目等”，他说。未来很长一段时间，自贸港建设将需要立法和实践紧密合作，法律板块将在其中扮演重要角色。
需求从哪里来？
作为服务行业组成部分，法律服务，尤其是高端法律服务的活跃度和经济发展程度密切相关。自贸港新身份下，海南经济发展仍处于开端阶段，高端法律服务需求并未展开，而伴随布局海南的“大品牌”律所越来越多，他们又到哪里去寻找新需求？
受访律所指出，正是在这样的背景下，一体化大所的优势才得以彰显。
以大成海口办公室为例，汤尚濠主任告诉ALB，2007年底，他自己的尚濠律师事务所并入大成，大成海口办公室正式成立，发展到今天已有120余位律师和员工，“目前是异地律所在琼分所中规模最大的”，而且连续四年实现了年均一亿元人民币的业绩。
“光靠大成海口办公室本身，没有那么大能耐。”汤主任坦言，“粗略统计，一个亿的业绩里面，应该有三成是大成系统内合作产生的业绩。我们的客户不一定是海南的，也有内地企业；我们业绩里有和北京、上海、广东等各地办公室合作的成份。”
伴随大成网络的不断扩大，大成海口办公室的服务延展性也不断增强：近处可以辐射珠三角、大湾区；远处可以辐射全国，甚至依靠大成全球兄弟所辐射多国。“将来一定是谁的平台大，谁的理念、制度、作业模式先进，谁的市场份额就越大。”汤主任指出。
对于君合，海口分所和君合其他办公室间也有着紧密的业务和情感联结。张平律师告诉ALB，海口分所成立于1992年，是君合设立的第一家分所，“君合对海南有着特殊情结。上世纪九十年代前几年，海口分所的创收在君合总收入中占比相当可观，今天君合有一批资深合伙人当年都是海口分所的业务骨干。海口分所是君合华南服务体系的重要组成部分”，张律师说。
“君合近期成立了跨传统业务领域和办公室的海南自贸港业务部，可以高效、多领域服务涉及海南的项目，为投资海南的各行业客户提供一揽子法律支持。”
- 张平，君合律师事务所
最近几年，君合海口分所继续积极和其他办公室合作，开拓新业务机会——例如，与深圳分所联手探索科创板上市业务，目前正在服务的一家照明企业的上市项目，“是海口分所新增的、重大的非诉业务”。此外，君合近期成立了跨传统业务领域和办公室的海南自贸港业务部，“可以高效、多领域服务涉及海南的项目，为投资海南的各行业客户提供一揽子法律支持”，张律师说。
谈到未来，尤其是海南必将大幅发展的涉外法律服务，大成三亚办公室的王进律师认为大型所的实力必将进一步释放。一方面，大型所可以在“跨境贸易、公司并购、金融、基础建设、海事海商、文化体育与博彩、旅游开发、新型劳动人事关系、刑事等需要世界级法律服务的领域，和全球律师合作”；另一方面，大所也更有能力创新业务合作管理方式和机制，在海南业务上，寻求与外国律所更好的合作模式。
挑战重重
和亟待更新的经济一样，谈到海南法律市场面对的挑战，大成海口办公室的汤尚濠主任首先指出了律师的观念问题。“海南的经济基础和体量，决定了与之相适应的法律业务体量、服务事项、客户体量，都比较传统。”他指出。
大成三亚办公室的王进律师对此表示认同，他指出，海南的法律服务内容亟待革新。“海南目前的法律服务市场主要集中在房地产、建筑、旅游等领域，并过多集中在诉讼领域。随着海南抛弃对房地产的依赖，未来这一传统领域将出现萎缩，或服务内容出现较大调整……诸如政策顾问、公司治理、企业并购、尽职调查、仲裁调解等非诉需求将越来越多，甚至成为海南法律服务市场的主要类型。”他说。
与此同时，高端、多元的新板块也将不断诞生壮大，例如金融、贸易、证券、航空、知识产权、海事海商等，“现有的法律服务若不及时提升与创新，将无法适应自贸港建设的需求。”王律师提醒道。
与此同时，高端人才也是海南市场的一个痛点。“海南最缺乏的就是国际性复合人才。”汤主任指出，“涉外人才首先要解决最基本的语言问题，此外还要有国际法基础知识，包括对不同国家政策、法律法规、商事活动规则的了解……需要靠引进或合作解决这个问题。”
伴随越来越多律所涌入海南，大家又是否感受到了竞争压力呢？
汤主任坦言，最近一年进驻海南的中国所，甚至外国所确实很多，但据他了解，大部分“规模都在10人以内……目前只是把品牌放进来，人员、业务的拓展还需要一个过程”。
而且，来到海南的律所“各有各的目的和追求”，尤其考虑到海南律师业目前采取的定额税收方式要比内地更优惠，单纯为节省成本来到海南的情况也客观存在。“我们海口已经出现了外地律所在海口设分所后人员、工作和日常管理不到位的情况，有个别所已经受到主管部门的相应处理”，汤主任说。
