LEGAL PROFESSION (AMENDMENT) BILL

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LEGAL PROFESSION (AMENDMENT) BILL: Order for Second Reading read.

The Minister for Law (Mr K Shanmugam): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill amends the Legal Profession Act (LPA) primarily to implement the recommendations of the Committee to Develop the Singapore Legal Sector headed by Justice V K Rajah. The Committee presented its report in September 2007. Specifically, the Committee recommended the liberalisation of the legal sector. The Committee stated that the following benefits will accrue as a result of liberalisation.

(1) Liberalisation will allow the development of a legal infrastructure that is able to support an increasingly sophisticated and knowledge-intensive business environment in Singapore. This will in turn help support the growth of important sectors in the economy, such as banking, corporate finance and maritime industries.

(2) A liberalised competitive environment will also lead to an improved level of legal services as Singapore Law Practices (SLPs) will be encouraged to rise to the levels of global legal service standards and raise service standards to domestic and regional corporate clients.

(3) More foreign law firms will bring to Singapore a greater volume of offshore work that will otherwise not be done here, thus increasing the legal services sector's contribution to our GDP.

(4) Allowing more foreign law firms to set up in Singapore and facilitating them

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to use Singapore law will incentivise the greater use of Singapore law in international transactions. This will further boost the development of our exportable legal industry.

(5) Opening up of our legal services sector will partially reverse or slow down the current legal brain drain of Singapore-qualified lawyers, who will be given a choice to do high quality offshore work in Singapore. There will be greater opportunities for young talented Singaporeans. Liberalisation would lead to the growth of the intellectual legal capital of our local lawyers, including in knowledge management, global partnership experience and regional management expertise.

(6) The move to liberalise will enhance and entrench Singapore's image and position as a regional legal centre.

Several of the Committee's recommendations were accepted by the Government in December 2007. The Committee also made recommendations to improve the disciplinary process of lawyers. This Bill seeks, inter alia , to effectuate the proposals that have been accepted by the Government.

Major changes

Sir, now let me explain some of the more important amendments that provide a framework for liberalisation of the legal services sector.

Liberalisation of the legal services sector

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(i) Repeal and re-enactment of Part IXA _

To provide for greater flexibility to respond to changing business needs, clause 53 repeals and re-enacts a substantially amended Part IXA. Part IXA now devolves the details prescribing business conditions from the main Act to the Rules, so that amendments can be

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more easily made to respond to developments in the legal market.

(ii) Three main initiatives to enhance the offshore legal services pie

In line with the emphasis on flexibility, and to align the various regimes for foreign legal entities, the registration regime applicable to existing foreign legal practice vehicles, which are the Joint Law Venture (JLV), Formal Law Alliance (FLA), Foreign Law Practice (FLP) and Representative Office, has been changed to a licensing regime. For existing registrants, transitional provisions will allow new licences to be issued on terms similar to their current registration.

Members may recall three key changes announced last December.

(1) International Commercial Arbitration. Currently, FLPs are allowed to participate in international commercial arbitration in the context of arbitration proceedings. That is interpreted in practice to refer to the post notice of arbitration period. However, as a result, FLPs which wish to use Singapore as the seat of arbitration, or use Singapore law as the governing law for arbitration, may be discouraged from doing so as they are unable to advise on Singapore law matters before the notice of arbitration is issued. This detracts from our objective to promote Singapore as an international arbitration hub. We will now expand the FLPs' scope of Singapore law work by allowing them to participate wherever arbitration is contemplated through Singapore qualified lawyers. Clause 53 introduces a new section 130E under the revamped Part IXA to allow Rules to be prescribed for this purpose.

(2) Implementation of the Qualifying Foreign Law Practice scheme. For the first time, the amendments allow the award of

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Qualifying Foreign Law Practice (QFLP) licences to FLPs. Going forward, FLPs awarded the QFLP licences will be allowed to practise Singapore law through Singapore qualified lawyers in permitted areas of legal practice, defined in section 130A of the revamped Part IXA to refer to all areas of legal practice other than specifically ring-fenced domestic areas to be detailed in the Rules. Traditionally domestic areas, such as litigation, conveyancing, family and probate law, will be excluded. We hope to award the licences by the end of the year.

(3) Enhancement of the Joint Law Venture scheme. At present, a Singapore Law Practice (SLP) may work together with an FLP in either an FLA or a JLV. In line with the Government's announcement last year, the Bill allows a substantially enhanced JLV scheme. The Rules will detail the additional privileges of, firstly, allowing the constituent FLP of a JLV to share up to 49% of the constituent SLP's profits in permitted areas of practice; secondly, allowing the constituent FLP to directly hire Singapore lawyers; and, thirdly, allowing partners from the constituent SLP to concurrently hold partnership and administrative positions in the constituent FLP.

(4) In addition, a new section 130B(11) of the new Part IXA provides for discretion for the Attorney-General, with the approval of the Law Minister, to approve JLV structures that may go beyond the conditions prescribed in the Rules. These enhancements to the JLV scheme will address feedback received on the scheme since the last review in 2005 and make the JLV an even more attractive collaboration between FLPs and SLPs.

(iii) Opportunities for Singapore-qualified lawyers

These changes will open new opportunities for international commercial arbitration and, within QFLPs and JLVs,

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offer new avenues for Singapore-qualified lawyers. Our lawyers, particularly the younger lawyers, will have far greater opportunities.

Traditionally, the Attorney-General has been the regulator for all lawyers working in foreign legal entities. The Law Society has disciplinary oversight of Singapore-qualified lawyers who hold practising certificates (PCs).

The amendments will now create a new category of Singapore-qualified lawyers who will be allowed to retain their PCs and practise Singapore law in foreign legal entities in the areas outlined earlier. In general, the policy intent is for similar regulatory and other requirements to equally apply to PC holders, regardless of whether they are in SLPs or FLPs. For this new category of Singapore-qualified lawyers, however, it would be quite onerous to subject them to the overlapping disciplinary jurisdictions of both the Law Society and the Attorney-General. Thus, the Attorney-General will have the primary oversight in respect of lawyers working solely within a foreign entity, referring matters where relevant to the Law Society. Lawyers in Joint Law Ventures who are employed by Singapore Law Practices will continue to be the subject to the Law Society's regulation, in relation to their practice in the Singapore law practice.

Enhancement of the disciplinary process

Sir, the other main category of amendments enhances the disciplinary process for lawyers.

(i) Complaint and inquiry procedures

There are a range of amendments to streamline the entire disciplinary process. I will only outline the key changes here. Specific timelines are stipulated for each step of the disciplinary process. To deter frivolous complaints, it will be mandated

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that every complaint against a lawyer be made in writing and be supported by a statutory declaration, except when the complaint is made by a public officer. A limitation period of six years, in line with the general limitation in law, will be introduced to prevent stale complaints. The powers of the Inquiry Committee and Disciplinary Tribunal to order costs will be enhanced. Sentencing options will also be enhanced. Judicial review of the Disciplinary Tribunal's decision can only be applied for after the conclusion of the Disciplinary Tribunal's deliberations.

(ii) Disciplinary Tribunal

There is one change to the recommendations earlier made by the Committee. The Committee found that the average time taken by the Disciplinary Committee to complete their cases doubled from 7.5 months in 2002 to 15.4 months in 2006. To address the serious problem of delays, the Committee proposed to shorten the disciplinary process by replacing the Disciplinary Committee with a Disciplinary Tribunal. The Tribunal was to be appointed by the Chief Justice and comprised only one member – a Senior Counsel, or a retired Judge or Judicial Commissioner. Clause 34 now revises this to a two-man Disciplinary Tribunal, consisting of a President, who will be a Senior Counsel, a retired Judge or Judicial Commissioner, and a second member, who will be an advocate and solicitor of at least 12 years' standing. Under clause 35, the President will have the casting vote.

This change is in response to strong feedback from the Law Society which had raised concerns about disciplinary matters being decided on by only one person, without the element of "judgement by peers", which is in the current process. The Law Society has given the assurance that it will commit to completing the prosecution of disciplinary cases heard before a Disciplinary Tribunal within nine

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months, barring any unforeseen circumstances and cases of unusual complexity. We believe this should adequately address the problem of delay. We will, however, monitor the situation closely.

