Lim
Wee Teck looks at the distinction between Joint Law Ventures and Formal Law
Alliances and summarises and highlights the main provisions of the new Legal
Profession (International Services) Rules 2000, which regulates the registration
of these new entities.
Introduction
As
part of Singapore’s on-going efforts to become an international financial and
banking hub, amendments were made to the Legal Profession Act (‘LPA’) on 8
February 2000 to allow for Joint Law Ventures (section 130B, LPA) and Formal Law
Alliances (section 130D, LPA). These amendments came into effect on 5 May 2000.
As
part of these amendments, the Legal Profession (International Services) Rules
2000 (‘International Services Rules’) were made and these also came into
operation on 5 May 2000. The new International Services Rules reflect the
government’s policy of deepening and expanding Singapore’s expertise in the
areas of finance and banking by encouraging the growth of greater sophistication
and knowledge in these areas. Accordingly, the International Services Rules
entrench requirements of expertise in banking, financial, technology and
telecommunications work. Provision is also made to maximise the possibility of
knowledge transfer.
Distinction
between Joint Law Ventures And Formal Law Alliances
By
way of preliminary comment, some consideration should be given to the
distinction between a Joint Law Venture and a Formal Law Alliance.
Joint
Law Ventures
Aside
from its name, which implies a certain degree of mutual effort and exchange, no
formal characteristics of Joint Law Ventures are provided in either the Legal
Profession Act or the International Services Rules. A Joint Law Venture is
distinguished by the privileges accorded to it. Under section 130B(6) of the LPA,
a Joint Law Venture is to be accorded the following privileges:
A registered Joint Law Venture may practise in areas of legal practice mutually
agreed between the law firms constituting the Joint Law Venture.
Foreign lawyers who are employed by or who are partners or directors of the
registered Joint Law Venture may practise Singapore law in accordance with
section 130C of the LPA.
A registered Joint Law Venture may market or publicise itself as a single
service provider competent to provide legal services in all areas in which the
constituent law firms are qualified to provide.
A registered Joint Law Venture may bill its clients as a single firm.
The scope of privileges is not fixed and a Joint Law Venture may be accorded
other privileges as may, from time to time, be prescribed or otherwise conferred
by law.
Formal
Law Alliances
Formal
Law Alliances, as their name suggests, are not as close-knit as Joint Law
Ventures. Accordingly, the privileges accorded to a Formal Law Alliance (section
130D, LPA) are not as far-reaching as the privileges accorded to Joint Law
Ventures:
A Formal Law Alliance may market or publicise itself as a single service
provider competent to provide legal services in all areas in which the
constituent law firms are qualified to provide.
A Formal Law Alliance may bill its clients as if it were a single law firm.
A foreign lawyer who is a partner, director or an employee of the foreign law
firm which constitutes part of the Formal Law Alliance may prepare all the
documents in a transaction involving the law or regulatory regime of more than
one country or jurisdiction, except that any legal opinion relating to Singapore
law must be given by a Singapore lawyer who has in force a practising
certificate.
It
should be noted that unlike foreign lawyers practising under a Joint Law
Venture, foreign lawyers practising under a Formal Law Alliance are not entitled
to practice Singapore law, except for the limited exception set out above.
In
order to be able to register as a Joint Law Venture, a foreign law firm and a
Singapore law firm must be able to meet a range of requirements specified in the
International Services Rules. In general, these requirements go towards ensuring
that Joint Law Ventures have expertise in banking and finance and that the Joint
Law Venture is a substantive vehicle and not merely one in which the Singapore
law firm functions as a front for the foreign law firm. The requirements are
continuing requirements and do not operate only at the constitution of the Joint
Law Venture.
The
requirements for registration as a Joint Law Venture are as follows:
The foreign law firm and the Singapore law firm must have relevant legal
expertise and experience in banking and finance work which are acceptable to the
Attorney-General.
The foreign law firm must have not less than five foreign lawyers resident in
Singapore, at least two of whom must be equity partners in the foreign law firm.
If the foreign law firm is constituted as a corporation, at least two of its
foreign lawyers resident in Singapore must be directors of the corporation.
The foreign lawyers under the Joint Law Venture must have at least five years of
relevant legal expertise and experience in banking or finance work.
The Singapore law firm must have not less than five Singapore lawyers, at least
two of whom must be equity partners in the Singapore law firm or, in the case of
a law corporation, at least two of whom must be directors of such law
corporation.
The Singapore lawyers must have at least five years of relevant legal expertise
and experience in banking, finance or corporate work.
