Conditional fee arrangements now permitted in Singapore

Out-Law News | 14 Jan 2022 | 11:38 am | 1 min. read

Lawyers and their clients in Singapore will now be able to enter into conditional fee agreements (CFAs) in certain proceedings.

CFAs were prohibited in Singapore before the recent amendment. Such agreements will be only available in international and domestic arbitration proceedings, certain proceedings in the Singapore International Commercial Court (SICC) and related court and mediation proceedings, according to a Singaporean local report.

A CFA is an arrangement in which a lawyer is paid the legal fees only in certain circumstances. It has two forms including 'no win, no fee' and 'no win, less fee' agreements. A lawyer can also charge an additional fee, known as a success fee, if the claim is successful.

Arbitration expert Chen Han Toh of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, said: "These changes enhance Singapore’s attractiveness for the resolution of international commercial disputes. Singapore-based lawyers can now offer innovative fee arrangements for the sharing of the risks and rewards of litigation. This can circumvent financial constraints which may otherwise stifle the pursuit of legitimate claims."

According to Singapore’s Ministry of Law second minister Edwin Tong, CFAs are "not intended to replace traditional fee structures”. Safeguards will be introduced to protect clients from risks of potential abuse by lawyers, including that the agreement must be in writing and signed by the client. The existing professional rules against overcharging will continue to apply.

The Ministry of Law first introduced the Legal Profession (Amendment) Bill 2021 on 1 November 2021. The ministry said the proposed amendments would provide a framework for CFAs between lawyers and clients in certain types of proceedings.