(iii) Mental or physical incapacity

The Bill will provide for the Attorney-General or the Council of the Law Society to adopt certain measures when they are satisfied that a lawyer is incapacitated by any physical or mental condition to such an extent as to be unable to attend to his practice, or that a lawyer's fitness to practise appears to have been impaired by reason of his physical or mental condition.

The Bill also contains various minor amendments requested by the Law Society and other changes of a technical nature.

In conclusion, Sir, the changes to be made through this Bill will, we hope, further develop and enhance the standards of our legal profession and Singapore's position as an international centre for the provision of legal services. But these will not be the only measures that we will need to take. The scene in the legal landscape is fast changing. We must be prepared to make further changes to keep up with developments and ensure that our legal services sector remains vibrant and competitive.

Sir, I beg to move.

Question proposed.

3.13 pm

Dr Teo Ho Pin (Bukit Panjang): Mr Speaker, Sir, I rise in support of the Bill.

Sir, the proposed Bill seeks to amend three areas of the Legal Profession Act, namely:

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(1) Disciplinary processes;

(2) Measures to address a solicitor incapacitated by physical or mental conditions; and

(3) Liberalisation of the legal services sector.

Sir, the Straits Times on 21st August 2008 reported a list of 10 prolific corporate fugitives in Singapore who are on the run. Out of these 10 fugitives, six of them are lawyers who had stolen or misappropriated their clients’ money totalling $27.8 million.

Sir, these breaches of trust and the recent cases of misconduct of lawyers have affected the professionalism and integrity of the legal profession. These rogue lawyers are not just a few black sheeps in the legal profession. There are many other cases of lawyers’ misconduct. I had also received complaints from my residents on the lack of professional services and/or misconduct of lawyers. These include gross overcharging, lack of diligent services, making of misleading statements or misrepresentations.

These increasing trends of lawyers’ misconduct and complaints are indeed disturbing and of concern to the general public, corporate entities, and Government. If I may quote the stinging rebuke which former Chief Justice Yong Pung How made when he dealt with three errant lawyers in August 2005:

“We cannot have lawyers going round telling lies. It is becoming a most naughty profession in the world. What is the profession coming to?”

Sir, these are indeed serious wake-up calls for the legal profession. There is an urgent need to uplift the integrity of our legal profession in Singapore.

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Sir, instead of making minor amendments to the Legal Profession Act to streamline the disciplinary processes of lawyers,

the Ministry should take more concrete steps to regulate the professional conduct and services of lawyers. We should not introduce measures as proposed in the Bill to protect lawyers but should instead make provisions to deter misconduct of lawyers.

On the contrary, the Ministry should make more provisions to protect clients or parties affected by the misconduct or unprofessional services of lawyers.

Sir, I do not agree with clause 29(a) which mandates every complaint against a lawyer to be made in writing and supported by a statutory declaration. I understand the rationale for statutory declaration is to deter frivolous complaints, but this has placed undue onus on the complainants or affected parties who can be ordinary citizens. Can the Minister explain why lawyers should be given such protection while the other professionals such as doctors, architects or engineers do not have such provisions to deter frivolous complaints?

Sir, if the legal profession is receiving many frivolous complaints, we should instead address the roots of the problems, and find out why there are such complaints against lawyers. Is it due to unreasonable or demanding clients, lack of communication, or poor professional services?

Sir, complaints or feedback provide good checks and balances on professional conduct and services. The Law Society should be more diligent in addressing complaints against their members; and regulate, maintain and improve the standard of conduct of the legal profession. At the same time, more public education efforts should be made to keep the general public informed of legal

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services and professional conduct. This would not only reduce complaints but also enhance solicitor-client relationship.

Sir, we should not set up measures to deter complaints or feedback as it would encourage complacency and increase malpractices in the legal profession. Companies which do not entertain clients' feedback or complaints would never be able to satisfy the needs of their clients in providing quality services. If Singapore aims to be a global legal services hub, we need to set up a professional service framework to better serve our clients in the legal services sector.

Sir, I support clauses 28 to 30 of the Bill which reduce the eligibility criteria for an advocate or solicitor to be appointed as a member of the Inquiry Panel. This would enable more advocates or solicitors to be eligible, thus facilitating the review and inquiry processes of complaints of misconduct made under section 85(1) of the Legal Profession Act.

Sir, clauses 34 and 35 provide for the composition of a 2-member Disciplinary Tribunal which shall comprise a President and an advocate or solicitor. It also states that if the two members of the Disciplinary Tribunal were unable to reach a unanimous consensus on any matter, the President would have the power to decide on the matter.

This provision does not seem to provide a fair hearing as the decision of the Disciplinary Tribunal is essentially made by the President of the Tribunal. Sir, I would like to propose that we form a three-member Disciplinary Tribunal similar to the Court of Three Judges, and all matters should be decided based on a simple majority vote. I hope the Minister could clarify the rationale for a two-member Disciplinary Tribunal.

Sir, clause 34 also provides that every member of a Disciplinary Tribunal and the

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secretary of every Disciplinary Tribunal shall be paid such remuneration as the Chief Justice may determine. I wish to clarify with the Minister as to whether it is appropriate to use public funds to pay the Disciplinary Tribunal members and its secretary to address complaints against lawyers in the private practice.

The Law Society is responsible for the professional conduct and discipline of its members. As such, the Law Society should bear all costs and expenses in such Disciplinary Tribunals instead of the State. As a matter of policy and self-management principles, we should not use State funds to resolve complaints against lawyers in the private sector.

Sir, I would like to propose that the costs and expenses of all complaints against lawyers in the private practice be appropriated accordingly among the complainants, lawyers and the Law Society. This would encourage stronger self-management and ownership among all three parties. It will also ensure that complaints are genuine and properly addressed by the Law Society and the Courts.

Sir, I support the amendments to allow qualifying foreign law firms to practise Singapore law in permitted areas such as corporate, banking and maritime law through Singapore law-qualified solicitors. This licensing scheme would attract more investments to Singapore, thus creating more job opportunities for Singaporeans. At the same time, it would build capabilities among Singapore law-qualified lawyers to expand their range of legal services both locally and globally.

Sir, I support the Bill.

3.22 pm

Mr Alvin Yeo (Hong Kah): Mr Speaker, Sir, let me begin by disclosing that, apart

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from being a partner of a local law firm, I was on the Committee headed by Justice V K Rajah whose report was adopted by the Government in formulating the present amendments. However, the proposed liberalisation of the legal sector will change the landscape so significantly that I feel compelled to add my voice in support of the Bill and to raise some further points for the Minister's consideration.

Before I launch into the main thrust of my speech, I do feel compelled to add my comments after hearing the learned Member Dr Teo's speech in terms of the legal profession. It is my view that the state of the profession is perhaps not as bad as may be painted in some press articles and that the number of cases involving rogue lawyers is a very, very small minority in the context of a profession of over 3,500 practicing lawyers. The Bill does address and streamline the disciplinary process and I believe it is a step in the right direction. It is my considered view that added regulation will not improve the situation and I do believe that the vast majority of the practicing lawyers do behave honourably.

Returning to the main thrust of my speech, the liberalisation of the legal sector is, in my view, unavoidable for Singapore if it is to continue to grow as a financial services centre to become a leading hub not just for Asia, but the world. Underpinning our financial and capital markets are the bankers, accountants and lawyers who service these markets and make them tick. We have the international banks here, the international accounting firms, but the international law firms are restricted in their practice of Singapore law, as opposed to English or New York law.

To support the flourishing activities of the market and to compete with other centres like Hong Kong which are not so

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restricted, we do need to provide the widest range of choices for the various players in the market which includes their choice of law firms and their choice of law. In allowing international law firms greater latitude in practising Singapore law, we will also widen the knowledge and acceptance of Singapore law which not only extends the reach of our home-grown lawyers, but enhances the soft power of Singapore as a whole.

So why has it taken so long? The need for caution arises from the fact that the greater size and reach of the international law firms means they could cherry-pick our best lawyers, leaving our Singapore firms as second-tier outfits, unable to participate in the cutting-edge transactions that lead the market. What this also means is that, if owing to recession here or some change in business strategy decided in the head office in London or New York, an international law firm could choose to close down its office here and move their lawyers elsewhere to what is perceived to be a more lucrative market. It is for similar reasons that when liberalising the Singapore banking sector, the Government stressed the importance of having local banks that will stick by Singapore through good times and bad.

