Are foreign lawyers a problem?

By Donna K. Woodward

MEDAN (JP): In the April 13 issue of The Jakarta Post, attorney Kartini Muljadi presented clearly the rationale for the position taken by Indonesian lawyers' groups on the employment of foreign lawyers in Indonesia.

As Kartini and T. Mulya Lubis in his April 18 article correctly pointed out, other countries have similar restrictions on the employment of foreign attorneys within their borders. The bar associations of the U.S. certainly maintain tight controls on foreign lawyers.

Kartini refers to those who attempt to circumvent the restrictions by working as "business consultants with an Indonesian company operating under the foreign capital investment law." This reference might have been prompted by the recent detention of two American attorneys who were alleged to have practiced law here without the proper work permits.

As someone who is licensed to practice law in the U.S. but who is authorized to work in Indonesia in the field of management consulting, may I address a gray area.

Many attorneys in the U.S. do not practice law as such, but work as business consultants in a broad range of ventures. Thus instead of practicing law in New York, where I am licensed to practice, I might decide to work as a business consultant in California, where I am not licensed to practice law.

Like Kartini or Mulya, I would be prohibited from giving advice on California law or representing a client in court in California, because in the eyes of the state of California I too am a "foreign" lawyer. But I may legitimately work as a business consultant in California even though I am not licensed to practice law there.

The specific substantive expertise of lawyers lies in understanding and interpreting law, researching the law, applying laws -- and of course arguing the law. But lawyers are also trained in fact-gathering, questioning, analysis and document drafting skills that are of value to business.

These generic skills are not the exclusive property of lawyers. Political scientists, economists, researchers and business consultants all need to be adept at collecting, evaluating and presenting data persuasively on behalf of clients. But because the practical training of lawyers emphasizes these skills, lawyers are often in demand as consultants.

Consultants, whether Indonesian or foreign, capitalize on those factors in their academic and professional backgrounds which enhance their appeal to clients. A consultant who is also an attorney would be likely to refer to that legal training when meeting clients because it supports a consultant's credibility. A legitimate consultant will also make clear that he or she is not authorized to practice law here.

The gray area: If foreigners have work permits authorizing them to work here as consultants, but also happen to be attorneys, when and how do the consultants cross the line into the forbidden land of practicing law?

What activities constitute "the practice of law" in Indonesia? Guidelines need to be more transparent and perhaps more defined, if they are to protect the interests of Indonesian lawyers, of the local clients who engage foreign consultants, and of those foreign consultants who try to do the right thing. Kartini also referred to practices which "violate the spirit and letter of the prevailing rules".

Unfortunately, here it is sometimes easy to avoid compliance with the spirit of the law, because officials themselves rely so heavily on the letter of the law when enforcing compliance. The tendency to interpret regulations and laws so legalistically invites abuse, by dissembling foreigners and disingenuous officials alike.

Law, like economics, is becoming transnational. As Mulya pointed out, because of innovations in communication through the use of electronic mail systems, "net" meetings and others, it will soon be hard to say just "where" a lawyer is practicing law, or to control the encroachment of foreign attorneys into a country's legal or business environment.

If a California-licensed attorney is sitting in Singapore, checking the latest relevant court decisions with his/her New York or London office via the Internet, and formulating advice to be e-mailed to a Jakarta-based client, where is the lawyer "practicing" law?

As we say in New York, "An educated consumer is our best customer." For anyone, Indonesian or otherwise, to seek advice on local legal matters from a foreign attorney who is not educated in local law, could be legal suicide. A strategy for Indonesian lawyers against foreign interlopers might be to emphasize not just your exclusive rights regarding the practice of law, but to emphasize your exclusive expertise in Indonesian legal matters.

The problem is larger than that of foreign lawyers engaged in the unauthorized practice of law. Show me a failing mega-project in North Sumatra and I will show you ill-qualified expats who were employed without work permits. Not only Indonesian lawyers, but Indonesian English teachers, managers, and other professionals are also disadvantaged: passed over in favor of relatively cheap foreigners who work in Indonesia without the proper credentials and permits.

These other professionals, though, do not have the visibility and strong lobbying power of lawyers' groups. Self-styled foreign "consultants," managers, English teachers (English teachers are the most ubiquitous undocumented workers, at least in Medan) often are employed quite openly without benefit of a work permit.

Doesn't this give an unfair business advantage to those who avoid the US$1,200 per person/per year tax? While some employers who have gone to great lengths and expense to obtain work permits are victimized by greedy immigration officials because of innocent mistakes in documents, other foreigners work openly for years without obtaining the proper sponsorship and permits.

What could account for such selective enforcement of the immigration law?

Some employers would like to comply with the law, but eventually ignore Indonesia's visa and work-permit regulations because the rules are so obscure, or because the bureaucracy is so slow, or because some local officials and agents demand such exorbitant unofficial fees, or because it is finally easier and cheaper to pay off a lower-level immigration inspector than to go through proper channels. Unofficial fees and payoffs are tired old news. Are there any new solutions?

Mulya suggests a way to resolve the controversy over foreign attorneys: a dialog. Can there be any dialog about abuse of work permits by foreign attorneys without addressing the issue of bureaucratic corruption?

And can Indonesian attorneys address the problem of corruption without addressing the problem of the substandard salaries of most civil servants?

Can the problem of public salaries be addressed without looking at the tax structure? And can corporate taxation policy be addressed without examining the system of corporate cronyism? And can cronyism be addressed without returning to the fundamental question of national reform?

Are foreign lawyers really the problem? Just as law -- a constitution -- is at the foundation of a nations' existence, local lawyers are central to national reform.

Let the various Indonesian lawyers associations initiate dialog toward civil service reform and tax reform, business law reform and government reform. As the loopholes for legal abuse and the motives for exploiting legal loopholes disappear, the problem of illegal foreign lawyers may all but disappear.

The writer, an attorney and former American diplomat, is president director of PT Far Horizons.