The Gazette 1975

providing advice and service in relation to French

jaw itself. This practice is understandably resented

by the French legal profession which forbids its

members to enter into partnership or full time

employment with any foreign practitioner. As a

result, the foreign firms invariably employ non

practising Avocats or law clerks holding legal quali-

fications and experience for most day to day work.

The services of outside Avocats are engaged only for

specialised opinions or litigation itself. This practice

s therefore similar to that existng between Solcitors

and Barristers in Great Britain or Ireland.

There is a strong likelihood that the French Bar

will relax its embargo on association with foreign

lawyers. Two instances illustrate this loosening of

attitudes. The most significant is the recent decision

°f the Conseil de l'Ordre permitting any Avocat of

seven years' practice to enter into a limited form of

association with a foreign lawyer practising in France

Provided that any such link-up is notified to and

approved by the Conseil de l'Ordre. This is seen as

first step towards "Cabinet Groupés" among French

Avocats and their foreign counterparts.

Proposed Convention for Practice Rules

The second development has taken the form of

discussions between the Conseil de l'Ordre, the Bar

Council of Great Britain and the Law Society with a

view to establishing a Convention aimed at fixing prac-

tice rules ensuring that members of one professional

body do not usurp the functions of the other at the

level of international practice. It is widely admitted

mat the French Bar has most to gain from such a

Convention because of the heavy competition from

British firms in France in respect of British clients.

Moreover, the small number of French Avocats in

Britain, most of whom are sole practitioners, present

° serious challenge to either British barristers or

solicitors. It is not surprising therefore that this

Convention has yet to be enforced although various

drafts have from time to time been approved and

ben amended. Notwithstanding the absence of such

Convention, overseas practice rules do exist for

toembers of all three professional bodies, some of

jyhich are the results of agreements between the

bree bodies concerned.

Incidentally, it is interesting to note from the point

view of Irish legal practice that the existence of

wo separate professions in Great Britain has proved

quite a hindrance to the development of satisfactory

°verseas practice rules and proper working relation-

with the French Bar. Should a British Barrister

Practising abroad be entitled to hold client monies?

jVlust a French Avocat use the intermediary of a

Brita"

^ °

r d e r t 0 c o n s u l t a B a r r i s t e

r practising in

These problems may ultimately be resolved by the

pUmerical strength of British Solicitors practising in

r a n c e

- They far outnumber British Barristers in

r a n c e

or, as mentioned above, French Avocats in

o f

r e a

* Britain. The main reason for the dominance

solicitors is the cost factor. A one man firm hav-

8 a s e c

r e t a ry and two-roomed office in central Paris

Gently costs approximately £25,000 per annum.

The clientele required to finance such an investment

comes mainly from Great Britain direct. It follows

that only a large Solicitors firm or at least a con-

sortium of medium sized offices can provide the

funds and clientele to support a practice in France.

Setting up Practice in France

It is now proposed to outline how a foreign firm

establishes a practice in France, the nature of the

work it handles and the internal organisation of the

firm. The main factor influencing the setting up of an

office in France is that the firm's clientele at home

has become increasingly involved in trading with

France.

It is essential therefore that the principal

office should have a very large commercial practice.

Some British and American firms have suffered

heavy financial loss by setting up offices in France

merely on the strength of a handful of commercial

clients, hoping unsuccessfully to pick up the

remainder from French residents of English mother

tongue.

Once it has been decided that the French office

appears ultimately capable of paying for itself, a

decision as to profit sharing should then be made.

It is usually preferable to resolve that profits remain

in France.

While naturally subject to French income tax in

respect of the portion distributed to resident mem-

bers of the firm in France, no other taxes will be

payable for as long as the profits are not repatriated.

It follows that the French office must be treated as

a separate entity and not just a branch. The initial

cost of the investment can be advanced as a loan

though only interest charged thereon is subject to

French withholding tax.

If on the other hand, profits are to be repatriated,

the non resident partners will be subject to French

income tax, withholding tax and income tax in their

own country on the balance after allowing credit for

the two former taxes.

The formalities for opening an office are minimal.

As the French Registries of Commerce deal only

with commercial partnerships and companies, there

is therefore no business names registry for pro-

fessional firms. Declarations must, of course, be made

to the income tax, Social Security and indirect tax

authorities. The latter relates mainly to a business

tax known as Patente to which a firm may or may

not be subject depending on its size and the area in

which it carries on business.

The Société Civile

It is of course possible to form a separate French

partnership known at a "Société Civile Profession-

nelle". Although regarded as a corporate entity, a

Société Civile has fiscal transparency and to all

intents and purposes is the equivalent of a Common

Law partnership. Requirements for establishing a

Société Civile are minimal, the partnership coming

into existence on the signing of its Articles (Statuts)

by members thereof. There is nothing to prevent the

French partnership having the same firm name as its

principal office at home although it is preferable to

distinguish the French resident partners from those

116