Second Reading Speech by Minister for Law, K Shanmugam, on the Legal Profession (Amendment) Bill

04 NOV 2014

4 Nov 2014 Posted in Parliamentary speeches and responses

Madam Speaker,

I beg to move, ‘That the Bill be now read a second time’.

Introduction

The Legal Profession (Amendment) Bill (“the Bill”) contains two key sets of amendments, as follows:
1. First, to provide for the registration of foreign lawyers who wish to appear and plead before the Singapore International Commercial Court (“SICC”); and
2. Second, to modernise and streamline Singapore’s regulatory framework for lawyers and law practices.

I will take each set of amendments in turn.

Allowing Foreign Lawyers to Appear and Plead before the Singapore International Commercial Court

Madam Speaker, earlier, I explained the rationale and structure of the SICC during the Second Reading of the Constitution of the Republic of Singapore (Amendment) Bill and the Supreme Court of Judicature (Amendment) Bill.

I also explained that foreign lawyers will have to register to appear and plead before the SICC, or to argue appeals from the SICC.

This Bill provides for two forms of registration ¹:
1. First, full registration, which allows a foreign lawyer to appear and act in proceedings before the SICC and appeals from the SICC in certain cases to be prescribed in subsidiary legislation:
  1. For example, where the case does not have a substantial connection with Singapore.
2. Second, restricted registration, which allows a foreign lawyer to appear and act solely for the purposes of making submissions on matters of foreign law in the specific case permitted by the Court.

The foreign lawyer’s registration may be cancelled in limited circumstances, for example, where he has been subject to disciplinary action in another jurisdiction ².
1. The judge hearing the application will give the foreign lawyer a reasonable opportunity to be heard before making the order to cancel the registration.
2. His decision is not appealable.

Foreign lawyers who are registered to appear before the SICC are subject to the oversight of the Supreme Court ³.

The Bill also introduces a framework for dealing with complaints on the professional conduct of lawyers registered with the SICC.

Under this framework:
1. Upon receipt of a complaint, the Chief Justice will appoint a complaints committee to hear and investigate the complaint⁴.
2. If the complaints committee determines that there is a prima facie case for investigation, the appointing committee will appoint a solicitor⁵:
  1. to frame the charges to be preferred against the foreign lawyer; and
  2. thereafter, conduct proceedings before the complaints committee, in accordance with the instructing authority’s instructions.
3. After the solicitor prefers the charges against the foreign lawyer, the complaints committee will hear and investigate the complaint.
  1. The foreign lawyer will have a reasonable opportunity to be heard by the complaints committee ⁶.
4. If the complaints committee finds cause of sufficient gravity for disciplinary action, the appointing authority will appoint a solicitor to make an application to the Court of 3 Judges ⁷.
5. The Court of 3 Judges, apart from the usual powers to order a penalty and/or a censure, will also have the power to cancel the foreign lawyer’s registration.

Modernising Singapore’s Regulatory Framework for Lawyers and Law Practices

Madam Speaker, the next set of amendments aims to modernise Singapore’s regulatory framework for lawyers and law practices.

This set of amendments arises from the recommendations made by the Committee to Review the Regulatory Framework of the Singapore Legal Services Sector.
1. The Committee was headed by Chief Justice Sundaresh Menon, who was then the Attorney-General.

In January 2014, the Committee released its Final Report, recommending to:
1. First, streamline the disciplinary framework for all Singapore-qualified and foreign-qualified lawyers in Singapore;
2. Secondly, establish a new Professional Conduct Council (“PCC”); and
3. Thirdly, create a new statutory office under the Ministry of Law that will be helmed by a Director of Legal Services (“DLS”) to regulate Singapore and foreign law practices.

The amendments seek to maintain high professional standards in the legal industry.

Let me elaborate on this set of amendments by discussing:
1. the regulation of individual lawyers; and
2. the regulation of entities.

