Why Hong Kong Firms Are Feeling The Pinch

While many complain about the costs of litigating in London, legal costs in Hong Kong can in some cases be even more expensive.

Jonathan Rostron set up Jonathan Rostron Solicitors about one year ago to combat the problem legal firms based in Hong Kong have of high overheads which inevitably get passed on to clients.

He has just been joined in the partnership by a former Sinclair, Roche and Temperley colleague, Damien Laracy.

Like London, the drive by P&I Clubs to set up local representative offices with their own claims handlers and legal advisers has meant that there is a lot less work around, says Mr. Rostron. He explains his venture – which has low overheads and therefore can keep fees down – has been “pretty much vindicated” over the last year.

He plans to keep his operation small and says the firm is attracting correspondent’s and agency work.

Many maritime law firms based in Hong Kong are laying off trainees at the moment he says and he believes some of the firms are going to feel the financial pinch.

On the plus side, he says there is still the same legal system as there was pre-handover.

Another trend he sees in the local legal scene is the attempt by the Maritime Law Association to revive maritime arbitration in Hong Kong. There has so far been limited success.

“Mainland Chinese see Hong Kong as a reasonable place to arbitrate,” he says.
Although, again like London, there has been an influx of US law firms into Hong Kong, this has not had much effect on the shipping side, Mr. Rostron says.

Hong Kong has been considering its own version of the Woolf reforms and the Law Society of Hong Kong has put forward a series of proposals for reforms in the hope of reducing costs and delays encountered in civil litigation.

In its report the Hong Kong Law Society said that it was “not satisfied that the Woolf reforms in England and Wales have proven to be the panacea it purported to constitute”.

In particular the front loading of costs is seen as undesirable, Mr. Rostron says.

However, there is an emphasis on case management with the association recommending “proactive judicial control of civil action,” and the introduction of measures like the use of pre-action protocols where appropriate, early identification of issue and tighter control on costs awarded.

Judges, Mr. Rostron says are already quite proactive and accessible out of hours. There is a very efficient procedure for arresting ships which makes it an attractive jurisdiction in which to do so. Maritime claims are dealt with in the High Court where a second maritime judge has been appointed.

On the whole, Mr. Rostron says there is still room for improvement because there is “still a degree of complacency about Hong Kong as a maritime centre.”

It is up to the law firms to make it more attractive, he says.