This is, in my view, also why we should not allow our local law firms to become simply middle of the road outfits focused essentially on retail business. If a further reason is needed, there is a further reason for upholding the standards and status of our Singapore law firms. This is where we have drawn many of our judges, including our present Chief Justice and even including our present Law Minister. As part of a local law firm, their practice was centred in Singapore and steeped in our home-grown values and culture.

Will we have the same pool of talent to draw on if our best lawyers have all joined

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foreign law firms and are practising outside Singapore? I think not. Hence, the need to strike a balance between providing the financial institutions that demand legal advice of the highest quality with the full suite of choices, whether the applicable law is English, New York or Singapore law, and between providing our Singapore law firms not to shield from competition but with the platform to upgrade themselves and participate in the growth of Singapore as a financial centre.

How do we achieve this balance? I believe the Enhanced Joint Law Venture (EJLV) Scheme holds the key. It is the means by which a top international law firm can link up with one of our leading Singapore firms to offer legal services through a common vehicle. In the process, the local law firm will gain exposure to the cutting edge transactions that the international law firms handle, their greater knowledge base and more advanced infrastructure. Put another way, the local law firm gets a transfer of technology and sharpens its competitive edge.

The reason why the earlier JLVs did not do as well as planned was because their financial interests were not aligned, the two partner firms did not share profits and would compete as much as cooperate with each other. This has been addressed in the new EJLV proposal which makes it clear that they can share in the permitted areas of practice up to 49% of profits. The authorities, as the Minister has mentioned, also have the discretion to permit even greater integration between the two partners which can only serve to foster greater cooperation and to facilitate the transfer of technology which will benefit the Singapore law firm in the long run. All this is not to say that the qualifying foreign law practice, or QFLP, proposal is not required.

Indeed, it complements the EJLV Scheme in that it permits a foreign law

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firm to practise Singapore law on its own, that is without a local firm as partner, provided it satisfies the authorities that it will bring greater economic benefits to Singapore. This measure recognises that market forces are what drives our economy and that the Government will not attempt to prescribe how a foreign law firm wishes to organise its presence here if overall Singapore would benefit. But the key difference between the EJLV and the QFLP is that in the former, a local law firm has the opportunity to upgrade its skills and experience of its lawyers while the QFLP will doubtless pass on the same benefit to the Singapore lawyers it hires as its employees, the upgrading effect will, by definition, be more limited.

I recognise and agree that the authorities cannot set perimeters for the QFLP Scheme that are so narrow that prospective applicants are put off from applying, nor can it bar firms that could have formed an EJLV from opting to go it alone as a QFLP. If the economic benefits stack up in favour of Singapore, that must be the telling factor but the criteria must not be so relaxed that international law firms see little incentive in pursuing a partnership with local law firms because the QFLP licence is easily attainable. For if that were to happen, one would expect even wider cherry-picking of our best lawyers and the relegation of the Singapore practices from the premier league of law firms here.

It is precisely because Singapore has to have its own representatives in the top tier that we need to pay serious attention to how our law firms can enhance their skills to compete at the highest level.

The liberalisation proposal has my full support. The local Bar does not seek protection from competition, but a platform to upgrade themselves to compete with the best. Therefore, in closing, I do urge the Government when it

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comes to implementing the scheme of EJLVs and QFLPs, to have in mind these concerns. In this way, we can make strides towards having the best of both worlds - a leading financial centre served by top-notch law firms but whose ranks would include some of our very own Singapore practices.

3.31 pm

Mr Sin Boon Ann (Tampines): Sir, I would like to remind my colleague, Dr Teo Ho Pin, that one bird does not make a summer. In fact, a majority of the lawyers are people of great integrity and honesty and it is not a contradiction, in turn, to say that, "I am represented by my 'honest' lawyer". But, Sir, I would like to, first of all, declare that I am an advocate and solicitor of the Supreme Court of Singapore and I have an interest in the subject matter which I am about to speak on.

The proposed section 130D of the Legal Profession Act, when passed, will allow a foreign law firm being a Qualifying Foreign Law Practice, to practise Singapore law subject to certain conditions and constraints set by the Attorney-General. This is a significant development in the legal profession. This amendment opens up the practice of Singapore law to foreigners, even though presently it is restricted to certain areas of practice. This is a very unusual development as, in many countries, the practice of local law is often restricted to the local people.

Quite obviously, such a significant development would be of great interest and concern to many lawyers whose practice may be affected by this change of policy. To the extent that a foreign law firm is now able to give legal opinions on local laws in an approved area of practice, it would give rise to a number of issues and implications that I would like to address in this House.

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First, there is now a distinct possibility that the local legal practice, at least in the financial services, including the corporate and capital market practices, has the potential to be marginalised by foreign law firms. These firms having had the benefit of a longer history of international practice would be in a better position to attract the best of our lawyers to work for them. The local firms, which are most unlikely to match the pay and service conditions that these foreign firms will offer, will not have the ability to attract top graduates to join them. In the longer term, the quality of services of the local firms will suffer and this will, in turn, make them even less competitive than the foreign firms.

Take a look at Hong Kong. With the dominance of foreign firms, the local firms have been finding it difficult to compete. The outcome unfortunately is that many of these firms that could have grown to become major regional or international players, standing alongside the bigger firms, are increasingly being sidelined. We know it because before, our first preference was to use local firms. Now, we are turning to international firms when it comes to using Hong Kong lawyers for the Hong Kong part of the work.

Secondly, and it follows from the point just made, I am not sure whether such a move will necessarily help Singapore firms to develop and grow an international profile similar to the Magic Circle firms (being the established London firms) or the Wall Street firms. Without the necessary talents and with fewer opportunities to work with these foreign law firms, since there are fewer incentives to form joint law ventures now that foreign firms are allowed to practise local laws, it is very unlikely Singapore law firms will have the potential to become world class practices.

For Singapore, our biggest advantage has always been our people. We know

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that our lawyers are highly regarded because of the excellent training that they receive both at the university and in practice. The presence of our human talent would be better felt across the globe if we are presented as Team Singapore through a practice that is firmly rooted in Singapore as opposed to losing our talents to the offices and the hallways of big foreign practices whose interests may not always be aligned to our national interest. Like the local financial institutions, most of the major local law firms have aspirations to become regional and international practices. In order for this to happen, we need to put key policies in place; some of which have been implemented at the moment. These policies include making Singapore law the applicable law that governs the transactions, beginning with financing documents; encouraging the greater use of our capital markets, both on the buy and sell sides to raise capital; the continued encouragement to use Singapore rules as the applicable rules in arbitration proceedings; the promotion of policies that will incentivise the upgrading of knowledge management among the local law firms; and the transfer of know-how that I believe was the main intent when foreign joint law ventures were first mooted. Unfortunately, by allowing foreign law firms to now practise Singapore law, even in limited areas, the Government could well be dealing a fatal blow to the nascent efforts of our local law firms to develop and go regional. Is this what we want for the legal industry?

Thirdly, law and the practice of law is a very unique vocation that occupies a very special place in any society. In its modern context, it is supposed to reflect the values and the choices that represent the will of the people. As lawyers, we are not only advocates of the rights of private citizens but are also officers of the Court. In this regard, lawyers have a special role in that they owe a duty to their clients and are also expected to uphold and

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protect the integrity of the application of the laws of the land. It is for this reason that lawyers who mislead the authorities or knowingly break the laws will have to face the censure of the Courts and the Law Society.

It is also for this reason that lawyers have through history, and in our case, since colonial times, been closely associated with the development of the law, either in the Courts, the review committees or the law schools. Law firms and law practitioners have always been called upon to perform public service and would readily do so mainly because of the wider interest that their involvement will serve. The firms that they represent, being local firms, as far as I am aware, have seldom placed obstacles in the way even if these lawyers recommend policies that may potentially harm the firm's interest. A clear example of this is the recommendation from local lawyers who form the committee to promote the introduction of Qualifying Foreign Law Practice. Sadly, I am not convinced that these foreign firms necessarily share, nor are they expected to share, these commitments that the local firms have. When the crunch comes, whose interest will they serve? I am much concerned that we will lose much of our heritage and tradition that is very much a part of Singapore's history. Will the likes of Drew and Napier, Allen and Gledhill, Rodyk and Davidson, Wong Partnership, firms that we know well and are products of Singapore, become footnotes in our history books?

