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Following pressure from the opposition party, the Japanese Prime Minister has decided to withdraw legislation to rehabilitate the financial sector. The government was planning to use taxpayers' money to help bail out Japan's ailing banks but Minshuto, the Democratic Party of Japan, has proposed a rescue plan which will address the problems by allowing market forces to prevail. Naoto Kan, the leader of Minshuto, proposes that the Long-Term Credit Bank (LTCB) be nationalized and no longer entitled to receive public money from a fund which was set up in February following the enactment of a new law to provide financial assistance to banks. Kan also proposes that an independent body be created to deal with failed financial institutions. The creation of this body, under Article three of the National Government Law, will result in a separation of budgetary and financial administration in the Ministry of Finance. However, this move is criticized by lawyers for its lack of long-term vision. Andrew Castle, banking partner at Allen & Overy in Tokyo, says: "These proposals do not provide an answer to the problems. Nationalizing the bank does not really mean anything in itself. The question they must address is whether they will find resources to keep LTCB in business or wind it up."

Freshfields, in a further move to build its US offices, has poached four partners from New York firm Milbank Tweed Hadley and McCloy. Ted Burke (project finance), Jonathan Rod (project bond finance) and Brian Rance (structured finance and derivatives) will join as partners in the New York office. Gregory May (tax) will join the Washington, DC office. Freshfields is concentrating on building up its project finance practice. Ian Terry, managing partner, says: "We will now have project finance specialists in all of the major jurisdictions. Expansion in the US will enable us to consolidate our practice with our US client base."

Facing addressive competition on three fronts, French firms need to abandon their approach to stay in the front rank. Barbara Galli reports from Paris

The International Bar Association's Council has passed a resolution on multidisciplinary practices (MDPs), its first acknowledgment that the joining of legal and accountancy practices is inevitable. The resolution calls on national regulators, including authorities which promote trade in services, to establish rules on MDPs to protect both practitioners and clients. Such rules should include measures to protect lawyers' independence and to prevent MDPs from representing conflicting interests. Client privilege and confidentiality should also be safeguarded.

Emile du Toit, general manager legal services at Absa, talks to Samantha Swiss about developing a group team after a merger

A recent Court of Appeal decision (Russell McVeagh McKenzie Bartleet v Tower Corporation) provides a useful indication to New Zealand law firms of the judiciary's approach to Chinese walls in large firms.

President Jiang Zemin's recent call for restraint of the People's Liberation Army's widespread business activities is only part of a greater campaign to separate government and business in China. In the areas of tax and finance, two events highlight this tendency:

Credit derivatives are contracts intended to transfer credit risk on loans, bonds and other assets (the underlying assets) from the protection buyer to the protection seller. Under these contracts, the payment or other obligations of the protection seller are triggered by credit events affecting the reference asset.

For some years money laundering prevention measures of considerable effectiveness have applied to banks in Switzerland. These measures did not, however, cover the rest of the financial sector, and as a result the regulatory framework had large gaps. One of these was filled on April 1 1998 when the Federal Statute for the Combating of Money Laundering entered into force. It extends the standard of care exacted in the banking sector to financial intermediaries operating in the non-banking sector. If an attorney-at-law chooses to act as a financial intermediary within the meaning of the statute, he or she is fully subject to its regulatory requirements and may not, in particular, invoke professional secrecy if requested to disclose details of his or her financial activities.

In connection with the financial and political crises that swept Russia in August and September, the Russian government has adopted certain extraordinary measures, including the restructuring of the state's obligations under widely-held debt securities, and a moratorium on repayment of certain other hard currency debts. Creditor losses as a result of these measures are potentially enormous; by some estimates, in the hundreds of billions of dollars. Among other effects, the new measures have precipitated the effective collapse of the Russian banking system. From a legal perspective, the imposition of the measures has raised a host of issues, including the effective remedies available to bond creditors and the status of private debtor obligations in view of the moratorium.