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Singapore set to permit alternative business structures

Ministry of Law plans would overhaul legal regulatory regime

28 January 2014

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By Manju Manglani, Editor (@ManjuManglani)

Under a range of new proposals backed by the Ministry of Law (MinLaw), legal practices in Singapore will be permitted to form alternative business structures (ABSs) with non-lawyer managers and external ownership.

MinLaw has also backed the creation of a new legal regulator and the forcing of all foreign lawyers to meet the same professional conduct and disciplinary requirements as local lawyers.

The proposals are based on research by the Committee to Review the Regulatory Framework of the Singapore Legal Services Sector, which conducted consultations with local and foreign lawyers in 2012.

For a start, MinLaw said that legal disciplinary practices (LDPs) will be permitted, whereby non-lawyers will be allowed to own equity and/or share in the LDP's profits. Firms with ABS licenses would then be permitted to have non-lawyer managers and to offer multidisciplinary solutions within one entity.

"The legal sector is evolving to meet the changing and increasingly varied needs of international trade and business," said Dr Beh Swan Gin, permanent secretary of MinLaw.

"We believe that the recommendations will enable Singapore's regulatory regime to keep pace with and, where possible, anticipate these changes so that the legal sector maintains its high professional standards even as it continues to grow as a high-value segment of the economy."

New Legal Services Regulatory Authority

A new legal regulatory regime for all law practice entities in Singapore has been proposed by the committee.

At present, the Law Society of Singapore regulates Singapore law practices while the Attorney-General's Chambers regulates foreign law practices and manages the registration of foreign lawyers.

Under the proposals, all of these functions will be transferred to a new regulator, the Legal Services Regulatory Authority, which will focus on regulating business criteria.

The regulation of businesses will be kept separate from the regulation of professional conduct matters, which will come under the ultimate oversight of the Supreme Court.

New professional conduct rules for foreign lawyers

MinLaw's regulatory committee has proposed that the application of professional conduct rules (PCR) be extended to cover all lawyers in Singapore.

It also recommends establishing a new Professional Conduct Council to oversee the new PCR.

The PCR are currently applicable only to Singapore-qualified lawyers and foreign lawyers practising Singapore law, but will be reviewed and updated to apply to all lawyers in Singapore.

The legal profession in Singapore currently comprises Singapore-qualified lawyers, lawyers qualified in foreign jurisdictions, and foreign-qualified lawyers practising Singapore law. Under the proposals, there will be general universally-accepted principles of conduct that will apply to all lawyers in Singapore.

There will also be specific rules that are more relevant to the practice of Singapore law which will only apply to Singapore lawyers and foreign lawyers practising Singapore law.

In addition, there will be new management rules applicable to lawyers involved in managing a law practice. According to the committee's final report, these managers will be held responsible for ensuring their firms maintain adequate systems to handle client money and accounts; deal with conflicts; and maintain client confidentiality.

"Failure by a firm's management group of lawyers to maintain adequate systems in the three areas outlined should be treated as a breach of the new PCR, and trigger disciplinary action in accordance with the usual discipline regime for SLs and FLs," it says.

New disciplinary process for foreign lawyers

Under the proposals, foreign lawyers will be subject to the same disciplinary process as their Singapore counterparts. There will be no change to the current disciplinary process for Singapore lawyers.

Under the present system, complaints against Singapore-qualified lawyers are dealt with through various stages: a review committee, inquiry committee, disciplinary tribunal, and ultimately, the court of three judges.

For foreign lawyers under investigation, however, there will be one foreign lawyer member in each of the committees and tribunals at every stage of the disciplinary process before the matter reaches the court of three judges for final disposal.

According to MinLaw, the recommendations aim to update and bring about greater consistency in the regulatory regime for the legal profession in Singapore.





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