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NEWS Survey Report |
The
Small Law Firms Committee (‘SLFC’) was formed in January 2004 with the aim
of serving as a channel of communication between Council of the Law Society and
small law firms of less than three lawyers to enhance the ability of the legal
profession to serve the public better. To achieve these aims, the SLFC set out
to identify problems faced by small law firms and to propose solutions to the
problems identified.
One
of the first tasks undertaken by the SLFC to achieve the above aims was to
conduct a survey amongst small law firms in July 2004 (‘survey’). The SLFC
decided that initiatives be taken to see how small law firms could enhance
profitability and reduce costs to better compete in the market place for legal
services. Cross-referral work was identified as one way small firms could
enhance their profitability.
The
survey sought feedback from small law firms to ascertain the following:
(a) the nature and profile of the practices of small law
firms;
(b) whether cross-referrals are likely to boost revenue of a
small law firm’s practice;
(c) whether there is at present a trend towards
specialisation in small law firms;
(d) the degree of cross-referral work currently being
generated by small law firms;
(e) whether a directory of small law firms would assist
referral work; and
(f) whether the respondents would like to be listed in such a
directory.
The
survey also invited respondents to offer any comments on specific issues that
they might have to improve the lot for small law firms.
Survey
forms were sent out to 719 law practices comprising six lawyers or less. Of
these 719 firms, only 59 responded. A sub-committee comprising Mr Tan Siah Yong,
Mr Heikal Bafana and Ms Farah Namazie was formed by the SLFC in early August
2004 to review the results of the survey.
Notwithstanding
the relatively small samples of the responses received, the sub-committee
decided to proceed with the review of the results, as the feedback reflected a
wide variety of issues on a number of recurring matters and problems faced by
small law firms.
The
sub-committee submitted its report of 10 December 2004 (‘Report’) for
Council’s consideration some time in early 2005. The results of the survey as
contained in the Report are summarised as follows:
(a) Most of the respondents were from sole-proprietorships or
partnerships with no more than two or three lawyers. The majority were
general practitioners with a focus on
general litigation, conveyancing, matrimonial and general practice work.
(b) There was no clear
indication whether cross-referrals are likely to boost the revenue of a small
law firm’s practice.
(c) Cross-referral work does appear to be fairly common in
areas of practice where the respondents lack infrastructure to support a
particular practice (for example, litigation), or where respondents lack
know-how or expertise to practice certain areas of newly developing fields such
as patent or intellectual property law.
(d) Whilst identifying a degree of specialisation in relation
to areas of work such as shipping law, syariah law, intellectual property law,
it did not emerge from the results that there was a discernible trend towards
specialisation. The general response was that the volume of work demanded that
small law firms accept work in as many areas as possible.
(e) Of the 59 responses, 44 respondents answered in favour of
a directory of small law firms to boost referral work. 15 respondents answered
in the negative, or were uncertain whether such a directory would achieve
cross-referrals. Of the latter category, respondents felt that referrals were
now made on the basis of peer preference (ie a lawyer will refer work to someone
he or she is familiar with and has worked with before, or to another lawyer of
his or her peerage).
(f) The majority
of the respondents were in favour of being listed in a directory of small law
firms. This included some who had responded that such a directory would not
assist referral work. One respondent expressed concern with a possible
‘stigma’ of being listed in such a directory.
In
addition to the above results, the following feedback, comments or proposals
were also received from the survey respondents and enumerated in the Report:
(a) The current restriction on small law firm practitioners
from mentioning cases on behalf of other practitioners in the criminal courts
even if they are familiar with the respective case is problematical for small
law firm lawyers who face time constraints and lack of resources.
(b) Subsidies to be given to small law firm lawyers to
upgrade their professional skills or to keep current with core areas of the law
were proposed.
(c) Law Society’s subscriptions to be reduced based on the
general state of the industry and that of general inflation.
(d) Cross-referral fees without the need for client’s
consent and the sharing of fees with other solicitors to be allowed.
(e) Small law firms to be allowed to appoint a practitioner
from another firm to act as counsel on the instructing firm’s behalf.
(f) Minimum solicitor-client costs for various transactions
to be set to avoid undercutting of fees by small law firms.
