Hong Kong-based legal services firms have been urged to embrace new market opportunities when Chinese mainland enterprises embark on overseas initial public offerings (IPOs) or overseas business expansion, experts from the city’s legal sector and a think tank said.

Ambrose Lam San-keung, the lawmaker representing the legal sector, commissioned think tank National Integration Fund Co in July last year to conduct a survey regarding utilization of legal services in Hong Kong by mainland enterprises, with recommendations on how to boost Hong Kong’s legal services industry amid the growing legal services needs of mainland companies for IPOs and overseas business expansion.

The survey suggests reviewing and amending existing laws and regulations that restrict local law firms from expanding their scale and business. With greater economies of scale, they can better manage business expansion, brand-building, and customer retention by competing with international peers to gain the favor of mainland companies and embark on overseas business expansion.

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Regarding legal amendments, the government of the Hong Kong Special Administrative Region has been urged to implement the Legal Services Legislation (Miscellaneous Amendments) Bill 1997 as soon as possible, regarding adoption of the incorporation of solicitors’ practice.

The government has also been urged to relax restrictions on the partnership of law firms under Section 2 of the Legal Practitioners Ordinance that facilitates the development of alternative business structures by allowing other professionals to practice within law firms.

Stakeholders in the city’s legal services sector should jointly build a legal services consultation platform and compile a list of legal experts that enables mainland companies to more easily access Hong Kong’s legal services, the survey said.

The report concluded that there is a lack of regular and efficient communication mechanisms or platforms between mainland companies and local law firms, leading to a mismatch of market demand and supply.

“In the face of ever-changing market demands and economic environment, the legal industry must explore new business areas, understand market demands correctly, and continuously enhance its own competitiveness in order to meet the needs of clients and social development,” Lam said during the Tuesday news conference.

James Wang, research director at the National Integration Fund Co, said Hong Kong should promote its legal services brand by creating market demand through actively attracting more mainland companies to set up branches or overseas headquarters in Hong Kong.

He also advocated establishing a tiered pricing system to improve the cost-effectiveness of legal services in Hong Kong, and nurturing more specialized legal professionals to meet the multifaceted needs of mainland companies for legal professionals.

Wang said there is a need to create several legal services clusters in Hong Kong that can enhance the competitiveness of the city’s legal services segment.

“By creating legal services business clusters in key areas such as maritime arbitration, it can help in slashing legal costs through economies of scale to better meet the needs of small and medium-sized mainland companies. It can also serve national strategies and help achieve goals such as the development of Hong Kong as an international legal and dispute resolution services center in Asia Pacific,” Wang argued.

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During the survey 16 institutions were asked their views on Hong Kong’s legal services. These included 11 mainland business enterprises, one economic and trade organization, two arbitration centers and two law firms.