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

14 Feb 2012 Posted in Parliamentary speeches and responses

Introduction

1. Mr Speaker, Sir, I beg to move, “That the Bill be now read a Second time.”

2. The Bill makes three key amendments to the Legal Profession Act, to strengthen the legal industry in Singapore.

3. Let me explain the changes.

Easier access to foreign counsel

4. The first of these changes makes it slightly easier for foreign expert counsel to appear in our Courts.

5. The policy on the admission of foreign counsel to appear in our courts has evolved over time.

6. Prior to 1991, more QCs appeared in our courts.

7. Many of us benefited from working with them, watching them in action, and pitting ourselves against them in court.

8. As our Bar developed, the conditions for admitting QCs were tightened.

9. 1n 1991, admission was restricted to cases which were, in the view of the Court, “sufficient complexity and difficulty”.

10. In 1997, the first batch of Senior Counsel were appointed.

11. Over the years, the Courts have gradually restricted ad hoc admissions of QCs.

12. This was in line with the 1991 Amendments.

13. Meanwhile, Singapore has grown exponentially as a business and financial centre, with a corresponding growth in the demand for top-tier legal representation.

14. This has thrown up a different set of challenges.

15. One of the key challenges has been that, in several cases, litigants had difficulties getting a Senior Counsel in Singapore of their choice when they are up against a bank or a large corporate.

16. We have several SCs.

17. The majority of them practise in large firms.

18. These firms have extensive corporate practices serving a wide range of clients.

19. As a result, many of our SCs from the big law firms often find themselves unable or unwilling to act for a client when a large bank or corporate is on the other side.

20. The larger firms would have had some relationship with such banks and corporates.

21. Thus even if the bank or corporate does not instruct them in the specific case in question, the SCs will decline to accept instructions from the other side.

22. The Courts have observed this to be quite a serious problem over the years.

23. When he opened the Legal Year in 2010, the Chief Justice said and I quote:
    1. … there is another area of practice we might want to revisit – litigation, and the availability of top counsel to appear in our courts. Currently, we have a provision in the Legal Profession Act for the ad hoc admission of Queen’s Counsel and Senior Counsel from other Commonwealth jurisdictions, in cases where legal expertise is not available. Fortunately, it is rare that we cannot find the necessary expertise since we have built up a pool of first class litigation counsel under our Senior Counsel scheme. However, many of them are no longer in active practice and not many appear frequently in our courts, especially in the Court of Appeal. In Opening of Legal Year 2002, I spoke on this topic and pointed out that a major corporate client with a court case could immobilise all the litigators in the large law firms, including our best Senior Counsel. This is a point that the Chief Justice talked about when he was Attorney-General ten years ago and I continue the quote. To maintain our eminence as an international business and financial centre, we should make available to litigants in important commercial and financial disputes a greater diversity of legal representation in our courts. I have discussed this with the Minister for Law. He agrees with me that this is an issue that needs looking into, and he intends to consult the Law Society on it.

24. The CJ was very clear in what he has said and he did speak with me on several occasions on this matter.

25. The CJ reiterated this in his address during the opening of the Legal Year in 2011.

26. Again I quote:
    1. This year will see the revival of the Singapore Circuit – not the Singapore Grand Prix – but something older which was sidelined by the need to grow our own pool of expert advocates. We now have a sizeable pool of Senior Counsel who provide advisory, arbitral and litigation services to offshore and onshore clients. However, experience has shown that their services may not be available to the general public in times of need. We have a very large financial and business sector in terms of contributions to our GDP – it grew from 24.4% out of a nominal GDP of S$158.1 billion in 2002 to 25.9% out of a nominal GDP of S$303.7 billion in 2010. But, the legal services provided to these sectors are dominated by a small number of large law firms. The result is that the best litigation counsel are usually conflicted out of advising or acting for claimants against big business as they are mainly concentrated in the large firms. So we need a greater diversity of expert counsel to advise, negotiate and pursue legitimate claims in court. This is not a new problem. The Ministry of Law has consulted the Law Society and the Senior Counsel Forum on the best way forward. We can expect amending legislation to be enacted this year. The Bar can rest assured that this will not be a free for all. The courts will admit ad hoc expert counsel on the basis of need, and not simply because a litigant can afford to pay. We do not want to disadvantage litigants who cannot afford equivalent representation, nor do we want to impede the nurturing of our own Senior Counsel. So, ad hoc admission will be on a case by case basis, with the court doing a judicious balancing of competing interests in each case.