(g) To address the impression that the larger firms undercut
fees by virtue of their ability to attract larger volumes of work.
(h) The proposal for separate legal representations for the
different parties in conveyancing matters so that the work could be spread to
more lawyers to be looked into.
(i) Larger law firms are able to advertise more lavishly and
more extravagantly than small law firms, thus perpetuating the gulf between
small and larger law firms in terms of volume of work spread.
(j) Rule 31 of the Legal Profession (Professional Conduct)
Rules 1998 which states that:
An
advocate and solicitor who has acted for a client in a matter shall not
thereafter act against the client (or against persons who were involved in or
associated with the client in that matter) in the same or any related matter’
is unduly prohibitive, particularly where the solicitor may not have had any
particular dealing, or even knowledge of, the matter relating to that client
whilst at his former firm.
Following
the Report submitted by the sub-committee, Council directed the SLFC to publish
the results of the survey accompanied by the SLFC’s recommendations on what it
would plan to do after studying the results. The SLFC’s responses and
follow-up plans are as follows:
(a) The SLFC had reported to the Council of the Law Society
that it was not in favour of the publication of a directory of small law firms
as it was of the view that practitioners generally refer work to someone whom
they know and not to a stranger picked from a directory. The SLFC was also
concerned that the 44 respondents who were in favour of publishing a directory
were not representative of the 719 small law firms. Council agreed with and
accepted the Committee’s recommendation.
(b) The SLFC was of the view that as the Law Society’s
Continuing Professional Development seminars were run at cost, it was not
possible for the Law Society to provide subsidies to only small law firms and
run the seminars at a loss.1 However, the Society had in 2004,
started a yearly four-part seminar series entitled ‘Small Firms Practice
Management’ which is subsidised by the Society and is open to both support
staff and lawyers of small firms.2
(c) The SLFC deliberated on the need to reduce the Law
Society’s subscription fees for members and on the proposal from some quarters
that lawyers from small law firms pay less subscription fees. The SLFC was of
the view that to be fair to all members of the profession, small law firm
members should not seek preferential financial treatment from membership
subscription.
(d) The SLFC unanimously supported the proposal that
cross-referral fees among lawyers be allowed. It noted that an ad hoc committee
of the Society had submitted a report on liberalising the rules of ethics which
was discussed with members early this year and which awaits Council’s
decision.
(e) The SLFC did not agree to the setting of minimum
solicitor-client costs for various types of legal work as the SLFC was of the
view that such a measure would create more problems than it would solve.
(f) The SLFC was of the view that it was the prerogative of
law firms whether big or small to charge as they deem fit for their legal
services and that ultimately economic reality would prevail.
(g) The Committee was of the view that there were no
restrictions on lawyers mentioning on behalf of another lawyer.
(h) In the Committee’s view, there were no restrictions or
prohibitions against a lawyer appointing a practitioner from another law firm to
act as counsel on the instructing firm’s behalf.
(i) The SLFC supported the call for having separate legal
representation for conveyancing matters. It noted that Justice V K Rajah had
formed a committee to study the issue of conflict of interests and would await
the release of its report.
(j) The SLFC recognised and accepted that it was a fact of
economic reality that larger firms had the financial ability to market and
advertise their services.
(k) The SLFC noted that the liberalisation of ethics report
recommended a re- draft of Rule 31 of the Legal Profession (Professional
Conduct) Rules. It was of the view that members could seek directions or
guidance from the Ethics Committee of the Law Society when they were in doubt on
the application of the Rule.
A
humble start has been made by the SLFC and the Council to engage the small law
firms. Although only a relatively small number of the firms surveyed responded,
it gave the Council and the SLFC an opportunity to deliberate on the issues and
to communicate their views on these issues to the small law firms. The SLFC will
continue to explore ways to achieve its aims of acting as a channel of
communication between the Council and the small law firms and to enhance the
professional and business capabilities of these firms.
Dennis Chua Soon Chai
Small Law Firms Committee
The Law Society of
Endnotes:
1 Based on
research conducted by the CPD Department in 2004, the Law Society’s continuing
professional development (‘CPD’) programmes were two to five times more
affordable than those of other training providers in the market.
2 Further, in
response to feedback from members, the Law Society will change its pricing
policy from 1 June 2005 to extend employees of