(Yicai Global) Oct. 17 -- "We have paid more attention to the quality of projects this year, and abandoned a large-scale merger after carrying out due diligence in the first half," a lawyer involved in investment banking told Yicai Global. Chinese law firms are becoming increasingly cautious about their work with investment banks.

With the rapid development of China's capital market over recent years, lawyers are playing an indispensable role in the securities business, including initial public offerings, mergers and acquisitions. However, there are also a number of clearly visible problems cropping up.

Law practices are at different professional levels. At some firms, teams strive to take on as many cases as they can, which leads to a dilution of quality between cases. Companies also run different systems, with some smaller firms not assigning teams to cases, and allowing individual lawyers to handle assignments.

However, since the China Securities Regulatory Commission began making changes at intermediaries last year, the situation has been improving. The 'two-tier' regulatory mechanism has become normalized and there is no equal emphasis on inspection, punishment and rules and regulations.

The regulator is mulling changes to the measures against law firms' securities businesses, and is formulating detailed legal business rules for law firms to conduct initial public offerings and mergers and acquisitions.

On Oct. 13, the CSRC reported on the progress of its inspection into law firms engaged in IPOs and securities this year, saying it had taken action against nine companies and 13 lawyers.