In case I am misunderstood, Sir, I am not against competition, and neither am I against the opening up of our market to foreign law firms. I am, however, a firm believer in fair competition and of the principle that we should not pursue economic development at all cost.

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In the case of fair competition, we must allow for more time for our local firms to grow and develop the expertise to provide the services that are required to meet the demands of an increasingly sophisticated financial services sector. If we are still committed to the principle of helping our legal sector to grow, we should improve the framework for the transfer of technology. We should, for instance, provide more incentives and opportunities for our young lawyers to be exposed to foreign firms and provide more opportunities for the use of Singapore law as the governing law of the documents, as mentioned earlier. In this regard, if we are prepared to reconsider the principle of non-internationalisation of the Singapore dollar, it would help to promote the use of Singapore law in cross-border loan documentation. Until local firms are ready to face foreign competition, opening up the market will be premature and will work against the interest of the local law firms. The Australians and the Americans on the other hand are not concerned with foreign competition because they have a longer history. That is why you will find only some Magic Circle firms in Australia and the US where they have a relatively modest presence. The market will have to be opened up more slowly if our interest is to be served.

Now, this leads me to the next point. It is my understanding that one of the principal reasons behind the move to allow foreign firms to practise Singapore law is to support the financial services sector. One feedback from financial institutions as to why we are not able to grow our financial services sector fast enough is the inability of the foreign law firms to provide a seamless one-stop service to these financial institutions undertaking cross-border work. However, I am not sure if providing a one-stop service will hasten the development of the financial services sector, and I would like to ask the Minister in this regard to just demonstrate to this House how this will

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be so. Be that as it may, even if that were true, it raises a fundamental point and issue of the way we want to take this country forward. In approving this policy, and bearing in mind the potential harm that this may do to our legal profession, the bigger question that we should ask is whether we are now moving towards the principle of economic development at all cost, even if it may harm a key sector of our society?

This has been a difficult question that confronts many societies today. On the one hand, much has been said about liberalising the economy to free trade among countries while breaking down all protective barriers. Yet, at the same time, we are mindful of the social costs that come with free trade and liberalisation. The question is where do we draw the line? Each country will have to decide where that equilibrium is. Even countries such as the US, one of the biggest proponents of free trade, are struggling with finding that equilibrium. Whatever it is, in fact, no country, I dare say, would pursue the policy of economic development at all cost. Yet the one question that some of us will be asking is, are we pursuing the policy of development at all cost with this policy at this time?

One response to this question perhaps is the belief that what is good for Singapore must necessarily be a good policy to adopt. I have alluded to this earlier in my speech that the underlying principle in opening up the profession is to allow for a seamless one-stop service by foreign firms for cross-border services based on the feedback given by the financial services sector. Honestly, I am not convinced that allowing foreign firms to provide that one-stop service to the banking sector will speed up the development of not just the financial services but also the legal services as well. After all, is the joint law venture policy not promulgated much earlier supposed to make that happen? And what

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has the record and history of this policy been, having been implemented for a while now? It is my understanding that more, perhaps, could have been done and yet the expected transfer of technology is not taking place, even under the rubric of joint law ventures. What will then happen again with this policy is that the possibility of these firms competing with local firms directly for local work at the higher end, apart from competing for local talent. If that were so, how will this serve to meet the needs of the financial services sector that is not already met by the local firms? How can we say that this is good for Singapore when it is your own people's interest who are put at risk in the process?

Presently, the amendment Bill contemplates that the Attorney-General in permitting a Qualifying Foreign Law Practice to qualify for a licence to practise Singapore law may stipulate certain terms and conditions to these firms. Also, it is envisaged that in order to ensure that there will not be a deluge of foreign firms practising Singapore law, only a limited number of foreign law firms will be permitted to qualify in this category. In considering the application and the terms and conditions to be applied to these firms, it is my hope that a certain balance be struck by the Attorney-General in his wisdom in coming to a decision as to what to permit.

Finally, there is just one other point that I wish to comment on the Bill. Clause 36 introduces a new section 91A which restricts judicial review in any court on any act done or declaration made by the Disciplinary Tribunal. Sir, I am just puzzled as to why the Government should choose this draconian approach in taking away the right of an affected person who is the subject of an administrative law action from seeking redress at our Courts. In the context of our Constitution, the right of an aggrieved person to seek redress at our Courts is fundamental. Restricting this

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right would run counter to the spirit of our Constitution even if the restriction itself is not on the face of it, ultra vires the Constitution. I should therefore be grateful if the Minister could explain why this restriction to judicial review in the new section was introduced in the first place.

Subject to the comments above, Sir, I support the Bill.

Dr Teo Ho Pin: Thank you, Sir, for allowing me to just clarify. What I mentioned is that I am aware that we have a few thousand good practising lawyers in Singapore, but I am indeed very concerned with this increasing trend of misconduct cases of lawyers in Singapore. It looks like we are in for a long summer.

Mr Low Thia Khiang (Hougang): Sir, it sounds to me that the Government's foreign talent policy has caught up with the legal profession. But I am not speaking on this issue as I believe that the lawyers are more than capable of speaking up for themselves.

Sir, I refer to the proposed amendments to the disciplinary proceedings. A layman's representative used to sit at both the Inquiry Committee as well as the Disciplinary Committee will now be restricted to only the Inquiry Committee. Clause 34 of the Bill amends section 90(1) of the Act to say that the Disciplinary Committee will now consist of only two persons instead of four. The two persons who are dropped from the Committee are the Government legal officer and the layman. Although the Minister has explained briefly the changes in the disciplinary procedures, I think it is useful to recall the reasons why the layman was introduced to the process.

Sir, in 1986, the then Second Minister for Law, Prof. Jayakumar, moved

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amendments to the Legal Profession Act to include lay persons to justify his move. He had said, and I quote, "At present, the persons who sit on the Inquiry Committee and the Disciplinary Committee are all lawyers. The errant member is therefore judged entirely by his peers. This is based on a traditional British practice of self-regulation which grew up in guilds of people in a particular trade, historically. In recent times, the permissive attitude of these self-regulating bodies have created doubts in their willingness to police themselves or to discipline members of their own kind." He continued to say that the inclusion of non-lawyers and of people who are regular users of the services of lawyers will help allay some of the apprehensions caused by the present inhouse nature of the disciplinary process. And the inclusion of lay persons or non-lawyers in the Disciplinary Committee would stop the belief that self-help and mutual forgiveness is the way lawyers maintain standards of professional conduct.

Sir, are these concerns for mutual forgiveness and transparency no longer valid now? It is true that under the existing law, the lay persons at the Disciplinary Committee stage cannot vote. Nevertheless, he contributes to the deliberation of the Committee by reminding the Committee of how a client would perceive the event at hand. This would surely provide for a fuller, more informed discussion as to what is fair and just in the circumstances. Let us not forget that the Disciplinary Committee is a very important milestone in the disciplinary process. It is the gatekeeper of whether the lawyer under inquiry should face the Court of Three Judges be struck off or suspended. Care should be taken at such an important stage and the laymen can make important contributions. If our experience has been that the laymen are too busy, perhaps, we should amend the Act to allow more people to qualify as laymen.

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3.47 pm

Ms Ellen Lee (Sembawang): Mr Speaker, Sir, I join my colleagues in the legal profession, Mr Alvin Yeo and Mr Sin Boon Ann, in contradicting the views expressed by Dr Teo Ho Pin about the legal profession. Many in our profession actually feel that, as lawyers, we are over-regulated and under-protected. And the provisions in the Bill are viewed actually as the minimum protection that lawyers accused of wrongdoing should be accorded, as with any other accused in any criminal proceedings.