当然，预期未来，竞争肯定会更激烈。王进律师指出，正是由于自贸港还在建设，“高端法律服务需求尚不突出。在增量资源不足的情况下，僧多粥少的局面预计会持续一段时间”。对此，大成的策略是尽快开拓增量业务，避免恶性竞争，具体来说，就是在稳固“传统领域的同时，积极拓展金融、贸易、知识产权、境内外并购等领域的增量业务。并在业务形态上，从传统的顾问咨询者转变为操盘者，提供包括方案设计、执行等全流程法律服务”，王律师说。
汤尚濠主任则指出：未来海南的法律行业的发展与大环境休戚与共。“如果自贸港政策都能够落地，法治环境能够得到进一步的优化和改善，海南法律市场能够良性规范运转，就会形成一种‘各美其美，美美与共’的状态。拥有与自贸港所需法律服务相匹配的人才力量的大所、国际所会得到较多市场份额；传统所、小所则走专业化道路，并持守难以被替代的传统领域，比如刑事辩护法律服务领域。”
海南律师业面临的另一点挑战则十分实际：即迟迟没有最终落地的核定征收税收制度。
根据法律媒体“环球法研”的介绍，2019年颁布的《海南经济特区律师条例》规定，“律师和律所可以依法选择缴纳税款的方式”。汤尚濠主任告诉ALB，内地律所普遍采用的是查账征收，海南则延用了十几年的核定征收，“两种都是法定税收方式……实践证明核定征收非常适合律师行业的特点”。
在汤主任看来，正是这样的优惠又简便的税制度吸引大量律所落户海南。而去年10月，政府有关部门召开吹风会，未来或将全省统一执行查账征收。事实上，“目前新入驻海南的律所已经开始采用查账征收，无疑给大家浇了盆冷水……一旦全面实施查账征收，或许会影响海南律师业的规模化和国际化方面的发展”，他担忧道。
未来趋势
中国人很喜欢“危机”这个词：显然，越是挑战重重的地方，胜者面临的机遇就越大。海南的律师们同样如此。关于未来，他们已经有了种种设想与布局。
“我们在法律服务方面要开拓思路，不断创新服务领域。”
- 吴昊，浩天信和律师事务所
浩天信和的吴昊律师首先提到了保持创新的重要性。“5月下旬，省人大常委会领导来我们海口办公室考察工作时提到，海南在知识产权保护和转化方面要下大力气，在高新技术，现代服务贸易，旅游等行业也要有所突破，同时在船舶游艇等很多方面也需要制定相关的可操作的法规。”吴律师说，“这也提醒了我们在法律服务方面要开拓思路，不断创新服务领域。”
面对未来，君合已经摩拳擦掌。张平律师告诉ALB，“近期我们为海口办公室租赁了新的办公场地，目前正在装修，办公面积大幅增加，办公设施也全面升级，目的就是筑巢引凤，为海口办公室大力吸引和配置优秀律师人才”。而在重点业务领域方面，“海口分所的市场定位会与君合整体保持一致，同时兼顾地域性市场差异”，例如侧重关注医疗健康、教育、旅游、现代服务业、高科技产业、离岛免税和岛民免税等领域。
大成的王进律师则补充了人才培养的重要性。“我们将依托大成的平台资源优势，为三亚办公室律师提供丰富及有针对性的培训、学习机会，提升律师个人业务水平，组建专业团队，为未来可能落地的重大专项法律服务进行人才储备。”他说。
“海南未来法律服务的需求，无论类型、数量还是质量，必将出现翻天覆地的变化。”王律师展望说，“世界级的法律服务以及全球律师的合作，在不远的将来一定会出现在海南自贸港建设的需求中，我们已经为此做好准备。”
ALB China Regional Report: Hainan
The Hainan Free Trade Port Law was officially passed on June 10, one year after China released the Masterplan for the Construction of the Hainan Free Trade Port. In the past year, Hainan Province has seen saw rapid development, with the number of practicing lawyers there almost doubling. Given the rapid pace of developments in the province, legal service provides face both opportunities and challenges.