27. Clause 4 amends section 15 to deal with this situation.

28. The amendments were made after frank and intensive consultations with the Law Society, the Forum of Senior Counsel and the Bar at large.

29. The Bar was generally supportive of this proposal.

30. Lawyers from mid sized and small firms in particular were very supportive.

31. There can now be a less restrictive approach to the ad hoc admission of QCs and foreign counsel holding appointments of equivalent distinction toQCs

32. Greater discretion will be given to the Courts.

33. Nevertheless, the Chief Justice has stated during his address at the Opening of the Legal Year 2012 that ad hoc counsel will be admitted on the basis of need, and that it “will not be a free for all”.

34. The Chief Justice will, before the amendments come into force, gazette the matters that the Court may consider in deciding whether to admit foreign counsel and the amendments give him power to do so.

35. There will remain prescribed areas of law, where ad hoc admissions need to be justified by special reasons.

36. These are:
    • constitutional and administrative law
    • criminal law
    • and family law.

Collaboration between Singapore and foreign law practices

37. The next key amendment relates to Singapore law practices.

38. Sir, the legal services market today is
    • a globalised one
    • and increasingly competitive.

39. Size, international presence, and economies of scale matter. Consolidation is the trend.

40. The international market is dominated by a handful of large international practices which secure the most lucrative transactional work.

41. Singapore law practices realise this, and many of them are moving to embrace the new paradigm.

42. To this end, my Ministry has been in consultation with the Law Society and a diverse range of Singapore law practices on the regulatory framework that will be needed for us.

43. The thrust of the feedback that we have received is that Singapore law practices need more flexibility to collaborate with foreign law practices.

44. One area which has been raised is the sharing of profits and the holding of shares in Singapore law firms by foreign entities.

45. Currently:
    • only foreign lawyers can take profit or equity shares in Singapore law practices
    • up to a maximum of 25%.

46. Clause 10 amends section 130L, to clarify that foreign law practices may participate in such equity and profit sharing.

47. At the same time, we will change our policies and rules to give greater flexibility to Singapore firms on how they collaborate with foreign law practices.

48. Some of these changes are:
    1. Singapore law firms will be allowed to give an increased share of profit and equity in their practices to foreign lawyers up from the current 25%.
    2. When there is a collaboration between a Singapore and foreign law practice, a lawyer will be allowed to be a partner in both practices.
    3. A significantly greater degree of collaboration within Formal Law Alliances will be allowed.
    4. Qualifying Foreign Law Practices (“QFLPs”) will be allowed to enter into Formal Law Alliances as well as Joint Law Ventures with Singapore law practices, while retaining their QFLP licence.

49. There will be conditions imposed to ensure that the Singapore law practice remains in effective control of Singapore lawyers.

50. Within these limits, we will allow Singapore law practices significant freedom and flexibility to tie up with foreign partners.

51. The details of these changes will be put on the Ministry of Law website after my speech.

52. I had earlier asked the Attorney-General to chair a Committee to undertake a comprehensive review of the framework regulating lawyers and law firms.

53. The review will also put in place a systematic and clear framework for the future.

54. We are also giving Singapore law practices more flexibility to expand their practices:
    1. First, Singapore law practices will be allowed to set up a related law corporation. That will give them more flexibility to structure their operations. They can also take advantage of corporate tax incentives.
    2. Second, Singapore lawyers will be able to hold executive appointments in companies set up by the Singapore law practice for related activities such as patent agent services.

Providing for the means to enforce mandatory continuing professional development for lawyers

55. The third key area concerns mandatory continuing professional development.

56. Last year, the Singapore Institute of Legal Education was set up to administer legal education in Singapore.

57. One of the Institute’s functions is to oversee mandatory continuing professional development for the legal profession, and that will be implemented this year.

58. Clauses 2, 5, 8(a) and (b) amend the Act to provide for the means to enforce mandatory continuing professional development obligations.

59. The annual application by a lawyer for a practising certificate will now need to be accompanied by a declaration in writing on matters to be prescribed by the Institute.

60. This will include a statement that the applicant has fulfilled his continuing professional development obligations.

61. If a lawyer fails to fulfil these obligations, the Institute can refer the case to the Law Society for disciplinary action.

Conclusion

62. The remaining clauses make ancillary, consequential and minor amendments to the Act.

63. Sir, I beg to move.

Fact Sheet - Allowing Singapore Law Practices more flexibility to grow and enhance international competitiveness
Video: Channel NewsAsia 14 Feb 2011 - Legal Profession Act changes passed

Last updated on 25 Nov 2012