Mr Speaker, Sir, I rise to support the proposed amendments to the Legal Profession Act. In particular, I wish to speak on the proposed provision whereby a lawyer can be submitted to a medical examination in the event his "fitness to practise" is deemed impaired by any physical or mental condition. The introduction of this new provision which can be meted out on any lawyer deemed physically or mentally unfit has ramifications to the lawyer himself, his family, his firm and his clients. I therefore urge the Minister, in introducing this provision, to take cognizance of the fact that there should be safeguards for the lawyer, his family, his firm and his clients as these are the parties who are affected directly and indirectly as a result of the order or direction for a lawyer to undergo medical examination to see if he is "mentally sound".

We have read newspaper reports that the number of cases of depression in Singapore has been on the rise. Mental illness and impairment affects anyone and is rampant. However, the impairment may be of varying degrees. It is therefore important that the profession is well aware of the standards by which medical practitioners will adjudge whether a lawyer's physical or mental condition has affected his "fitness to practise".

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Although what constitutes "fitness for practise" and what sort of "physical and mental conditions" should be displayed will remain to be tested, there is a strong impetus for greater elucidation and clarity in this respect.

For the lawyer and his family, there will be questions on integrity and confidentiality. Inevitably, such a direction to undergo medical examination will pose more than moral stigma to the lawyer and his family. Even if he is finally adjudged to be of sound mind and fit to practise, there are often the unintended consequences of embarrassment and stigma. Moreover, there are instances where the "unfit mental condition" could be a short-term or long-term problem. Especially in cases of remission or where a lawyer has been deemed "fit for practise" after medication and treatment, how easily could he bounce back and continue in the profession remains to be seen, although the answer is obvious.

From a law firm's perspective, I question whether there will be an obligation on fellow partners, directors or colleagues to take steps to prevent an impaired lawyer (at varying stages or degrees of unfitness) in the firm from further acting or appearing on behalf of clients or advising clients. Besides taking steps, will the onus be on fellow colleagues and lawyers to inform the Law Society or the appropriate authority or the impaired lawyer's clients or prospective clients that the lawyer is mentally impaired? Furthermore, there will also be the question of liabilities and obligations that the firm may have when the impaired lawyer leaves the firm or re-joins the firm when he or she recovers. All these are salient considerations which must be addressed so that this new provision will better serve the profession and the people.

Finally, whilst pondering on this proposed amendment, it has set me

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thinking on whether similar provisions should be extended to all forms of professional practice, where it is imperative that the practitioner is of sound mind and has a healthy psychological state with good judgement. Otherwise, he or she will not be able to act in the best interest of his or her client and conduct himself or herself properly so as not to denigrate the profession.

With that, I support the Bill.

3.52 pm

Mr Hri Kumar Nair: Mr Speaker, Sir, first, I declare my interest as a lawyer and a Director of a local law firm.

Sir, the practice of law has always been a challenging one, particularly in the last 20 years or so. A combination of tight deadlines, demanding clients, stiff penalties for failure and long, long hours in the office have contributed to a serious attrition from the profession. So while the Singapore economic pie has grown considerably in the last 10 years, the number of practising lawyers has been stagnant. Despite the claims that great amounts are earned by lawyers, there are many who obviously feel that they are paying too high a price for staying in the profession. Well, to borrow a phrase from the Americans, they ain't seen nothin' yet.

This Bill represents a dramatic transformation of the Singapore legal landscape. And it may leave some Singapore lawyers wondering whether there is future for them in the profession. The most significant change is, of course, the opening up of legal services to foreign law practices, including granting them the right to practise Singapore law, save in certain excluded areas.

Sir, I support the reasons behind opening up the profession. Any move

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which benefits Singapore as a whole should be given the highest priority, even if it may adversely affect a particular profession or business. What I believe requires greater explanation from the Minister is the correlation of this move with the growth of the economic pie for all, and not primarily for foreign law firms. Will the Minister give concrete examples of how this will help Singapore as we all move to the next level of economic advancement?

Sir, in my 17 years of practice, dealing with both my fellow members of the profession as well as foreign lawyers, including those from the "magic-circle" firms, I can say with conviction that our best minds are more than a match for theirs. But the glitter and the deep pockets that these foreign firms have will present local firms with serious issues.

First, there will be clients who will engage foreign firms for high-end corporate work simply on the basis of their name and standing. Today, Singapore firms get involved in international deals to advise on Singapore law issues. By this involvement, our local firms build up their skills and expertise. Now, there is a serious risk that they will be bypassed, and I share the concerns expressed by my colleague, Mr Sin Boon Ann. Second, the issue of talent. There will be an outflow of talent, particularly of younger and mid-level lawyers from local to foreign firms. Local firms will not be able to compete with the packages of the large foreign firms. We are seeing this already. I personally know of younger lawyers who have moved from local to foreign firms and who have had their monthly salaries doubled and even tripled. Foreign firms also offer potential recruits stints in their home or overseas offices, and the opportunity to get involved in the larger, sexier deals. It will be difficult for our young, talented lawyers to resist this pull. And this will have a knock-on effect on the Legal Service, which has already

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witnessed a brain drain to the local private sector, even without these new players in the market. It is important that we keep good people in the Legal Service. I ask the Minister how the Legal Service proposes to meet this challenge.

I know there are some areas of practice, such as litigation, which will remain the domain of local law firms. But there is no assurance that these will remain protected. More importantly, once foreign firms are permitted to practise Singapore law, there is a serious risk that they will, inadvertently or otherwise, extend into such areas as well. For example, while a foreign firm cannot appear in our local courts, what is to stop them from doing the substantial litigation work in the background, including advising the clients, taking witness statements, overseeing the discovery process and even drafting submissions? Singapore lawyers may eventually be nothing more than the mouthpieces of the foreign firms in our courts. And I hope there will be clear and practical rules in place to ensure that this does not happen.

The effect of these changes may well be the dominance of the foreign firms in the Singapore market, and a gradual diminishing of local firms, both in size as well as the nature of work they perform. I do not believe these are fanciful concerns, and Mr Sin has outlined what has happened in Hong Kong. I will not repeat that. I know it is not the Government’s role to protect local firms or to preserve their livelihood. It is a challenge to our lawyers in the local law firms not to confine themselves to Singapore, but to make themselves relevant in the globalised economy. Some will succeed, others may not. But all must be prepared for change.

On that note, I would like to touch on two specific matters in the Bill. First, the provisions to compel a solicitor to undergo

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a medical examination if there are doubts that he is physically or mentally capable of discharging his duties. It is difficult to argue against its rationale. However, I would like to raise a few points.

First, the Bill provides that where an application is made by the Attorney-General or the Law Society Council, and it appears to the Judge that the fitness of the solicitor may be impaired, the Judge shall order the solicitor to be examined by a registered medical practitioner who meets certain criteria as the Judge may specify. However, it is unclear whether the Judge merely specifies the criteria, or identifies the actual medical practitioner. If the former, who selects the medical practitioner?

In this regard, I note a striking dissimilarity with the law governing the medical profession. The Medical Registration Act and its regulations also empower the Medical Council to take steps to deal with doctors who may not be able to discharge their duties on account of their physical or mental condition. In that case, the Complaints or Health Committee may invite the doctor to be examined by at least two medical practitioners to be appointed by the Committee, but the doctor is also entitled to nominate his own medical practitioners to report to the Committee on his fitness to practise.

Sir, there is a more fundamental difference between lawyers and doctors in this regard. Where a doctor refuses medical examination, he risks his practising certificate. Under the Bill, the lawyer who refuses risks not just his practising certificate, he would be in contempt of court as well. There may be many reasons why a person may refuse a medical examination, particularly when the report will be disclosed to the Council (which is made up of his peers) and the Attorney-General. We are not dealing with a public health issue. A lawyer, just like a doctor, should be entitled to refuse

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examination without the pain of contempt. He puts his certificate at risk, but that is his choice. And if he chooses to subject himself to an examination, he should, like doctors, be entitled to furnish the report of a physician of his choice as well.

Second, the proposed section 25C(6) spells out that "the solicitor shall bear all costs of incidental to his medical examination …". Could the Minister clarify whether it is intended to include the costs of the legal proceedings to compel the lawyer to undergo the medical examination? In this regard, I hope the intention is to leave such matters, as is usually the case, to the discretion of the Courts.

