Singapore's step towards a more liberalised legal services market has been welcomed by most law firms, which have backed the government's move to create a more competitive market.

Managing principal Wong Kien Keong of Baker & McKenzie.Wong & Leow said that under the more liberalised regulatory regime Singapore's legal market will expand in both size and complexity, benefiting the economy.

"Observing other countries 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 Singapore 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 (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 that the government will make available.

The QFLF scheme is also hoped to encourage foreign firms to attract more demand for legal services in Singapore, claims Wong. This is because international firms are more likely to have multinational companies and banks as clients.

But 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 is not enough quality Singapore legal talent to service more firms ... Singapore firms will end up bringing in more foreign lawyers who are not readily able to practise Singapore law," a source told ALB.

Asia executive partner Jim Dunstan of Allens Arthur Robinson agrees that there is currently a shortage of skilled legal professionals in Singapore. However, he feels that defections to the UK and USA pose an even greater risk and supports the liberalisation as a means of helping retain more Singapore lawyers through offering international experience within the country.

The liberalisation will also mean more competition as clients face a wider choice of legal service providers. Angeline Joyce Lee of Singapore Press Holdings said: "The change means more scope and opportunity for legal practitioners, and that clients and users hopefully will enjoy a more holistic service, encompassing cross-jurisdictional expertise with more economical costs."

Wong said that this will not create as much of a burden as some Singapore firms might think. Business will improve as the quality of legal professionals is set to rise, creating more international opportunities: "One day we may be providing legal advice not just domestically but also across Asia too. I'm talking about making Singapore an international legal hub and that requires basing more lawyers here who can provide region-specific advice to other countries. The main markets to aim for are China and India, and maybe the Middle East later on."

Dunstan supports this outlook, adding that gradual liberalisation has been Singapore's model for foreign firms since 1980. He claims that there is already extensive work in progress for Indonesia and Malaysia, which will build the legal sector and make it more closely resemble that of Hong Kong.

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 have not found the JLV to be very advantageous. It is not 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 will certainly be watching with great interest."

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 have lured some foreign firms away from the country.

Foreign firms that have up to now dealt with Singapore at arm's length see the shift as a good opportunity to consider opening a new office. "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 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 suf- ficient mutual benefits for us," said Dilhan Pillay Sandrasegara, managing partner of WongPartnership LLP, the partner firm of Clifford Chance in Singapore.

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 would provide tighter integration and potential to hire Singapore lawyers as partners, said Dunstan.

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, in speaking to ALB, confirmed 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 QFLF or EJLV licences, but they are likely to consider the schemes. The licences are more likely to attract a foreign firm that mainly does offshore work, according to Dunstan.

Smaller firms, however, are not likely to be granted them because applicants will need to demonstrate a "concrete commitment to enhance Singapore's status as a regional hub," which would rule them out, he said.