Second Reading Speech by Ms Indranee Rajah, Senior Minister of State for Law and Finance, on Legal Profession (Amendment) Bill 2018

20 MAR 2018

20 Mar 2018 Posted in Parliamentary speeches and responses

Mr Deputy Speaker,

  1. On behalf of the Minister for Law, I beg to move, ‘That the Bill be now read a Second time’.
  1. Introduction
  1. This Bill makes amendments to the Legal Profession Act in three main areas:
    1. First, it introduces new measures to the disciplinary framework for lawyers, to supplement the existing suite of measures.
    2. Second, it introduces a framework to deal with unclaimed client money and brings unclaimed intervention money within the same framework; and
    3. Third, it introduces a registration category for non-practising foreign law experts to appear in the Singapore International Commercial Court or “SICC” for short, to make submissions on matters of foreign law.
  1. It also contains certain miscellaneous and technical amendments.
  1. The majority of the amendments being introduced in this Bill, are at the request of the Law Society.
  1. Let me now take the House through the key amendments in the Bill.
  1. Bill’s key amendments
  1. Introduction of new measures to the disciplinary framework for lawyers
  1. The legal profession is a noble one and members of the profession must continue to hold themselves to the highest ethical standards of professional conduct. This is essential to Singapore’s reputation as an international legal services hub, as well as for the protection of the public and clients.
  1. Under the current disciplinary framework for lawyers, the range of disciplinary measures available to the Law Society Council include issuing a warning or reprimand to the lawyer, and/or ordering the lawyer to pay a penalty.
    1. In more egregious and serious cases of misconduct, the Court of 3 Judges can order that a lawyer be suspended or struck off the roll of advocates and solicitors.
  1. This Bill introduces more nuanced and calibrated options to the range of disciplinary measures.
    1. The amendments seek to deal with the root causes of certain types of misconduct, reduce recidivism, as well as widen the range of measures available to deal with less serious disciplinary matters.
  1. Clauses 2, 22, 23, 24 and 26 to 29 of the Bill thus expand the range of measures that may be imposed during disciplinary proceedings to include remedial measures[1]
    1. Such remedial measures can be imposed in addition to, or in lieu of, the current options which are available to the Law Society Council[2].
    2. The amendments will enable Council to prescribe remedial measures such as those which involve training, counselling and other means of rehabilitation.
    3. This does not mean that serious cases of misconduct will be dealt with lightly. Rather, it strengthens our disciplinary framework for lawyers with a broader range of disciplinary options that can be imposed together with other existing measures, or in lieu of, where appropriate.
  1. Introduction of framework for unclaimed client money and unclaimed intervention money
  1. The second main set of amendments introduce a framework to deal with: (a) unclaimed client money and (b) unclaimed intervention money.