Sir, on the issue of the penalties and the increased penalties, clause 26(e) of the Bill proposes amending section 82A(12)(d) increasing the monetary penalty that could be imposed on a legal officer or non-practising solicitor from the present of not more than $5,000 to not more than $20,000. Clause 27(a) of the Bill proposes to amend section 83 to allow for the penalty of not more than $100,000 on a practising solicitor.

In both cases, the monetary penalty is but one of the various possible punishments that could be imposed. The questions are: Why the disparity of increase? Why the disparity between $100,000 and $20,000?

The nature of the penalty raises another issue. What is the basis of the new upper limit of $100,000? I note that the upper limit for medical practitioners stands at $10,000. A lawyer may also be suspended for up to five years, while a doctor can only be suspended up to three years. May I ask: why the disparity in treatment, particularly where there is an equally strong, and arguably even higher, public interest in the regulation of doctors? This, of course, does not

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address whether there is consistency in the actual penalties given to lawyers and doctors for similar transgressions, but that is a different debate.

There is also proposed a whole slew of changes to streamline the disciplinary process to shorten the time to dispose of cases. I welcome this, as it does the legal profession little credit to have complaints against its members pending or unresolved for any considerable length of time. Such new measures include the step of reducing the Disciplinary Tribunal to just two members, and not requiring unanimity of the Tribunal in making the decisions. So, where there is a disagreement, the decision of the President prevails.

Sir, the fate of the respondent solicitor, therefore, effectively lies in the hands of one person, the President of the Tribunal. I understand that there has been much discussion on this issue with the Law Society, and this is a compromise solution. I will, therefore, not go over the same issues and arguments.

I would, however, like to draw a comparison again with the medical profession. A medical disciplinary committee consists of three registered medical practitioners of at least 10 years' standing, of whom at least two shall be members of the Medical Council. There is a lay observer, but he cannot vote and his presence is not even required. This is a bit odd but, again, I will leave that to a different debate. Therefore, unlike the proposed new law for the legal profession, the doctors are still judged by a majority of his peers. I would imagine, Sir, that any concern over the length of time it takes to dispose of complaints against lawyers would likewise apply to complaints against doctors and other professionals. In the circumstances, can we expect similar amendments to legislation governing the conduct of all other professions?

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Finally, Sir, with respect to the remarks by the hon. Member Dr Teo Ho Pin, can I just say this: It is because the vast majority of lawyers are honest and honourable that, when one falls, it makes the news and the public expresses its surprise and outrage. So, let us keep things in perspective. I think we will really be in trouble when lawyers fall and no one really thinks much about it.

Mr Speaker: Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.25 pm.

Sitting accordingly suspended

at 4.05 pm until 4.25 pm.

Sitting resumed at 4.25 pm

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[Mr Speaker in the Chair]:

LEGAL PROFESSION (AMENDMENT) BILL: **** Debate resumed.

Mr Christopher de Souza (Holland-Bukit Timah): Mr Speaker, Sir, thank you for allowing me to join in this debate and to lend my support for the Bill. I think our learned and honourable friend, Mayor Teo Ho Pin, has suffered enough, so I will go straight to my point.

Let me start by asking two questions:

(1) What is inferior about the manner in which Singapore Law Practices (SLPs) and Joint Law Ventures (JLVs) presently offer services to clients, both local and international?

(2) Singapore Law Practices are rooted here, they will continue to service their clients, both domestic and international, through financial and economic crises. Can the Minister ensure that foreign legal practices will do the same? In asking this question, I disclose my interest that I am a partner in a Singapore law practice.

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Let us not be numb to the fact that the amendments will quite obviously hurt the bread and butter of many corporate lawyers. So, surely, a case must be made out for liberalisation before it is introduced.

In summary, it appears that the major amendments to liberalise the Singapore legal sector are:

(1) The amendments allow the award of Qualifying Foreign Law Practice (QFLP) licences to foreign legal practices. These licences will allow them to practise Singapore law in permitted areas through Singapore law-qualified solicitors.

(2) The existing JLV scheme will be enhanced – the hon. Member Mr Alvin Yeo calls it E-JLV – firstly, to allow profit sharing of up to 49% of the SLP’s profits in permitted areas of practice, and, secondly, to allow foreign legal practices to hire Singapore lawyers.

(3) The scope of areas of Singapore law in which JLVs and QFLPs can practise will be all areas of Singapore law, save for only certain areas that are specifically excluded, such as litigation, conveyancing, family, trusts, wills and probate. In addition, all FLPs may practise Singapore law in areas to be prescribed by the Rules, and the relevant Rules will permit such practice where international commercial arbitration is contemplated.

The very fact that we have ringfenced a host of areas of laws shows that there is merit in leaving the practice of some areas to, and solely to, Singapore Law Practices. How are the areas left outside this list different? Why is there a need to retain local practices in some areas of law but push for liberalisation in others?

Another concern is that the amendments seem to envision further

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liberalisation in the future and that this liberalisation may take place via secondary legislation rather than primary legislation. For example, the amendments to the LPA envision that FLPs may practise Singapore law in areas to be prescribed by the Rules. I would query the reason for the devolution of such issues from Act to Rules since such devolution may mean that there is less debate on such weighty issues. In addition, the Bill provides for discretion for the Attorney-General, with the approval of the Minister for Law, to approve JLV structures that may go beyond the conditions prescribed in the Rules. So it appears that there is room for even further liberalisation, and such liberalisation need not come before this House in the form of primary legislation.

I would, therefore, appreciate the Minister’s clarification on the reasons for the devolution of such powers from Act to Rules, and the reason for the inclusion of this discretion for the Attorney-General.

In addition, would the Minister clarify if he sees the list of protected, or what the Minister calls "ringfenced" areas of Singapore law shrinking in the future? If so, what we have really is a moving target. This creates an environment where our Singapore-qualified lawyers have to constantly worry about whether the area of law which they practise, eg, matrimonial, criminal, conveyancing, litigation, trusts or otherwise, will be liberalised. If so, they would have to consider the following options: should we join a QFLP, learn a new area of law or, worse still, give up practice? Has the Ministry of Law considered the very real uncertainty these amendments create for the Singapore-qualified practising lawyer, especially if further liberalisation is envisioned?

This brings me to another issue. Given the shifting nature of liberalisation

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and the potentially shrinking carpet upon which Singapore lawyers can perch their practice, would the Minister care to share what is his vision of Singapore’s legal landscape in the future, say, in 10 or 15 years’ time? What does the Minister

see as the impact of these changes on our legal landscape and our law firms? Will there be room on our shores for our larger law firms and our sole-proprietorships? Or does the Minister see the QFLPs dominating the legal landscape? In fairness to those joining the profession in the future, those currently in practice, and those considering moving to offshore firms, I would urge the Minister to share his vision of Singapore's future legal landscape. This vision will also assist lawyers and law students in planning their future career moves.

It also seems that five QFLPs is just the start. Could there be more? If so, how many? Has the Minister considered how a strong QFLP local presence and a migration of younger Singapore-qualified lawyers to them will affect the traditions of our unique legal heritage – to quote the learned Member of Parliament, Mr Sin Boon Ann – and the impact on our local law firms? Also, given that more and more young lawyers may leave to join the QFLPs, which trait has already begun as they are presently joining JLVs and Foreign Law Practices, has the Ministry of Law considered how this will affect recruitment to the Singapore Legal Service, which has the important function of advising and servicing the Government? Also, has the Minister considered whether the migration of lawyers to QFLPs will cause a shrinking of the pool from which the illustrious Supreme Court Bench are appointed?

The potential consequences of the amendments should not be underestimated. In supporting the Bill, Mr Speaker, I ask the Minister to paint a vision of what he anticipates the legal landscape will be in future in order to

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convince lawyers that this is, in fact, the correct path to take.

4.35 pm

Mr Michael Palmer (Pasir Ris-Punggol): Mr Speaker, Sir, thank you for giving me an opportunity to speak on this Bill. Unfortunately, I am not as forgiving as the hon. Member, Mr Christopher de Souza, and I echo the sentiments of the Members who spoke before against the state of the profession as suggested by Dr Teo Ho Pin. We may have some naughty lawyers but we are not a naughty profession. Before I begin, let me declare my interest as a practising lawyer and a partner in a local law firm.

