SINGAPORE - "No win, no fee" agreements between lawyers and clients will be allowed for the first time in Singapore, if a Bill tabled by the Ministry of Law on Monday (Nov 1) is passed by Parliament.
The Bill proposes amendments to the Legal Profession Act which will provide a framework for lawyers to enter into conditional fee agreements with their clients in certain proceedings.
As a start, these include international and domestic arbitration proceedings, certain proceedings in the Singapore International Commercial Court (SICC), and related court and mediation proceedings.
A conditional fee agreement, or CFA, is an arrangement where a lawyer is paid the whole or part of his fees only in specified circumstances, such as when the claim is successful.
"The proposed introduction of CFAs in Singapore is part of our ongoing efforts to review our litigation funding landscape to better support the needs of businesses and lawyers, while referencing the developments in other jurisdictions," the ministry said in a statement.
Singapore law currently prohibits conditional fee agreements.
The prohibition originated from English common law, to guard against a potential conflict of interest for lawyers with regard to their duty to their clients and to the court. England removed the prohibition in 1990.
MinLaw said conditional fee agreements can ultimately strengthen Singapore's position as an international legal and dispute resolution hub.
"CFAs help to enhance access to justice by providing businesses or individuals with additional funding options to pursue meritorious claims, which they may otherwise not pursue. This is particularly relevant given the disruptions arising from the Covid-19 pandemic," said the ministry.
MinLaw said the framework will also level the playing field for Singapore lawyers in areas such as international arbitration or SICC proceedings, as their counterparts in foreign jurisdictions are able to offer such agreements.
Conditional fee agreements may also help to discourage lawyers from pursuing weak cases and frivolous claims, it said.
In 2019, MinLaw carried out a public consultation exercise on the proposed framework for conditional fee agreements.
Feedback from the legal profession and other respondents has generally been positive and supportive, it said.
The Bill proposes to create a statutory exception under the Legal Profession Act, so that lawyers will not be prevented from entering into a CFA that complies with prescribed requirements with a client.
However, contingency fee agreements, a different type of arrangement where a lawyer is paid a percentage of the damages awarded, will continue to be prohibited.
The proposed framework will also provide for "uplift" fees on top of a lawyer's usual fees.
MinLaw added that safeguards relating to information a lawyer must provide to the client before entering into a CFA, and the terms and conditions of a CFA, will be implemented via subsidiary legislation.
Fees charged under a CFA will continue to be subject to professional conduct rules against overcharging, it said.