Singapore has passed a law that allows lawyers and their clients to enter into Conditional Fee Arrangements (“CFAs“) for certain proceedings such as international and domestic arbitrations, and some proceedings in the Singapore International Commercial Court and related court and mediation proceedings.
The Ministry of Law first introduced the amending law – the Legal Profession (Amendment) Bill 2021 – in November 2021. The new law was passed in January 2022.
Prior to CFAs, there were limited avenues available to fund a potential dispute such as:
- Legal Aid – via the Singapore Legal Aid Bureau but certain financial criteria had to met to qualify.
- Third party litigation funding – The claim is funded by a third-party funder that agrees to cover some or all of the costs. If the claim succeeds, the funder will then take a share of the sum recovered. Third party litigation funding is currently permitted for certain types of proceedings in Singapore. There are currently a handful of commercial funders on the ground in Singapore.
- Crowdfunding – via a crowdfunding website seeking contributions and donations towards your legal costs from the public.
CFAs now provide a further avenue and may take the form of a “no win, no fee” or “no win, less fee” arrangement, which means lawyers and their clients utilising CFAs agree that all lawyers are paid all or part of their fees only if the clients’ cases are won.
Lawyers can also charge an additional amount, known as a “uplift” if claims are successful.
CFAs are not intended to replace traditional fee structures, which includes those on a time-cost basis or fixed-fee basis.
Though “no win, no fee” arrangements are common in other jurisdictions, it has not been available in Singapore until now due to various concerns. A primary concern was that CFAs could lead to higher litigation costs and increase trivial litigation. Another concern was that it could create conflicts where in some cases, lawyers may advise their clients to take settlements because it guarantees fees, even though a settlement may not be in the client’s best interests.
According to Singapore’s Second Minister for Law, Edwin Tong, safeguards will be introduced to protect clients from risks. Existing professional rules against overcharging will also persist. Minister Tong explained that the new law will help to level the playing field for local lawyers who have been facing competition with foreign lawyers who can offer such agreements.
It also helps enhance access to justice. “Businesses with legitimate claims but (are) themselves facing cash-flow problems may not be able to fork out full legal fees at the outset,” said Minister Tong. “CFAs will help provide such claimants with an alternative method of funding meritorious claims, which they may otherwise not be able to pursue.”
More broadly, the new framework will help further position Singapore as the preferred location to resolve disputes. Singapore already ties with London as the place most favoured by global businesses to arbitrate.
What does it mean to hire a lawyer on a CFA basis?
When a lawyer is hired by a client on a CFA basis, this means that no or only some legal fees are payable by the client if his or her claim is not successful when brought before the courts.
In other words, both the lawyer and his or her client agree that the client would pay the fees for the legal services rendered only if the lawsuit is successful. The legal fees are therefore contingent on the claim being successful.
If you have a legal matter that you would like to pursue but are concerned about your ability to afford the legal fees, you should consult a lawyer who would be able to assess whether a conditional fee arrangement is available to you.
For further information, please contact:
JTJB Singapore Office
T: 6224 3645
Established in 1988, our Commercial Dispute Resolution practice handles litigation, and domestic and international arbitration. We have advised and acted for our clients, who are private individuals as well as corporations, in a wide spectrum of cases spanning all industries and sectors. We are well equipped to handle cases of any size scope and complexity. If you need help with resolving your dispute or have any queries about your shipping business more generally, please feel free to reach out to K. Murali Pany, JTJB Lawyers.