In my speech, I would like to deal with some of the amendments to the Legal Profession Act (LPA) in so far as disciplinary proceedings are concerned, I have had the benefit of reviewing these amendments and I am heartened to find that there are three main thrusts to these amendments.

Firstly, the amendments aim to make the disciplinary process more efficient in terms of time and costs. Secondly, the aim to put in place measures which would discourage frivolous or vexatious complaints. Thirdly, upon a finding of guilt, they provide a more varied range of penalties which may be handed down and which can be more commensurate with the nature of the misconduct.

I said that I was heartened to find that the amendments had these three main thrusts because I believe that the amendments will make the disciplinary process more just and efficient. This is important for all lawyers. No lawyer relishes a complaint being made against him. When a complaint is made against the lawyer and he is notified of it, his life and practice are gravely affected. The weight of the complaint hangs heavily over his head constantly. For all intents

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and purposes, he finds it difficult, if not impossible, to carry on with his practice. Therefore, the speedy and efficient disposal of the complaint is crucial.

I realise that we are one of the few professions that remain self-regulated. With that privilege comes great responsibility. I am not for one moment advocating that we deal with a complaint against a lawyer in a manner which is not just or fair. In fact, I advocate exactly the opposite. I say that all complaints should be dealt with in a just, fair and efficient manner. The unfortunate reality, however, is that under the present provisions in the LPA, the whole disciplinary process, in my view, takes far too long and is rather awkward. For the benefit of Members who are not familiar, I will attempt to give this House a brief description of the process.

A complaint is made by the complainant and submitted to the Council of the Law Society. The Council refers the complaint to the Chairman of the Inquiry Panel. The Chairman of the Inquiry Panel constitutes a Review Committee to review the complaint. There is no time limit for the Review Committee to conduct the review but it can interview the complainant and the lawyer against whom the complaint is made. The Review Committee can dismiss the complaint or refer the complaint back to the Chairman of the Inquiry Panel. If it is referred back to the Chairman of the Inquiry Panel, the Chairman then constitutes an Inquiry Committee to inquire into the complaint. In the course of its inquiry, the Inquiry Committee can interview the complainant, the lawyer against whom the complaint is made and any other relevant witnesses.

At the conclusion of the inquiry, the Inquiry Committee may dismiss the complaint, impose a penalty that commensurates with the misconduct found to have been committed or recommend the matter to be referred to a

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Disciplinary Committee. The Council of the Law Society then considers the report and may refer the matter back to the Inquiry Committee if the Council disagrees with the report or requests the Chief Justice to appoint the Disciplinary Committee to investigate the complaint. The process before the Disciplinary Committee is a formal, adversarial hearing where the Law Society appoints a lawyer to prosecute the case, and the lawyer against whom the complaint is made may be represented by Council in his defence of the charge.

At the end of the investigation by the Disciplinary Committee, the Disciplinary Committee may acquit or convict the lawyer against whom the complaint is made and impose a penalty or refer the matter to a Court of Three Judges. If the matter is referred to a Court of Three Judges, the lawyer against whom the complaint is made appears before the Court of Three Judges at an appointed date to show cause why he should not be punished.

In my, what you may call, brief description of the process, I have spared Members from a description of the various permutations which the process may take, depending on the various findings with each of the Committees involved may make. These permutations, in turn, cause the whole process to become somewhat cumbersome.

I note that the proposed amendments to the LPA will facilitate a tighter disciplinary process by reducing the minimum years in practice to seven. The Inquiry Panel will gain a greater pool of lawyers, from which it selects its members. Complaints will have a limitation period of six years from the date of the alleged misconduct. The Review Committee is given a guillotine of four weeks to complete its review. The

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Disciplinary Committee, to be renamed the Disciplinary Tribunal, will consist of only two people as opposed to the present four. Any judicial reviews or procedures are reserved to after the Disciplinary Tribunal has made its final decision. At inception, the Law Society can require the complainant to support the complaint with a statutory declaration. Finally, where a complaint is found to be frivolous by either the Inquiry Committee or the Disciplinary Tribunal, the complainant may be ordered to pay the cost of anyone involved in the process. I am certain that these amendments will make a difference to the overall proficiency of the process. In that same spirit, I would like to request that the Minister consider certain other possible changes which may make the disciplinary process more just and efficient.

My first suggestion is to consider the abolition of the Inquiry Committee stage of the process. In so doing, there is a potential to save about six months of time and a considerable amount of duplication of work in the investigative process. Presently, there are three stages when an inquiry or investigation is carried out into the complaint. It begins with the Review Committee. If found to have merit, an Inquiry Committee is convened to inquire into the complaint. And then if so recommended, the Inquiry Committee refers the complaint to the Disciplinary Committee for investigation. Pursuant to the amendments, the Review Committee will now be given four weeks to review the complaint and make its recommendations. However, the provisions relating to the Inquiry Committee remain substantially unchanged. Under the present regime, the Inquiry Committee is given three months from the time it is constituted to complete its inquiry and submit its report. However, where the Inquiry Committee feels that it cannot complete its inquiry within the three months, it can make application to the Chairman of the Inquiry Panel for a further

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three months to complete its task. This means that the whole Inquiry Committee process may take a total of six months to complete.

There are arguments which both support having what is in effect three separate investigative stages and arguments which would advocate against it. Those that support such a system argue that the more investigative stages you have, the more likely investigations will be thorough and frivolous complaints will be thrown out early on. In reality, that is not the case. I say this because the subject of each stage of investigation is the same in that each committee is looking at the complaint and the evidence surrounding that complaint. More often than not, the easiest option for the lower Committee, such as the Review Committee and the Inquiry Committee, is to simply refer it to the Disciplinary Committee for investigation. Once that occurs, the Law Society appoints a lawyer to prosecute the case and that lawyer effectively conducts another thorough review to prepare his case and advises the Law Society on the charges to be brought and the best case to prosecute. In effect, this turns into an unofficial fourth stage of investigation.

Mr Michael Palmer (Pasir Ris-Punggol): 4.41 pm

In my view, a better approach to the disciplinary process would be for the Review Committee to review the complaint when it is received, with slightly wider powers. These wider powers would enable the Review Committee to consider the complainant's evidence and the defence evidence. If the Review Committee finds that there are prima facie grounds for the complaint, they can then recommend to the Law Society that the complaint be referred to a prosecutor. The prosecutor will proceed to

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gather all the relevant evidence and statements with a view to advising the Law Society on whether the complaint ought to be prosecuted before the Disciplinary Tribunal or dismissed outright. If the recommendation is to prosecute, the same prosecutor is used to prosecute the case before the Disciplinary Tribunal. This process will save not only time and cost, but also place the burden of inquiry on the shoulders of only one party. It will obviate the need for an Inquiry Committee to gather and review evidence with a view to making a recommendation. It also avoids any duplication of work that now takes place when the lawyer appointed by the Law Society to prosecute at the Disciplinary Committee stage repeats much of the work that the Inquiry Committee has done.

I would also like to ask the Minister to consider these other areas of concern that I have. As I mentioned earlier, the Inquiry Committee has a maximum of six months to complete its report. However, I have seen cases where the Inquiry Committee has taken in excess of six months to render its report. There is no recourse in the LPA for the lawyer against whom the complaint is made. Its only recourse is to take the matter to Court. Of course, by the time that application comes on for hearing in Court, the Inquiry Committee is likely to have rendered its report. Will the Minister consider providing some recourse for the lawyer against whom the complaint is made in such a situation?

Under the section 86(7) of the LPA where the Inquiry Committee finds that the complaint should be referred to the Disciplinary Tribunal for investigation, the Inquiry Committee will now be required to frame the charges that are preferred against the lawyer in question. Would this not impose considerable constraints on the lawyer appointed by the Law Society to prosecute the case before the Disciplinary Tribunal? What if, during his preparation of the case, he feels that the

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charge ought to be a different one? Is he bound to prosecute the precise charge drafted by the Inquiry Committee or is he or the Law Society at liberty to amend the charge? Under section 93(3) of the LPA, the Disciplinary Tribunal has six months to conclude its investigation and submit a report to the Council of the Law Society. If it fails to do so, the Law Society can make an application to the Chief Justice for directions to be given to the Disciplinary Tribunal. But what happens if the Council does not do so? What recourse is open to the lawyer against whom the complaint has been made? Again, my thrust is to ensure that justice is done and seen to be done expeditiously.