If the Joint Law Venture is to be constituted as a partnership, the number of
equity partners in the foreign law firm and resident in Singapore cannot at any
time be greater than the number of equity partners in the Singapore law firm.
If the Joint Law Venture is to be constituted as a corporation, the number of
directors nominated by the foreign law firm shall not at any time be greater
than the number of directors nominated by the Singapore law firm.
The foreign law firm and the Singapore law firm must have entered into a written
agreement to jointly manage the Joint Law Venture. If requested by the
Attorney-General, the Joint Law Venture must submit a copy of such agreement to
the Attorney-General and no material modification can be made to the agreement
without the prior written approval of the Attorney-General.
The foreign law firm and the Singapore law firm must submit a satisfactory
business plan describing the objectives of the Joint Law Venture and the
implementation of the business plan and no material modification can be made to
the plan without the prior written approval of the Attorney-General.
The Joint Law Venture is required to maintain insurance policies concerning
indemnity against loss arising out of practising Singapore law, which are of a
value not less than that required under the Legal Profession (Professional
Indemnity Insurance) Rules in respect of Singapore law firms.
It
should be noted that foreign lawyers practising Singapore law under the auspices
of a Joint Law Venture will be required to register with the Attorney-General,
who has the discretion to approve or reject the application on such grounds as
he may think fit. The fee for registration currently stands at S$1,000.
Any
such foreign lawyer will be required to comply with the Legal Profession
(Professional Conduct) Rules and the Legal Profession (Publicity) Rules.
Joint
Law Ventures will be required to ensure that their keeping of accounts comply
with the Legal Profession (Deposit Interest) Rules, Legal Profession
(Solicitors’ Accounts) Rules, Legal Profession (Solicitors’ Trust Accounts)
Rules and the Legal Profession (Accountant’s Report) Rules.
Registration
as a Joint Law Venture will entail the payment of a fee. Currently, the amount
of the fee stands at S$5,000.
Formal
Law Alliances
As
with Joint Law Ventures, the International Services Rules set out requirements
that the Formal Law Alliance must satisfy both at its commencement and during
its life. Again, these requirements are set up with a view towards ensuring that
expertise in the areas of industry which the Singapore government is presently
trying to promote are imported. In addition, requirements similar to those
imposed on Joint Law Ventures are mandated to ensure that the Formal Law
Alliance is not an alliance in name only.
The
requirements for registration as a Formal Legal Alliance are as set out below:
The foreign law firm and the Singapore law firm must have relevant legal
expertise and experience in banking, finance, corporate, technology or
telecommunications work or such other areas of work as may be determined by the
Attorney-General.
The foreign law firm must have not less than five foreign lawyers resident in
Singapore, at least two of whom must be equity partners in the foreign law firm
or, in the case of a foreign law firm constituted as a corporation, at least two
of whom must be directors of such corporation.
The foreign lawyers must have at least five years of relevant legal expertise
and experience in banking, finance, corporate, technology or telecommunications
work or such other areas of work as may be determined by the Attorney-General.
The Singapore law firm must have not less than five Singapore lawyers, at least
two of whom shall be equity partners in the Singapore law firm or, in the case
of a law corporation, at least two of whom must be directors of such law
corporation.
The Singapore lawyers must have at least five years of relevant legal expertise
and experience in banking, finance, corporate, technology or telecommunications
work or such other areas of work as may be determined by the Attorney-General.
The foreign law firm and the Singapore law firm must have entered into a written
agreement to form a Formal Law Alliance. If requested by the Attorney-General,
they must submit a copy of this agreement to the Attorney-General. No material
modification can be made to the agreement without the prior written approval of
the Attorney-General.
The foreign law firm and the Singapore law firm must have agreed on a written
plan to transfer the legal and other related skills, expertise, know-how or
technology of the foreign law firm to the Singapore law firm. A copy of this
plan must be submitted to the Attorney-General and no material modification can
be made to the plan without the prior written approval of the Attorney-General.
The
fee for registration as a Formal Legal Alliance is presently S$2,500.
Others
The
International Services Rules also provides registration procedures for foreign
law firms and foreign lawyers wishing to practice foreign law in Singapore.
Conclusion
The
liberalisation of the legal industry will undoubtedly mean interesting times
ahead for Singapore law firms. What remains to be seen is the extent to which
the partial liberalisation will successfully result in a transfer of expertise
and knowledge such that Singapore lawyers will be in a position to compete head
to head with their foreign counterparts in the upcoming years as Singapore’s
banking and finance sectors mature.
Lim
Wee Teck
Rajah
& Tann