On June 10, Hainan Free Trade Port Law was adopted, stipulating a “step-by-step approach in establishing policy and governance to ensure the orderly flow of trade, investment, people, logistics and data” in the island province of Hainan.
This transformed the Masterplan for the Construction of the Hainan Free Trade Port, released a year ago into legislative reality, providing legal guarantees for the future development of Hainan. Further, the FTP Law contains amendments to the Masterplan by, for example, adding provisions on refund of VAT and consumption taxes for goods from China’s inland areas, and sets detailed requirements on the movement of goods.
“Just like Hong Kong SAR’s Basic Law, the FTP Law is of epoch-making significance. Hainan's future is planned under the Central Government’s long-term roadmap, and such planning has now become law.”
- Tang Shanghao, Dentons China
“Just like Hong Kong SAR’s Basic Law, the FTP Law is of epoch-making significance,” says Tang Shanghao, director of Dentons Haikou Office. “Hainan's future is planned under the Central Government’s long-term roadmap, and such planning has now become law.”
In the year following the release of the Masterplan, Hainan experienced exponential economic growth: In 2020, its GDP grew by 3.5 percent; this figure rose to 19.8 percent year-on-year in the first quarter this year, the second-fastest across China.
“We need to think out of the box and make constant forays into new areas of service.”
- Wu Hao, Hylands Law Firm
Despite substantial progress, Hainan’s economy remains small. As Wu Hao, director of the Haikou Office of Hylands Law Firm, admits: “Recently many friends in China and abroad have said Hainan is about to become Singapore, Dubai or Hong Kong SAR, while in fact, Hainan’s 2020 GDP was only 553.239 billion yuan [$86 billion], ranking fourth from the bottom nationally.”
However, Hainan is catching up fast thanks to policy support. “In 2020, eleven industrial parks in Hainan FTP posted revenue of 506.78 billion yuan, a year-on-year increase of 49.8 percent,” says Wu, “From the release of the Masterplan in June 2020 to the end of May 2021, Hainan saw a stunning year-on-year increase of 375,000, or 44.33 percent, in the number of market participants, and 180,000, or 132.11 percent, in the number of enterprises.”
Other data also support this observation. Restrictions on travelling abroad amid the pandemic have made duty-free shopping in Hainan a new craze. Total purchases from July 2020 to March 2021 hit 33.6 billion yuan, up 241 percent year on year. Since last June, Hainan has attracted over 168,000 working professionals, an increase of 425 percent year on year. Benefiting from the shortened negative list for foreign investment, Hainan utilized more than $3 billion of foreign investment in 2020, with investors from 80 countries and regions. It became home to 419 new foreign-funded enterprises in the first quarter of this year.
Further, Hainan has also seen a phenomenal increase in the number of law firms. According to Nanguo Metropolis Daily, as of early April 2021, law firms operating in Hainan doubled to 277 from 139 a year ago, while the number of lawyers grew from 2,500 to 4,186. “Legal services will usher in a golden era in the context of Hainan FTP construction,” the newspaper said.
