Singapore's step to liberalise the legal services market and create a more competitive market finds wide support amongst law firms in the region, but some warn it will worsen the already crippling shortage of local talent.
Managing principal of Baker & McKenzie.Wong & Leow Wong Kien Keong said that under the more liberalised regulatory regime, Singapore's legal market will expand in both size and complexity, benefiting the economy.
"Observing other jurisdictions like Hong Kong and England, their legal markets are considerably more open than Singapore. This is the trend that we should also follow. In doing so, Singapore can better attract and retain high quality legal talent, as well as enable firms to better serve the region," he said.
Some local firms have also supported the liberalisation. "This should lead to an increase in opportunities in international arbitration and more sophisticated corporate finance transactions, which we welcome," said Manoj Sandrasegara, a director of Drew & Napier.
Under the new enhanced JLV (or EJLV) scheme, foreign firms will be allowed to hire their own Singapore lawyers and share up to 49% of their profits with their Singapore partner firm. They will also be able to hire Singapore lawyers without establishing a JLV, if successful in obtaining one of five Qualifying Foreign Law Firm (QFLF) licences the government will make available.
It is also hoped the QFLF scheme will encourage foreign firms to attract more demand for legal services in Singapore, claimed Wong. This is because international firms are more likely to have multinational companies and banks as clients.
Staff shortage
Some Singapore firms argue that even though there will be limits in place restricting how many Singapore lawyers a foreign firm can hire, the drain on legal talent will leave firms short. "There isn't enough quality Singapore legal talent to service more firms... Singapore firms will end up bringing in more foreign lawyers who aren't readily able to practise Singapore law," a source told ALB.
Asia executive partner of Allens Arthur Robinson Jim Dunstan agreed that there is currently a shortage of skilled legal professionals in Singapore. However, he feels that defections to the UK and US pose an even greater risk, and he supports the liberalisation as a means to help retain more Singapore lawyers through offering international experience within the country.
The changes apparently will not greatly impact Allens Arthur Robinson's JLV with TSMP Law Corporation. The firms will consider applying for an EJLV, as it will provide tighter integration and potential to hire Singapore lawyers as partners, said Dunstan.
Foreign invasion?
The change has caught the attention of international firms previously deterred by the JLV scheme. They are now reconsidering Singapore as a potential market. Head of Troutman Sanders' Hong Kong office Eric Szweda said: "In the past we haven't found the JLV to be very advantageous. It isn't so much the issue of sharing profits, rather the level of control that we have over the quality of our work. But because of the change we'll certainly be watching with great interest."
"We already have a good flow of work from Singapore and the proposal to liberalise the legal sector is definitely of interest to us, because it would allow us to hire Singapore lawyers and practise Singapore law," said Paul Li, managing partner of Simmons & Simmons' China offices.
A Singapore firm told ALB that a major concern about the JLV is the 'complication' in setting it up and the fact that in some cases profits are not shared equally. High investment in booming economies like China has lured some foreign firms away from the country.
A couple of foreign firms have begun reassessing their existing JLV agreements. "Both our firms will have to study carefully the terms of the enhanced JLV scheme as against our respective objectives and determine whether there are sufficient mutual benefits for us," said Dilhan Pillay Sandrasegara, managing partner of WongPartnership LLP, the partner firm of Clifford Chance in Singapore.
A source told ALB that the foreign firms most likely to apply for a QFLF licence are: Herbert Smith, White & Case, Jones Day, DLA Piper and Latham & Watkins. Jones Day partner in charge David Longstaff confirmed to ALB his interest in the scheme. He said that the main attraction would be to provide advice on Singapore law to existing clients.
Baker & McKenzie.Wong & Leow and DLA Piper conveyed that it is too early to say whether they will apply for a QFLF or an EJLV licence, but they are likely to consider the schemes.
EXISTING JOINT LAW VENTURES IN SINGAPORE
Shook Lin & Bok - Allen & Overy
TSMP - Allens Arthur Robinson
Wong & Leow - Baker & McKenzie
WongPartnership - Clifford Chance
Allen & Gledhill - Linklaters
Lee & Lee - Lovells