The Singapore Ministry of Law (MinLaw) is considering whether to introduce conditional fee agreements, a form of payment agreement whereby lawyers are only paid if their client's claim is successful. As MinLaw continues to seek public feedback, lawyers in the city-state welcome the move, saying it will give claimants a great deal of peace of mind.

Bazul Ashhab, managing partner and head of dispute resolution, Oon & Bazul 

The discussion on whether conditional fee arrangements (CFAs) should be permitted in Singapore and if so, to what extent, is long overdue. The prohibitions on such agreements stem from the public policy considerations which proscribe maintenance and champerty, to protect vulnerable litigants, and to guard against potential misconduct and conflict of interest for lawyers. However, other common law jurisdictions like the United Kingdom, Australia, Canada had already begun to depart from the old system nearly 20 years ago.

For an impecunious claimant, CFAs provide access to justice. However, CFAs do not have to be limited to use by impecunious litigants. Many companies today are challenging hourly-rate remunerations for lawyers. These companies want their lawyers to have more skin in the game and will prefer lawyers sharing the proceeds of victory. The sophisticated commercial clients who are familiar to CFAs in other jurisdictions will embrace the proposed changes. Even those entities which are not familiar with CFAs will be delighted to move away from hourly rates. This also deals with the misconception that some minority may have lawyers that are not motivated enough to explore settlement to bring an end to the dispute quickly.

The proposed changes to introduce CFAs will cement Singapore’s position as a hub for dispute resolution. However, regulations need to be worked out to safeguard the interests of clients. I support the idea of a “cooling off period” during which the clients may, by written notice, terminate the agreement. I would also suggest a cap on the uplift which a lawyer can charge. I would also consider disclosing such fee arrangements during costs submissions.

Arvin Lee, partner, Wee Swee Teow

CFAs are to be welcomed, although further thinking has to go into ensuring (i) that disputes lawyers are not now in a race-to-the-bottom to undercut and (ii) that there is clarity as to the conception of “success” underpinning the policy for CFAs (even though of course parties are able to agree on detailed scenarios which constitute success in their individual cases), which can be nebulous at the margins. Regarding the first concern, it is a good feature that the framework under consultation contemplates that orders for costs (party-and-party costs) shall not include any part of the success or uplift fee which the successful party may have to pay his counsel under the CFA.

Most clients want to recover as much as they can from their opponents if they (these clients) prevail, rather than be out of pocket for that. Indeed, this is one reason arbitration is preferred to litigation by commercial parties; if they win they are likely to get 100 percent (or close) of their legal fees - Arvin Lee back, rather than under a standard (or even indemnity) basis in litigation. As such, the lawyer has leverage to insist on at least charges that reasonably reflect time costs expended. For that reason, the need for a legislative cap on the percentage of uplift that can be agreed between parties is hence not as urgent, because on the client-side, there is strong incentive to keep that percentage down, to minimise the legal fees it is eventually out of pocket for should it prevail. Further refinement on the costs order proposal is necessary though.

To the extent that there is a policy rationale behind the CFA proposal, policy-makers should strive to have a more granular understanding of what “success” means, and the extent to which CFAs are to apply to different conceptions of “success.”

Edward Alder, barrister and arbitrator

In 2017, Hong Kong and Singapore permitted third-party funding for arbitration. In both jurisdictions this permitted the funders to share in the recovery produced by the case, thus both conditional fees (CFAs) and full contingency fee arrangements were legalised. In both, conditional fees, third-party funding and contingency fees remain impermissible in litigation.

Singapore now proposes to go further, with a consultation paper seeking views on allowing CFAs for certain court proceedings. It is proposed that CFAs may be on a simple “no win, no fee” basis or include an “uplift” for success. Contingency fees are not within the proposals.

The proposed reform extends to arbitration related court proceedings and certain proceedings in the Singapore International Commercial Court (SICC), including mediations arising connected with such proceedings. The idea is to align the prospective CFA framework with the third-party funding framework. As to arbitration, this will allow third-party funding for proceedings arising out of arbitration, for example enforcement or setting aside. As to the SICC, this may well much enhance the attractiveness of the court to inter-national parties.

The U.S. has long permitted full contingency fees. In the UK, following evolving reform starting in 1990, a wealth of experience has been gained in permitting both conditional and subsequently contingency fees in litigation and arbitration in controlled circumstances. To some extent, these reforms are a “catch up” initiative. Hong Kong practitioners will be hoping Hong Kong is swift to extend its regime in a similar way.

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