Unclaimed Client Money

  1. Client money refers to the money which lawyers and law practices receive in the course of client engagements, to hold on behalf of their clients. The Act currently requires all client money to be held and administered by the practising lawyer in a client account. The money remains in the client account until it is paid out based on the client’s instructions or returned to the client[3].
  1. However, the Act does not currently specify what happens when client money is left unclaimed in a client account: for example, if the client becomes uncontactable.
    1. In these cases, the lawyers and law practices concerned would be unable to close the client account, and must hold the unclaimed client money indefinitely, incurring costs in administering the client accounts.
    2. Lawyers who want to retire and dissolve their law practices, but who are holding onto unclaimed client moneys, are in a difficult position. They either have to find another practising lawyer willing to take over the administration of the client account, or they are unable to retire and must continue to bear the expenses of maintaining their law practices and these client accounts.
  1. Clause 18 of the Bill provides a practical solution to this problem. A new Unclaimed Money Fund (“UM Fund”) will be maintained and administered by the Law Society[4].
    1. Solicitors and Singapore law practices will be able to transfer unclaimed client money into the UM Fund, provided that they satisfy certain requirements and the Law Society approves the transfer.
    2. These requirements will be prescribed by the Law Society Council with the Minister’s approval, and will include what reasonable efforts the solicitor or Singapore law practice should have made to return the money, before the Society will approve a transfer.
    3. Such “reasonable efforts” will take various circumstances into account, for example, more robust steps may be required in the case of larger outfits, and account may be taken of practical issues which may arise in cases of very old client accounts.
    4. Provision is made for the framework to be extended, where appropriate, to foreign lawyers and foreign law practices or entities regulated under the Act[5].
  1. Once the money is in the UM Fund:
    1. Should the lawful owner of the unclaimed client money surface after the money has been transferred to the UM Fund, the new section 70L provides a statutory mechanism for such persons to apply to the Law Society for the transferred money to be returned[6]. Such claimants may also approach their lawyers, and their lawyers can apply to the Law Society on the claimants’ behalf for the transferred money to be returned to the claimants. Details of the statutory mechanism will be prescribed in the subsidiary legislation.
    2. The new sections 70K(4) and 70L(1) provide a six-year limitation period, commencing from the date the Law Society approves the transfer of the unclaimed client moneys, for actions or claims to recover the transferred unclaimed client money[7]. After six years, any rights the client may have against the lawyer in relation to the unclaimed client money, or any statutory claim a claimant may have against the Law Society, will be extinguished. This is so that there will be clarity and certainty for the lawyers and law practices who transfer unclaimed client money into the UM Fund, especially for those who do so with a view towards retirement.
    3. However, the new section 70L(5) states that the Law Society has the power to make discretionary, or ex gratia, payments from the UM Fund to claimants who apply after the time bar[8]. The Law Society’s discretion will be exercised on a case by case basis. In exercising its discretion, the Law Society will consider factors such as the reasons why the claimant did not approach the Law Society before the time bar, for example, whether they were prevented by matters such as fraud or disability; and whether there will be undue hardship if no ex gratia payment is made.
    4. The Law Society may invest or use the money in the UM Fund, as prescribed, to fund pro bono services provided by the Law Society or by any of its wholly-owned subsidiaries[9]. This allows the unclaimed client money to be applied towards the public good instead of idling unclaimed in a client account.
  1. It should be noted that the issue of unclaimed client money is not unique to Singapore. Solicitors in England and Wales have a framework under which a solicitor may pay unclaimed client money below a certain threshold to a charity, provided that certain requirements are fulfilled[10].
  1. I mentioned earlier that unclaimed intervention money will be brought within this framework. Let me explain what this is.
  1. Under the current Act, the Law Society has the power to intervene in a lawyer’s practice in specified circumstances, for example, where a sole proprietor has died.
    1. As part of the intervention, the Law Society may take over the administration of the lawyer’s client accounts[11].
    2. The client money in these client accounts is called intervention money.
    3. The intervention money is transferred into a special account held by the Law Society for the Law Society to administer (including returning the intervention money to the lawyer’s clients).
  1. The Act currently provides that intervention money which has remained unclaimed for six years in the special account, will be transferred to the Compensation Fund[12].
    1. In the event that a claimant surfaces after six years, the Law Society has the discretion to make an ex gratia payment out of the Compensation Fund[13].
  1. Clause 31 of the Bill amends the current Act to provide for intervention money that has been unclaimed for 6 years in the special account, to be transferred to the UM Fund instead of the Compensation Fund[14]. Similarly, in the event that a claimant surfaces after six years, any ex gratia payments by the Law Society will be paid out of the UM Fund instead[15].
  1. Introduction of a registration category for non-practising foreign law experts to appear in the SICC to make submissions on matters of foreign law
  1. Sir, the SICC was established in 2015 as a division of the High Court to hear international commercial disputes, including those governed by foreign law. To date, the SICC has heard 17 cases, with diverse subject matters including banking and finance, shipbuilding, construction, investment and involving parties from jurisdictions such as Australia, Japan, Hong Kong, the UAE, India and Indonesia.
  1. Clauses 8 to 16 of the Bill seek to allow a non-practising foreign law expert such as an academic to appear in the SICC to make submissions on matters of foreign law.
    1. This will allow experts with specialised knowledge on matters of foreign law, based on their training, study or experience, or who are otherwise qualified, to appear in relevant proceedings in the SICC and relevant appeals in the Court of Appeal to submit on matters of foreign law[16].
    2. Applications for registration of a law expert can be made to the Registrar.
    3. The Bill also extends the current complaints process, which is currently applicable to foreign lawyers registered to appear in the SICC, to these foreign law experts.
    4. Related amendments to the Supreme Court of Judicature Act[17] are also made.
  1. It is common in international commercial arbitration practice for law experts to make submissions on foreign law before tribunals. Extending this option to users of the SICC will further enhance the attractiveness of the SICC as a premier international commercial court.
  1. Miscellaneous amendments
  1. Let me now touch briefly on the other key miscellaneous amendments.
  1. First: Clauses 3 and 20 of the Bill amend the Act to give the Law Society Council the power to require prescribed classes of solicitors who practise or intend to practise in a prescribed area of law, to make a declaration when applying for a practising certificate[18].
  1. This amendment puts into effect the recommendation of the Study Committee on Professional Standards and Etiquette in Court under the auspices of the Singapore Academy of Law’s Professional Affairs Committee.
  1. The intention is to prescribe that solicitors who practise in the area of litigation will need to complete a short online test on professional conduct rules administered by the Law Society and declare that that they have done the test before applying for or renewing their practising certificates.
  1. The test is not intended to be an onerous requirement but will serve as a self-learning and self-assessment tool, to remind solicitors of their obligations as members of a noble profession. This will propagate good practices as well as reinforce and serve as a useful reminder of changes relevant to the practice area.
    1. Council also has powers to exempt a solicitor or a class of solicitors from making a declaration, if the Council is satisfied that the solicitor or the class of solicitors is already equipped with the knowledge and skills required for practice in that area of the law.
  1. Second: Currently, the Law Society Council is only able to apply interest, dividends and other accretions of capital arising from the Compensation Fund[19] which consists of contributions from solicitors, to purchase and maintain a library for its members’ use.
    1. Clause 19 of the Bill makes amendments to provide Council with greater flexibility to use such interest, dividends and other accretions of capital towards a wider range of worthwhile causes.
  1. Third: Clause 17 of the Bill allows penalty sums which are collected from solicitors who fail to vote at the annual election of Law Society Council members to be credited to the Law Society, instead of the Compensation Fund[20].
  1. Fourth: Clause 4 of the Bill extends an exception relating to the requirements for a practising certificate, which are currently applicable to solicitors employed by the Law Society, to those employed by wholly-owned subsidiaries of the Law Society[21].
  1. Fifth: Clause 30 of the Bill allows Singapore law practices which are structured as law corporations and limited liability law partnerships to form a group law practice. Currently, only Singapore law practices structured as sole proprietorships and partnerships may form a group law practice. This updates the group law practice scheme which was introduced prior to the introduction of law corporations and limited liability law partnerships.
  1. Sixth: Clause 25 of the Bill clarifies that a Senior Judge of the Supreme Court of Singapore can be appointed to sit as the President of a Disciplinary Tribunal[22].
  1. Lastly: Clauses 5, 6 and 7 of the Bill repeal section 36F of the current Act[23] and make consequential amendments[24] as this category of registration of lawyers has been subsumed into other registration categories under the regulatory regime and is no longer needed.
  1. Conclusion
  1. In summary, all these amendments I have mentioned will ensure that our framework for the legal industry continues to remain up-to-date and responsive to changes in the legal landscape.
  1. Mr Deputy Speaker, Sir, I beg to move.

