By Christelle Sim
On 1 November 2021, Singapore’s Ministry of Law introduced the Legal Profession (Amendment) Bill for its First Reading in Parliament. It seeks to introduce a framework for conditional fee agreements (CFAs) to be entered into between lawyers and their clients in selected proceedings. Singapore law currently prohibits CFAs and contingency fee agreements.
What are CFAs?
CFAs are agreements between a lawyer and client where the lawyer agrees to receive payment (whether in part or whole) of the solicitor-client fees only if the claim is successful, or when certain pre-agreed outcomes have been achieved. CFAs may also provide for the lawyer to obtain an “uplift” or “success” fee from the client in some situations. The details concerning this area have yet to be released.
CFAs are to be distinguished from contingency fee agreements, where a lawyer obtains remuneration from a direct, agreed percentage of the damages awarded to the client.
Proposed Amendments
Under the new section 115B(4) of the draft Bill, [1] lawyers can enter into CFAs that comply with the following requirements:
The CFA must be in writing and signed by the client.
The CFA must not adopt contingency fee arrangements.
The CFA must comply with other applicable regulations or subsidiary legislation.
The draft Bill considers subsidiary legislation prescribing, amongst other things:
The types of proceedings which allow for a CFA: these are currently regarded to be international and domestic arbitration proceedings, SICC proceedings, and related court and mediation proceedings.
The form, terms, and conditions of the CFA.
The maximum limits on the remuneration or costs that may be charged (including the uplift fee) under the CFA.
The prescribed information that must be provided to a client before entering into a CFA.
Legal Impact
With a more flexible scheme on the legal fees, CFAs promote greater access to justice for potential litigants who wish to pursue meritorious claims and may not otherwise do so due to cost considerations. The Ministry of Law noted the relevance of this where parties affected by the COVID-19 pandemic have meritorious claims, but may be unable to commence their claims due to temporary liquidity or cash flow issues. Additionally, since other Commonwealth jurisdictions such as the United Kingdom and Australia allow CFAs, the proposed CFA framework will level the playing field for local lawyers and strengthen Singapore’s position as an international legal and dispute resolution hub.
References:
[1] Legal Profession (Amendment) Bill 2021 (Bill 40 of 2021) cl 6
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