Framework for Conditional Fee Agreements in Singapore to Commence on 4 May 2022
29 Apr 2022 Posted in Press releases
- From 4 May 2022, lawyers in Singapore can enter into conditional fee agreements1 (“CFAs”) with clients in selected proceedings with the commencement of a new CFA framework. This provides an additional option, alongside traditional fee agreements provided for under the Legal Profession Act.
- A CFA is a mutually agreed arrangement for the payment of fees, subject to the requirements specified in the framework. Under the new CFA framework, examples of CFAs that parties may enter into include “win, more fee”2 , “no win, no fee”, and “no win, less fee” agreements.
- The new CFA framework will apply to Singapore lawyers and law practices, as well as certain registered foreign lawyers and foreign law practices. CFAs can be entered into for international and domestic arbitration proceedings, some proceedings in the Singapore International Commercial Court (“SICC”), and related court and mediation proceedings. The details can be found in the Legal Profession (Conditional Fee Agreement) Regulations (the “CFA Regulations”).
- The CFA framework is part of ongoing efforts to enhance our litigation funding landscape to better support the needs of businesses and lawyers. It also builds on reforms in the litigation funding space and enhances Singapore’s offerings as a dispute resolution hub.
- The following safeguards are in place to mitigate the risk of any potential abuse of CFAs:
a. A lawyer is required to provide information on the CFA to the client before entering into a CFA. This includes:
i. The nature and operation of the CFA and its terms;
ii. The client’s right to seek independent legal advice before entering into the CFA;
iii. That the uplift fees are not recoverable; and
iv. That the client continues to be liable for any costs orders that may be made against client by the court or arbitral tribunal.
b. The CFA must include the following prescribed terms:
i. The particulars of the specified circumstances in which remuneration and costs or any part of them are payable to the lawyer under the CFA;
ii. The particulars of any uplift fee, if applicable;
iii. That lawyers and clients must comply with the cooling-off period of five days after a CFA is entered into, during which either party may terminate the agreement via a written notice;
iv. That any variation of the CFA must be in writing and expressly agreed to by all parties to the CFA. For variation related to costs issues, there is also a cooling-off period of three days after the CFA is varied, during which either party may terminate the variation agreement via a written notice; and
v. That on the termination of the CFA during the cooling-off period in 3b(iii) or 3b(iv), the client is not liable for any remuneration or costs incurred during the cooling-off period except those incurred for any service performed during the cooling-off period that was expressly instructed by or agreed to by the client.
- Lawyers will continue to be subject to existing professional conduct rules against overcharging. This is clarified in accompanying amendments to the Legal Profession (Professional Conduct) Rules.
- The Law Society of Singapore is preparing a Guidance Note on CFAs to guide law practices and practitioners through the new framework. This will be issued in due course.
MINISTRY OF LAW
29 APRIL 2022
1. CFAs are arrangements in which a lawyer receives payment of the whole or part of his or her legal fees only in specified circumstances; for example, where the claim is successful. They differ from contingency fee agreements, where the lawyer may share in an agreed percentage of the sum recovered by the client with no direct correlation to the work done. Contingency fee agreements continue to be prohibited in Singapore.↩
2. A key feature of the CFA framework is that uplift fees may be provided. An uplift fee refers to the fees payable to the lawyer in specified circumstances, that are higher than what would otherwise be payable if there were no CFA. Such uplift fees can be in the form of a gross sum or hourly rate, and are unrelated to the sum of damages awarded to the client.↩
Last updated on 29 Apr 2022