AT Law Practice LLP

Month: January 2022

Clients may now engage lawyers in Singapore under conditional fee agreements – Part Two

This is the second part of a two-part article on the recent law passed in Singapore on allowing conditional fee agreements. Basic information about CFAs such as what are CFAs and in what situations CFAs can be used in Singapore is contained in part one of this article. 

Ministry of Law in its press release in Nov 2021 which was issued in line with its introduction of the relevant Bill explained the reasons for initiating this change in Singapore law that now permits CFAs in certain situations:

  • CFAs will enhance access to justice especially for businesses and individuals who may otherwise not pursue meritorious claims;
  • CFAs may discourage lawyers from pursuing weak and frivolous claims since they risk receiving no or much lower fees if the claim is unsuccessful;
  • Singapore lawyers will be better able to compete with lawyers in other jurisdictions who are already able to offer CFAs to their clients. 

We must remember that a CFA is just a type of contract between the lawyer and his/her client regarding his/her fees. As such, CFAs must be in writing and signed by the client. 

CFAs are not intended to replace traditional fee structures. Fees charged under CFAs are still subject to professional conduct rules against overcharging.

CFAs also do not absolve a lawyer from his/her professional conduct obligations to the client such as, advising his client if there is a high likelihood of getting a greater sum of damages through litigation rather than accepting the settlement offer on the table. 

There will be safeguards that the Ministry of Law will introduce for the CFA framework via subsidiary legislation such as information that the lawyer must provide to his/her client before entering the CFA with the client, terms and conditions of a CFA etcetera. 

In a recent press article Mr. Tong was quoted as explaining that in Singapore as the CFAs do not apply to indigent litigants for now, there is no need to impose any limits on uplift fees but if the CFA framework is expanded to cover other types of cases beyond what is permissible now, this will be a fresh consideration which the Ministry of Law will review at the appropriate time. 

Read part one of this article which contains basic information about CFAs such as what are CFAs, who can use them and in what types of proceedings. 

 Copyright © 2021 ATLaw Practice LLP. All Rights Reserved.

Clients may now engage lawyers in Singapore under conditional fee agreements – Part One

This is the first part of a two-part article on the recent law passed in Singapore on allowing conditional fee agreements. More general information about CFAs such as the benefits of CFAs and the rules that apply to CFAs in Singapore are contained in part two of this article. 

In line with many popular commercial jurisdictions in the world that now permit conditional fee agreements (“CFAs”) in some form, CFAs are now allowed in the Singapore legal services framework for the first time in history with the passing of the Legal Profession Amendment Act 2022. Contingency fee arrangements (where the amount of legal fees payable is a percentage or a proportion of the damages recovered for the client) are still prohibited under Singapore law. 

CFAs like contingency fee arrangements were prohibited in Singapore until Legal Profession Amendment Act 2022 made CFAs legal within certain parameters only for now. CFAs are allowed under Singapore law only in selected proceedings i.e. they cannot be universally adopted in all proceedings. However, Second Minister for Law, Mr. Edwin Tong explained that the Ministry of Law is currently studying the feasibility of extending CFAs but will consider it carefully as domestic proceedings may involve more vulnerable litigants. 

What is a CFA?

It is a contractual agreement between a client and his lawyer under which the lawyer agrees to receive his fees only in specified circumstances for example “no win, no fee”, “no win, less fee” or the lawyer can charge an additional amount known as “uplift” or “success fee” if the case is won. 

Who can use CFAs?

Singapore law practices, certain registered foreign lawyers and foreign law practices can use CFAs.

When can CFAs be used?

Mr Tong explained in Parliament earlier this week that “the over-arching CFA framework has been designed with the flexibility to enable the framework to be expanded incrementally step-by-step after we study and we take into account views by stakeholders. The main tenet of the CFA framework has been set out in the Bill [now the Act – as the Bill has been passed] supplemented by safeguards to be prescribed under subsidiary legislation. The categories of proceedings permitted by the CFA framework will also be set out in the subsidiary legislation.”

Thus, CFAs will likely be permitted international and domestic arbitration proceedings, certain proceedings in the Singapore International Commercial Court (“SICC”) and related court and mediation proceedings. We need to wait for the relevant subsidiary legislation to find out the exact scope permitted under the current CFA framework. 

Continue reading part two of this article which contains some general information about CFAs such as benefits of CFAs and the rules that apply to CFAs in Singapore.

 Copyright © 2021 ATLaw Practice LLP. All Rights Reserved.

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