A CLEARER PATH
Hainan has a lower starting point. Yet, China has set eyes on constructing it into an FTP of the highest global standards, as evidenced by the 155 times that the word “autonomy” is mentioned in the Masterplan. Over the past year, governments at all levels sped up the release of policies and legislation to convert “autonomy” into reality. Rough statistics show that more than 110 policy documents have been promulgated over the past year.
“A large number of core policies and their supporting measures have been promulgated and enacted in quick succession following the release of the Masterplan,” Wang Jin of Dentons Sanya Office tells ALB, “These supporting policies focus on key areas such as taxation, talents, trade, investment, finance, transportation, industry, trade parks and business environment. Regulations and rules have also been introduced for intellectual property rights, anti-smuggling, diversified dispute resolution mechanisms, and ecological protection.”
Chinese ministries and departments have unveiled many preferential policies for Hainan since April, according to Reuters. The NDRC and the MOFCOM released 22 measures aimed at liberalizing medical, cultural tourism, commercial aviation, and new energy areas, followed by the PBOC and CBIRC promulgating the Opinions on Financial Support for Hainan's Comprehensive Deepening of Reform and Opening-up.
At the end of April, the MOFCOM issued another 28 measures for facilitating trade in goods and in services; in mid-May, Hainan's Provincial Government announced the Three-year Plan for New Investment Policies in the Free Trade Port, setting a target of more than 10 percent annual growth in private investment in infrastructure.
According to Zhang Ping, partner and management committee member of JunHe, these “policies and regulations have implications on all of our business aspects … leading to innovations in the investment landscape and business climate in Hainan, giving rise to projects involving investments or cooperation in Hainan across multiple sectors, and thereby directly bringing new businesses to law firms.”
In addition to industrial policies, Wang also points to a batch of significant legal policies, including the launch of the Hainan FTP Intellectual Property Court. The court was officially established at the end of 2020, and heard its first case at end of April 2021. The Opinions of Supreme People's Court on Judicial Services and Guarantees of People's Courts for the Construction of Hainan FTP, and the Regulations on Diversified Dispute Resolution Mechanisms in Hainan adopted by the Hainan Provincial NPC Standing Committee also “provide strong guarantees for law firms to grow.”
As the industrial development path becomes clearer in Hainan amid an array of new policies, law firms have been making moves accordingly. Hylands’ Haikou Office, which was set up almost at the same time as the Masterplan was released, is one example, according to Wu. It initially focused on litigation, but has since expanded to non-contentious and foreign-related areas. Over the past year, Hylands’ Haikou Office has concentrated efforts on healthcare, intellectual property rights, and cross-border practices.
Zhang cites another “duty” of law firms in Hainan, which is to participate in the rule of law development in the FTP, as well as exploring business opportunities that come with it.
Lately, the Xinhua News Agency commented that as a piece of framework legislation, the FTP Law’s enforcement relies on supporting policies. “There is still a long way to go before the rule of law matches Hainan’s FTP status,” said Xinhua.
Hainan is expected to embark on formulating and revising a large number of local legislations, and the progress of the FTP construction largely depends upon if new laws enacted could provide sufficient rule of law guarantees. According to Zhang, JunHe has been involved in the discussion of some local legislation and innovative policies in certain areas.
Meanwhile, “transactions triggered by the new negative list for foreign investment, or innovative policies, are already underway. JunHe also represented globally renowned firms in important cooperation projects in Hainan's duty-free industry,” says Zhang. Going forward, construction of the FTP requires better alignment of legislation and practices, in which the legal sector is bound to play a vital role.
BUT WHERE ARE THE CLIENTS?
As part of the services sector, legal services, particularly high-end legal services, are closely linked to economic development in terms of the degree of business activity. For Hainan, the demand for high-end legal services is yet to emerge. As an increasing number of big law firms looks to operate here, where should they turn to find new clients?
