The Law Ministry will defer a decision until 2020 on whether to renew the licences issued to the second batch of qualifying foreign law practice (QFLP) firms.
The five-year licences issued to the four firms in 2013 were up for possible renewal as they were due to expire next year, but the report cards of these firms showed they fell short of their initial commitments made in 2012.
The ministry made clear the four QFLP firms had contributed to the growth of Singapore's legal sector, having collectively increased their revenue from offshore work and doubled the headcount of their Singapore offices since they obtained their licences. But they were impacted by the Asian economies' weaker than expected growth, drop in commodity prices and decrease in mergers and acquisitions, which led to weaker regional demand for legal services in the last two years, the ministry said.
"Deferring the decision to 2020 will allow the ministry to better assess each firm's performance and contribution to Singapore and their respective proposals for the new licence period," it added in a press statement.
The licences for this batch, comprising Gibson Dunn & Crutcher, Jones Day, Linklaters and Sidley Austin, will now run till 2020.
The QFLP scheme is meant to develop the legal sector, support the growth of Singapore's key economic sectors, and offer additional opportunities to Singaporean lawyers, said the ministry.
The scheme allows Foreign Law Practices (FLPs) to practise Singapore law, except in domestic areas of litigation and general practice. The QFLPs can practise the permitted areas of Singapore law through Singapore-qualified lawyers with practising certificates or foreign lawyers holding the foreign practitioner certificate.
There are currently nine firms holding QFLP licences of which five - forming the first batch - were awarded their licences in 2009, which they successfully renewed in 2014. The first batch of QFLPs comprise Allen & Overy, Clifford Chance, Latham & Watkins, Norton Rose Fulbright and White & Case.
"The QFLPs have contributed strongly to the growth of Singapore's legal sector. In 2016/2017, the nine QFLPs generated over $400 million in total revenue, of which about 80 per cent came from offshore work, or work that could have been done elsewhere. The nine firms also employ over 450 lawyers in their Singapore office, of which about 30 per cent are Singapore-qualified lawyers," said the ministry.
Lawyers contacted lauded the ministry's "realistic" move as it factored in the economic challenges facing the region and recognises the benefits these firms brought in helping grow the legal hub here.
Linklaters, in welcoming the development yesterday, said it had seen "exceptional growth" here over the last four years. "We appreciate our close working relationship with MinLaw and look forward to working together in the future to ensure we remain part of the fabric of the dynamic legal industry in Singapore," said Mr Christopher Bradley, Linklaters' managing partner for Singapore.