Law Ministry considering new payment system for lawyers: Shanmugam

The Maxwell Chambers Suites, an extension wing of the dispute resolution complex Maxwell Chambers, was launched yesterday.
The Maxwell Chambers Suites, an extension wing of the dispute resolution complex Maxwell Chambers, was launched yesterday.ST PHOTO: DESMOND WEE

Conditional Fee Agreement means lawyers get paid only if client's claim is successful

The Law Ministry is considering whether to introduce a form of payment agreement in which lawyers get paid only if their client's claim is successful, said Law Minister K. Shanmugam yesterday.

Known as Conditional Fee Agreements (CFAs), they could include a success fee on top of the usual legal fees. Such agreements are being considered for "specific categories of proceedings", said Mr Shanmugam, without elaborating.

This would be a "fairly radical change" to the industry, he said at the launch of the Maxwell Chambers Suites, an extension wing of the dispute resolution complex Maxwell Chambers.

The Law Ministry also plans to allow third parties to fund arbitration proceedings here - likely from early next year - after receiving good feedback about this funding method for arbitration proceedings internationally, he said.

The practice involves external parties funding the cost of arbitration proceedings, instead of the disputing parties. It was introduced here in 2017, but only for international arbitration proceedings.

Public consultations for Conditional Fee Agreements will start in the coming weeks, he added.

"I expect the legal profession to be very welcoming of this, because it means more work. But we will seek feedback and views. And I think it will give a substantial boost to arbitration mediation," he said.

MORE WORK SEEN

I expect the legal profession to be very welcoming of this, because it means more work... And I think it will give a substantial boost to arbitration mediation.

LAW MINISTER K. SHANMUGAM, about Conditional Fee Agreements

Such agreements are currently prohibited here. Advocates say it might allow for more access to justice, as clients need not fear having to foot a heavy bill if they lose their lawsuits. On the flip side, lawyers could be more tempted to pick only meritorious cases, or risk being on the losing end when they are not paid for a case they lost.

Lawyers interviewed described the move as an interesting development that could put Singapore's legal system on a par with other countries, where similar fee agreements are already being used.

Examples of such countries include China and the United States, said lawyer Hee Theng Fong from law firm Eversheds-Harry Elias.

"In that sense, maybe this might attract more businesses," he added.

Law Society president Gregory Vijayendran said it was a radical change, although he noted that there should be safeguards to protect the interests of both the public and the legal profession.

"Vital safeguards, like a gatekeeper, are needed to ensure each and every CFA is both in the interests of the public - specifically, access to justice, as well as in the interests of the legal profession," he said.

In his speech, Mr Shanmugam said he hopes Singapore will be the "city in people's minds when people consider dispute resolution".

 

The week has been an extremely busy one for Singapore with the signing of the Singapore Convention on Mediation on Wednesday, he noted.

Two international legal institutions have also launched their Asia headquarters here in the past week: Insol International, a federation for insolvency associations, and the American Arbitration Association - International Centre for Dispute Resolution. Both are housed in Maxwell Chambers Suites. The extension wing has tripled the size of Maxwell Chambers. It has the highest concentration of case management offices in the world, with institutions like the World Intellectual Property Organisation Arbitration and Mediation Centre setting up shop there.

Said Mr Shanmugam: "These developments will help us in cementing our position as a legal international hub, and certainly the leading hub in Asia."

A version of this article appeared in the print edition of The Straits Times on August 09, 2019, with the headline 'New payment system for lawyers under study'. Print Edition | Subscribe