[1] Clause 2 of the Bill (Revised section 2(1))

[2] Clauses 22, 23, 24, 26 to 29 of the Bill (Revised sections 86(7), 87(1), 88, 93, 94, 97A, 101).

[3] Legal Profession (Solicitors’ Accounts) Rules

[4] Clause 18 of the Bill (New section 70J(1))

[5] Clause 18 of the Bill (New sections 70N(5) and (6))

[6] Clause 18 of the Bill (New section 70L)

[7] Clause 18 of the Bill (New sections 70K(3) and (4) and section 70L(1), read with definition of “transfer date” at the new section 70I.)

[8] Clause 18 of the Bill (New section 70L(5))

[9] Clause 18 of the Bill (New section 70J(3))

[10] UK SRA Accounts Rules 2011, rules 20.1, 20.2, 29.16 and 29.17

[11] Section 74 read with the First Schedule of the Act

[12] Paragraph 11(3) of the First Schedule of the Act

[13] Paragraph 11(4) of the First Schedule of the Act

[14] Clause 18 of the Bill (Revised paragraph 11(3) of the First Schedule)

[15] Clause 18 of the Bill (New paragraph 11(5) of the First Schedule. Read together with the new paragraphs 11(4) and 11(6), these new paragraphs also make the language and intent of the current paragraph 11(4) clearer.)

[16] Clause 9 of the Bill (Revised section 36O).

[17] Clause 33 of the Bill (Revised sections 18M and 80(2A)(g)).

[18] Clauses 3 of the Bill (Revised section 25(1)) and 20 of the Bill (New section 75E).

[19] The Compensation Fund was set up in 1962 with contributions from solicitors. Where clients have suffered loss as a result of dishonesty by a lawyer, the Law Society may, if Council thinks fit, make a grant out of the Fund for the purpose of relieving or mitigating that loss.

[20] Clause 17 of the Bill (Revised section 50(2)).

[21] Clause 4 of the Bill (Revised section 26(3)).

[22] Clause 25 of the Bill (Revised section 90).

[23] Clause 5 of the Bill.

[24] Clauses 6 and 7 of the Bill (Revised sections 36H and 36K).

Last updated on 21 Mar 2018