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UK firm Freshfields is starting a joint venture with a Japanese lawyer, or bengoshi. The joint venture is the closest form of cooperation allowed by Japanese bar rules between bengoshi and foreign firms. Freshfields will become the fifth law firm to form a joint venture, after French firm Gide Loyrette Nouel and US firms Baker & McKenzie, Sullivan & Cromwell and White & Case. Restrictive legal rules mean foreign law firms in Tokyo are forbidden from employing bengoshi, or offering them partnerships. The joint venture allows firms to share offices and other expenses, but they must keep all income separate. There are many foreign law firms in Japan but joint ventures are rare because foreign lawyers think the system is flawed. Ruth Markland, Freshfields' managing partner in Asia agrees to a point. "It is unsatisfactory because it would be ideal to be able to offer full partnership," she says. "But we feel the time is right to have a Japanese capability and this is the structure that is allowed." Markland expects the planned economic reform will lead to greater demand for legal services in Tokyo.

UK firm Norton Rose is disbanding its national group of associated firms, the Norton Rose M5 Group, to concentrate on an international strategy. The group unanimously agreed to wind up its formal links by the end of July 1998. One possibility was that the group would eventually become a single national firm. However, a decision was taken not to merge in 1993, and the firms began to pursue their own individual strategies, most notably when two members of the group, Booth & Co, and Addleshaw Sons & Latham merged last year.

The largest US merger between east and west coast law firms is being contemplated by New York firm Reid & Priest and San Francisco's Thelen, Marrin, Johnson & Bridges LLP. The combined firm would have about 350 lawyers. Meanwhile, Reid & Priest has also linked with ambitious Indian firm Titus & Radhakrishnan. Richard Gary, Thelen Marrin's chairman, says: "The conversations are at a very serious stage. I expect there will be a decision within the next few weeks." A spokesperson for Reid & Priest refuses to comment.

On February 19, the Bank of Botswana liberalized exchange controls. The liberalization falls short of a complete abolition of exchange controls, although this may occur in the next six to eight months.

The Commission proposed a Directive to eliminate withholding taxes on payments of interest and royalties between associated companies in different member states. Taxes levied at source either by deduction or assessment can involve time-consuming formalities, cash-flow losses and double taxation for companies engaged in cross-border business. The Commission therefore proposed that taxes on payments of interest and royalties should be levied only in the member states where the companies receiving the payments are located. Commissioner Monti says this would remove a 'significant tax handicap' to companies' cross-border operations.

UK firm Linklaters & Paines has formally ended its two year association with German firm Schön Nolte Finkelnburg & Clemm and is now setting up to work with Oppenhoff & Rädler, the German member of the Alliance of European Lawyers. According to Linklaters' press release the office is set to continue as the Frankfurt branch of Schön Nolte. But the three Linklaters lawyers who will remain in Frankfurt have been offered new premises — coincidentally belonging to Oppenhoff. "They are moving into office space which Oppenhoff has made available to them," confirms Linklaters' managing partner Terence Kyle. So what of full Alliance membership? "We have an entirely open mind," says Kyle of Linklaters' European strategy and he is quick to point out that the firm itself has never declared any intention to join the Alliance.

The IMF recently declared that measures taken by the Brazilian government in the aftermath of the Asian financial crisis have prevented the extension of the crisis to Latin America. The IMF also emphasized that the Brazilian stabilization programme depends on the implementation of constitutional amendments on public administration, social security and financial matters. The finance minister, Pedro Malan, stated that the reforms would need to be approved and implemented within two years. Meanwhile, Brazil's financial situation would be sustained with the proceeds of the privatization programme.

The Supreme Court has confirmed a decision passed by an Appellate Commercial Court in June 1995 In re NL SA v Bull Argentina SA, challenging the validity of agreements entered into among shareholders of Argentine corporations.

As capital markets, project finance and securities work dry up in Asia some law firms are concerned. Most are compensating by changing the emphasis of the work they offer. Some are even expanding. By Mairi MacLean of Baines Gwinner, London

On March 5 1998 the Reserve Bank of New Zealand implemented a real-time gross settlement (RTGS) system for high value interbank transactions (including those in the wholesale securities and foreign exchange markets). The value of such transactions settled through the new Zealand banking system now averages more than NZ$30 billion (US$17.5 billion) a day. Previously, these interbank obligations were netted and settled overnight through each bank's settlement account with the Reserve Bank.