Regulation of Individual Lawyers

Presently, Singapore-qualified lawyers:
1. have to adhere to the Legal Profession (Professional Conduct) Rules;
2. come under a professional disciplinary process administered by the Law Society; and
3. are subject to the ultimate oversight of the Supreme Court.

On the other hand, foreign-qualified lawyers:
1. are generally not subject to our Legal Profession (Professional Conduct) Rules; and
2. come under the regulatory oversight of the Attorney-General.

The streamlining of disciplinary processes will ensure that a common disciplinary framework applies to all lawyers operating in Singapore.

To this end, the Bill will:
1. Extend the existing disciplinary regime that is applicable to Singapore-qualified lawyers, to foreign-qualified lawyers; and
2. Ensure both categories of lawyers will fall under the Supreme Court’s ultimate supervisory oversight.

The Law Society of Singapore (“Law Society”) will remain involved as the Secretariat for proceedings before the Review Committee and the Inquiry Committee.
1. The various stages of the disciplinary framework (namely, the Review Committee, the Inquiry Committee, the Disciplinary Tribunal and the Court of Three Judges) are identical to the present framework that is applicable to Singapore-qualified lawyers.
2. However, where a foreign-qualified lawyer is being disciplined, a foreign-qualified lawyer will sit on each of the committees, as well as on the Disciplinary Tribunal.

The Bill also establishes a new Professional Conduct Council (“PCC”) chaired by the Chief Justice⁸.
1. The PCC will oversee the enactment of the relevant rules relating to professional conduct matters for ⁹:
  1. Singapore-qualified lawyers and foreign-qualified lawyers practising law in Singapore; and
  2. the management of law practices.
2. This ensures that all lawyers will be subject to common ethical and professional responsibility standards.

Entity Regulation

I will now turn to the regulation of entities within the legal profession.

Presently, there is no integrated regime governing the regulation of law practices as entities:
1. The Attorney-General oversees the regulation and discipline of foreign law practices, and collaborations involving Singapore law practices and foreign law practices; and
2. The Law Society oversees various approvals pertaining to Singapore law practices, such as name approvals, but does not otherwise regulate or license Singapore law practices.

The Bill consolidates parallel regulatory regimes into one by establishing an integrated licensing system administered by a single central body, which we intend to name, the Legal Services Regulatory Authority (“LSRA”).
1. The LSRA will oversee and regulate local and foreign law practice entities that operate in Singapore.

The Bill establishes the post of the Director of Legal Services (“DLS”) to head the LSRA.

The DLS will have the following powers and functions:
1. He will take over the Attorney-General’s and Law Society’s respective powers to register law practices and regulate certain business criteria that are applicable to law practices in Singapore.
  1. However, all matters relating to professional conduct will remain under the Supreme Court’s oversight.
2. He will take over the Attorney-General’s function of registering foreign lawyers in Singapore; and
3. He will regulate and license law practices wishing to structure themselves as an Alternative Business Structure (“ABS”) in Singapore.
  1. I shall explain more about ABSes shortly.

Having an integrated licensing system would:
1. make it administratively more convenient for law practice entities to set up offices in Singapore by streamlining processes; and
2. allow for more consistent supervision and enforcement of the “business criteria” applicable to the various law practice entities,
  1. thereby facilitating a more coherent and consistent regulatory approach.

