Industry players welcomed a move to consider conditional fee agreements (CFA) as a means to level the arbitration playing field for local lawyers and further boost Singapore's position as a leading international legal hub.
A CFA is an additional payment option in which a lawyer may get an agreed percentage of the fees chargeable in addition to his hourly fees only if he wins the case for a potential client in an arbitration, a standing practice in countries such as Australia and Britain.
"A client would be incentivised to use CFA if he does not have deep pockets," said Senior Counsel N. Sreenivasan.
Senior Counsel Chan Leng Sun said: "The benefit of using CFAs is that it enables Singapore lawyers to compete with many foreign lawyers who do not have restrictions on CFA.
"Complications have arisen in some international disputes where a team comprises Singapore as well as foreign lawyers.
"The clients may have a CFA with the instructing foreign lawyers. However, the Singapore team cannot be part of this arrangement. This may result in the clients opting for a completely foreign team, for example, in international arbitration, where it is not absolutely crucial to have Singapore lawyers on board. That results in loss of work and competitiveness for Singapore lawyers."
Then Law Society president Lok Vi Ming said in his 2014 Opening of the Legal Year speech that there is "some basis for the point that the playing field may be levelled by the moderation or even removal of the bar against such fee arrangements in international arbitration cases".
When contacted yesterday, Senior Counsel Lok said: "There should be safeguards to prevent abuse, including caps on the amounts lawyers are permitted to uplift."
Said Mr Chan: "A CFA puts even more stress on lawyers, who may be tempted to sail close to the wind in order to win a case."
Law Minister K. Shanmugam said last Thursday that a public consultation exercise for the possible use of the CFA would be launched in the next few weeks for "specific categories of proceedings".
Currently, lawyers are paid for work done based on agreed rates with clients, whatever the outcome.
Singapore Institute of Arbitrators president Dinesh Dhillon said CFAs would enhance Singapore's status as one of the premier international arbitration destinations in the world.
"It gives multinational corporations an added option as regards fee arrangements so as to better manage risk allocation and access to justice," he said.
Mr Sreenivasan expects strong views on both sides of the divide for the CFA consultation but predicts a cautious approach to its use.
"It is likely that a calibrated approach will be adopted with limited use to arbitration and international commercial cases," he said.