Law firms point out that it is in such context that large full-service firms could showcase their advantages.
According to Tang, Dentons Haikou Office, officially set up at the end of 2007, now has more than 120 staff. As “the largest among all Hainan offices of non-local law firms,” it has recorded annual average revenue of 100 million yuan for four straight years.
“Dentons Haikou office is not the only contributor,” admits Tang, “Out of the 100 million yuan revenue, roughly 30-40 million yuan comes from synergies within Dentons. Our clients not only come from Hainan but also other Mainland areas, and our earnings include earnings from cooperation with offices in Beijing, Shanghai, Guangzhou and other places.”
With an increasingly bigger Dentons network, Dentons Haikou has boosted its capabilities to serve a broader client base, including clients from the nearby Pearl River Delta, Greater Bay Area, or across China, or even across multiple countries under Dentons international network. Tang says, “law firms that are set to gain bigger market shares are those with a larger platform and with modern ideas and advanced structures and mode of operation.”
The JunHe Haikou Office also has close ties with other JunHe branches. Zhang tells ALB that JunHe Haikou Office, established in 1992, is the firm's first branch. “JunHe has a special bond with Hainan. In the early 1990s, Haikou Office contributed a significant part of JunHe’s total revenue. Many senior partners in JunHe today once worked in the Haikou Office, which is an important part of our southern China legal service network,” says Zhang.
“JunHe has recently set up the Hainan FTP practice group, which is capable of efficiently handling Hainan-related projects across multiple sectors, and providing one-stop legal support to clients for investing in Hainan.”
- Zhang Ping, JunHe LLP
In recent years, JunHe Haikou Office has been actively joining forces with other offices to explore new opportunities, including joining hands with Shenzhen Office in STAR market listing deals. It now represents a Shenzhen-based lighting company on a relevant project, which is “a new and significant non-contentious practicing area to Haikou Office.” Moreover, JunHe has recently set up the Hainan FTP practice group that handles deals across traditional practice areas and different offices, which “is capable of efficiently handling Hainan-related projects across multiple sectors, and providing one-stop legal support to clients for investing in Hainan,” says Zhang.
When it comes to future outlook, particularly the cross-border legal service sector that is bound to grow substantially in Hainan, Wang believes that the strengths of large firms surely will be further unlocked. This is because large firms can “cooperate with global firms in areas of cross-border trade, corporate mergers and acquisitions, finance, infrastructural construction, maritime, culture, sports and gaming, tourism, new employment and labour relationship, criminal law and other areas that require world-class legal services.” On the other hand, large firms are more capable of pursuing a better form of cooperation with foreign firms.
CHALLENGES ABOUND
As with the much-needed economic restructuring, Tang first points to lawyers’ mindset when it comes to the challenges facing Hainan’s legal market. “Given Hainan’s economic foundation and size, the size of the legal service market, the scope of services and the client base are all rather traditional,” says Tang.
Wang concurs. “Legal services in Hainan are currently mainly for the real estate, construction and tourism sectors, and overly dependent on litigation. As Hainan wanes off its reliance upon the real estate sector, this sector may see contraction in business size contract or significant change in service offerings… Demands for non-contentious services are expected to rise in areas of policy consultation, corporate governance, corporate mergers and acquisitions, due diligence, arbitration and mediation, and may even become the mainstay of legal services in the Hainan market,” he says.
Meantime, high-end and diversified new legal service segments that relate to, for example, finance, trade, securities, aviation, intellectual property rights, maritime, will continue to emerge and grow, “existing legal services will no longer be suitable for the needs of FTP construction if they are not promptly upgraded and innovated,” emphasizes Wang.
The lack of highly skilled lawyers is another pain point. As Tang points out, “What Hainan lacks most is top talents with international exposure. Foreign-related talents must, first and foremost, speak relevant foreign languages, and have working knowledge of international laws, including policies, laws and regulations, business practices of different countries…This issue needs to be addressed by attracting talents or forming partnerships.”
