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 a 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 n ° 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 a 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- P s 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" t0 ? r ^ ° 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 F r a n c e - They far outnumber British Barristers in G 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