The Bill also provides for the flexibility to accommodate alternative business structures (ABSes) which have begun to come up in other major jurisdictions such as Australia and the United Kingdom.
1. Unlike traditional law practices which are completely owned by lawyers and only offer legal services, ABSes are innovative structures where:
  1. non-lawyers are allowed to be partners, directors or shareholders, or to have a share in the profits of the law practice; or
  2. firms offer multi-disciplinary services going beyond the provision of legal services, for example, by including accountancy services.
2. ABSes present new ways for law practices to better organise their business.
3. It will also allow law practices to:
  1. gain access to additional sources of capital and investments to grow;
  2. attract senior non-lawyer stakeholders with strong management or finance experience, to better manage the business or financial aspects of legal practice; and
  3. offer a wider range of value-added services to their clients.
4. In considering the issue of ABSes, the Committee:
  1. recommended an incremental approach; and
  2. stressed the importance of ensuring that appropriate safeguards are put in place to address independence and conflicts concerns that could arise from allowing non-lawyers to be involved in managing and developing a law practice.
5. The Bill therefore permits Legal Disciplinary Practices (“LDPs”) to be established:
  1. This allows non-lawyer employees to become partners, directors or shareholders, or to share in the profits of the law practice (“Non-Lawyer Owners”).
  2. However, LDPs will only be permitted to provide legal services.
  3. Further, Non-Lawyer Owners will need to apply for approval to become an owner or manager of the law practice ¹⁰.
    1. The suitability of each applicant will be carefully assessed by the DLS.
  4. If approved, the Non-Lawyer Owner will be subject to:
    1. the same management, professional responsibility and ethical rules in the professional conduct rules; and
    2. the same disciplinary framework as their lawyer counterparts ¹¹.

As for other forms of ABSes:
1. This is an issue we will continue to study in consultation with law practices, legal industry stakeholders and consumers of legal services.
2. A prudent, calibrated and incremental approach will be taken with regard to ABSes, with appropriate regulatory safeguards put in place to ensure adequate consumer protection.

Miscellaneous Amendments

Madam Speaker, the Bill also makes certain miscellaneous amendments which I will now go through.

First, the Bill introduces anti-money laundering and counter terrorism financing obligations into the primary legislation ¹².
1. These obligations are mainly taken from existing obligations in the Legal Profession (Professional Conduct) Rules.
2. The Law Society will also be given the power to make related rules, with the approval of the Minister for Law.
3. The Law Society’s existing powers to inspect Singapore lawyers for compliance with such obligations will be extended to foreign lawyers.

These amendments are part of Singapore’s on-going efforts:
1. to implement international best practices (including recommendations by the Financial Action Task Force); and
2. to ensure that there are sufficient safeguards put in place to combat money laundering and terrorism financing in the legal sector.

Secondly, the Bill enables the Law Society to introduce a new requirement for Singapore lawyers to disclose the number of hours spent in each preceding year on pro bono work.
1. This will take effect from 2015 onwards.
2. This requirement was recommended by the Committee to Study Community Legal Services Initiatives.
  1. This Committee was chaired by Attorney-General V K Rajah, who was then a Judge of Appeal, and it included representatives from the Singapore Bar.
3. This will generate the information that will enable a more holistic appraisal of the pro bono landscape in Singapore.

Thirdly, the Bill streamlines the process of applying for practising certificates, by allowing Singapore lawyers:
1. to make a declaration that they have paid or made arrangements to pay all relevant fees in the Supreme Court’s Integrated Electronic Litigation System;
2. without having to obtain certificates evidencing the same.

Fourthly, the Bill expands the membership of the Law Society ¹³:
1. by allowing foreign lawyers who practise only foreign law to join as an associate member of the Law Society.

Lastly, the Bill makes changes to better organise the categorisation of foreign-qualified lawyers seeking registration under the Act and sunset categories that will be streamlined.
1. In this regard, a new category of registration will be created for foreign lawyers who do not practise in Singapore, but who wish to hold an interest in a Singapore law practice, to register and obtain approval to do the same.

Conclusion

Madam Speaker, I beg to move.

Factsheet on the Legal Profession (Amendment) Bill (0.1MB)

^[1] Clause 18, new section 36P
^[2] New sections 36P(7) and (9)
^[3] New section 36S(1)
^[4] New section 36S(5)
^[5] New sections 36S(9)(c)-(d)
^[6] New section 36S(11)
^[7] New section 36U
^[8] Clause 27
^[9] Clause 27, especially new section 71(2)
^[10] Clause 17, new section 36G
^[11] Clause 34, section 82B
^[12] Clause 25
^[13] Clause 20

Last updated on 04 Nov 2014