Are law firms feeling the pressure competition with an increasing number flocking to Hainan?
Tang admits that a lot of Chinese, and even foreign, firms have set up shop in Hainan over the past year. However, to his knowledge, most “have ten or fewer staff… They exist just nominally, and it still takes time to grow business and workforce.”
In addition, different firms come to Hainan for different “purposes and pursuits.” Given the fixed taxation system adopted in Hainan's legal industry which is more preferential than other parts of the Mainland, some firms set up offices in Hainan solely to save cost. “We have seen cases where a law firm set up an office in Haikou, kept its office closed during normal business hours, and made no improvements after rounds of inspections, and later was ordered to close within one year,” says Tang.
The competition will surely become fiercer in the future. As Wang points out, with the FTP being constructed, demands for high-end legal services are yet to emerge, which means the problem of supply exceeding demand will continue for some time.” In response, Dentons quickly grew new practice areas to avoid cut-throat competition. Specifically, it “is actively developing new business in finance, trade, intellectual property rights, domestic and offshore mergers and acquisitions, while consolidating traditional areas. Further, we’re aiming to transition from traditional consulting and advisory services to rendering full services, including formulating and executing legal solutions,” says Wang.
Tang points out that the future development of Hainan's legal sector is closely aligned with the macro-economic landscape. “If all FTP policies are put into practice, the rule of law environment is effectively improved, and the legal market in Hainan can operate in a well-structured and healthy manner, all stakeholders will benefit. Large or international firms that are equipped with talents will gain bigger market share, while more traditional or smaller firms can specialize in traditional areas that are hard to replace.”
Another practical challenge facing Hainan’s legal sector is the preferential tax regime that is yet to be implemented.
According to legal media LexAlliance, the Regulations on Lawyers in the Hainan Special Economic Zone enacted in 2019 stipulates that “law firms and lawyers may choose the form of tax payment according to law.” Tang tells ALB that for domestic law firms domiciled in other Mainland areas, corporate income tax is levied on an actual basis, while in Hainan the fixed taxation approach has been used for more than a decade. In Tang’s view, it is such preferential incentives and simplified tax system that have attracted many law firms to set up offices here.
However, the Hainan Justice Department mentioned in a briefing last October that the actual-basis tax regime was expected to roll out province-wide. In fact, “this tax regime is already being implemented for law offices newly set up in Hainan, which undoubtedly produced a chilling effect… The full rollout of the actual-basis taxation approach may put a dent in the development of the legal sector,” fears Tang.
FUTURE TRENDS
The more challenges, the greater opportunities for the winner. The same can also be said for law firms in Hainan, where the lawyers have already formed their visions for the future.
Wu of Hylands underscores the importance of innovation. “In a visit to Hylands’ Haikou Office in late May, provincial officials called for more efforts in intellectual property right protection and conversion, breakthroughs in high-tech, modern trade in services and tourism sectors, and actionable regulations for vessels and yachts,” Wu says, “this reminds us to think out of the box and make constant forays into new areas of service.”
JunHe is also prepared for future challenges. Zhang tells ALB, “Recently we leased a new workplace for Haikou Office which is now under renovation. The new office has bigger space and better facilities, so as to attract talented lawyers.” In terms of key areas of practice, “the Haikou Office is positioned in alignment with JunHe’s overall service package, while taking into account the unique features of the Hainan market.” For example, it will focus on healthcare, education, tourism, modern services, the high-tech sector, duty-free shopping for both departing travellers and residents, etc.
Wang talks about the importance of grooming talent. “Leveraging Dentons’ platform and resource strengths, we will provide lawyers in the Sanya Office with extensive and targeted training courses and learning opportunities to build up the talent pool for important specialized legal services that may soon be launched,” he says.
“The future demand for legal services in Hainan, be it the type, size or quality, will see dramatic changes,” Wang notes. “FTP construction will soon need world-class legal services and cooperation by lawyers worldwide, and we are well prepared for that.”
To contact the editorial team, please email ALBEditor@thomsonreuters.com.