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.
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