With the impending introduction of the Qualifying Foreign Law Firm Scheme in Singapore, the question is how, and to what extent, the changes will affect the legal market in the Lion City. There are widely divergent views, with some believing that little will change from the Joint Law Venture system that has been in place since 2000. Others view the legislation as nothing short of groundbreaking.
Under the terms of the scheme, the Singapore government will issue between five and seven licences to foreign law firms, allowing them, for the first time, to practise Singaporean law through Singaporean lawyers who can be employed by foreign firms. They will also be entitled to hold partnership and administrative positions within the foreign firms in which they work.
There are, of course, some limits. Licensed firms will only be allowed to hire Singaporean lawyers with at least three years post-qualification experience. They will only be allowed to hire one Singaporean lawyer for each foreign lawyer they have in the practice. And they will not be permitted to act on behalf of clients in litigious matters.
The stated aim of the scheme is to help Singapore become an international centre for legal services, in particular to make it a more attractive place for firms to base their regional practices doing work in nearby jurisdictions such as India, Indonesia, Malaysia and Vietnam. However, initially at least, only a limited number of licences will be made available. This means that law firms who wish to get a licence are being forced to compete with each other.
Firms are now in the process of completing and submitting their proposals. These bids are to be based upon key criteria which relate to the firms’ commitment to Singapore, including the size and make-up of their presence there, the extent to which the firm brings international work to Singapore and the regional jurisdictions they will service from Singapore. It is vital for applicant firms to have a professional focus on core practice areas including corporate and banking and finance, while also maintaining an intention to practise in other areas of law deemed to be important, such as biosciences, tax, competition, arbitration and renewable energy.
It seems clear that the changes will create significant opportunities for local lawyers within international firms. Some individuals, teams and even boutique firms have already been having informal discussions with some of the international firms seeking licences. As for Singaporean firms, at certain levels and for some work, they will face increased competition. However, most have been expecting this change to come and are well prepared for it.
From the perspective of international firms, by obtaining a licence and thereafter hiring appropriate Singaporean professional staff, they will be able to offer commercial clients a one-stop shop for legal advice. For the first time, deals with both local and international components will be dealt with by an international firm without assistance from a Singaporean practice. Through their own local lawyers, international firms will be able to compete for certain local work.
Opinion is divided as to what this will mean for foreign lawyers. Some believe that in making Singapore more of an international legal centre and by making it a better place for big international law firms, the amount of work being undertaken in the jurisdiction will increase significantly. Foreign firms will grow and there will be more and better opportunities for overseas lawyers. Others doubt that such significant increases in work levels will be created. They think that once international firms can hire Singaporean lawyers, some of whom will also hold overseas qualifications, the demand for foreign lawyers in the island state will actually be reduced.
Only time will tell who is right, but there can be little doubt that Singapore is well positioned and has the right kind of infrastructure to become a leading international legal centre, and one through which leading firms will increasingly service the south Asia region. Whether it happens overnight or takes a little more time, this kind of liberalisation will undoubtedly help make that become a reality.