Sir, with that, I support the Bill.

4.44 pm

Mr Gautam Banerjee: Mr Deputy Speaker, Sir, thank you for allowing me to speak on the Legal Profession (Amendment) Bill. Let me at the outset declare my interest in this Bill.

Sir, while I am not a lawyer, I do have a vested interest in the proposed liberalisation of the legal profession, which is one of the important changes this Bill seeks to achieve. Liberalisation of the legal profession will hopefully spur other professions in Singapore, including the accounting profession to which I belong, to be less protective of its turf and its members and instead be more open and receptive to new ideas, talents and specialist skills.

Sir, I would like to speak on two proposed changes which the Bill seeks to amend, namely, the liberalisation of the practice of law in Singapore and the streamlining of the disciplinary proceedings for errant lawyers.

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Today, Singapore is one of the most open economies in the world and over the last few years, we have made huge strides in becoming a regional and, in some cases, global hub for multi-national companies to locate their key functions, such as procurement, supply chain management, finance and treasury operations. Singapore is now the preferred location for investment banks, private equity houses and other financial intermediaries to locate their regional cross-border transaction teams, which cover not only South-east Asia but increasingly India and even the Middle East. These changes in the business landscape have brought about new sophisticated buyers of professional services. But the ability of professionals in Singapore to adapt and innovate to meet the demands of these new buyers of professional services is hampered by the rules and regulations governing professions such as lawyers and accountants, not keeping pace with these changes in the market for their services.

In fact, the legal profession is probably one of the most restricted and protected professions in Singapore. For example, foreign law firms are presently not allowed to set up businesses here except under very limited scenarios. This is an unnecessary hindrance to businesses. It restricts their choice of service providers and could mean that they do not have easy access to specialist skills and domain knowledge. Often they cannot use the international law firm they use in other locations and have to work with new untested advisers. To the extent that this Bill will allow some top quality international law firms to operate locally, it is a positive. But the proposals in the Bill are far too tentative and limited. We could have been much bolder with the liberalisation plans because experience elsewhere has shown that decisions on supply and demand of professionals are better left to the market rather than professional bodies or government departments.

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Opponents of further liberalisation, and we have heard a few this afternoon, have argued that if international law firms are allowed to practise here, many local lawyers would join these firms and eventually leave Singapore. This is a very unlikely scenario because international law firms are likely to use Singapore as a hub for the region and we would likely see an inflow rather than an outflow of talent. This is certainly the case with large accounting firms, consultancies and other such organisations. The migration of people and skills from the West to the East has only just begun. In another decade, world-class service organisations will have a lot more of their people in Shanghai, Hong Kong, Singapore, Mumbai and Dubai than today, and this will be at the expense of London, New York and Paris.

However, in Singapore, we have another problem because the supply of both local and foreign qualified lawyers have been very tightly controlled over many years, resulting in the present severe shortage of lawyers. Unfortunately, the Bill does not address this significant problem. I hope the Ministry of Law, working with the legal profession, will liberalise the domestic supply of lawyers and also make it easier for foreign lawyers to practise here because a shortage of qualified lawyers does affect our competitiveness as a centre of business and finance. We must not miss the opportunity of the talent migration from West to East to anchor on our shores.

The second point I would like to raise is that the Bill, in an attempt to deter frivolous complaints, will now require a complainant to furnish a statutory declaration or an affidavit to support a complaint against an errant lawyer and to bear the costs for those involved in the proceedings. The amount of deposit that the Inquiry Committee can ask the

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complainant to deposit with the Law Society to cover necessary costs will also be raised from $500 to $1,000. These new proposals will be seen as an unnecessary inconvenience and even intimidating and alarming to many, particularly the man in the street. They may be frightened to take any action, fearing perhaps unnecessary consequences of their action.

Whether complaints are frivolous or not can be determined by the Law Society with its review and inquiry committees. Given that these committees now have timelines to meet to wrap up their work (eg, the Review Committee has to finish its work within four weeks), any complaint, whether frivolous or otherwise, should be dealt with efficiently. This should balance the rights of a person to have access to redress and the innocent lawyer being tied down with a frivolous complaint for a long period of time.

In this open and transparent information age, when most organisations have an established policy on "whistle-blowing" and encourage 360-degree feedback from all employees, why are we making it difficult for clients and others to provide feedback on professionals serving them? Unfortunately, in Singapore, the situation is similar in other professions. For example, in the case of doctors, dentists, accountants, a complaint must also be accompanied by a statutory declaration. Given that we are in fact becoming a global city, we need to revisit this practice, not only in the legal profession but also in the other professions.

Let us look at what happens in other countries.

In Hong Kong, for example, purely as a starting point, if anyone wants to make a complaint against a lawyer, it can usually be done in one of the following

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ways: a simple letter to the law firm to which the subject lawyer is attached or a simple letter to the Hong Kong Law Society (Conduct Section). Obviously, if the complainant wishes to have his or her complaint considered by the Hong Kong Law Society, the complainant is probably hoping for the complaint to result in disciplinary action proposed by the Hong Kong Law Society. What practically follows the above-mentioned initial letter to the Hong Kong Law Society is that if the Hong Kong Law Society decides to consider the complaint on a more formal basis, then further documentation will be required, ie, statutory declaration with supporting affidavit.

The UK mechanism is by way of letter of complaint to the Legal Complaints Service, which is part of the Law Society but operates independently. Statutory declaration is not required.

In the US mechanism, the complaint is ordinarily signed by a lawyer, who, by signing, affirms that there is a basis for allegations. The different states can, of course, differ in their practices but the complaint needs to be served and filed.

Sir, I asked that we remove the need for a statutory declaration or an affidavit to accompany every complaint to enable complaints to be made freely and without hassle upfront.

So, once again, thank you for giving me the opportunity to speak on the Legal Profession (Amendment) Bill.

Mr Shanmugam: Sir, I thank the hon. Members for their speeches and support for the Bill.

I might as well touch on what Dr Teo said about lawyers, which might provide some light relief to the House. When he was speaking, I was reminded of a survey

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that was done in the United States on which were considered the most respected and least respected of professions. The survey went like this: third from bottom were used car salesmen; second from bottom were politicians; and bottom were lawyers. So, I leave that to you and let the lawyer politicians here decide where they belong.

Sir, broadly, in terms of the speeches, the non-lawyers have been more supportive of these amendments. The lawyers, I think it is fair to say, have reservations. That is how the debate has panned out.

Let me deal with those reservations and the points that have been raised. First, of course, the bulk of the comments and passion have been directed at the liberalisation amendments. Mr Hri Kumar, Mr Sin Boon Ann, Mr de Souza and, I think, Mr Palmer touched on it, but he did not quite say too many things.

The following points were raised: are we sure that there are going to be clear economic benefits? What are going to be the consequences to the legal profession? Is there going to be further liberalisation? Have we established a clear rationale for this liberalisation? Because the onus is on those who want the liberalisation to prove that it is needed before we proceed with it.

First of all, Justice Rajah's committee comprising senior practitioners and others looked at the matter carefully last year and made its recommendations based on a number of conclusions, one of which was that the economic sector will indeed grow. I have covered these reasons in some detail in my speech and there is really no point in repeating them. But it is quite important to note that the key people – the non-lawyers who have a stake in our system – particularly the financial sector representatives, have very strongly asked for this. So, I think in our

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policy making, we must take that into account. We survive as an economic entity by reason of being open, by reason of being economically competitive, and the financial services sector is one of the key pillars of our economy and we have to listen to the feedback from that sector.

If the legal market is opened to the top global law firms, they will undoubtedly be able to increase the size of their Singapore offices. This will, in turn, help them to undertake more regional work in Singapore. Greater competition will also add to the vibrancy of the local legal market and local law firms will be forced to raise their game. The presence of very strong local and foreign law firms will then further strengthen our reputation as the region's legal services centre.

And really which way you go depends on the economic philosophy that you take. More competition, the consumer of legal services benefits, they have got greater choice. As Mr Banerjee pointed out, greater variety of services, young lawyers will have more choices. And if we boil down to the essence of the fears that have been expressed, and do not mistake me, I completely understand the concerns and the fear that underpins some of these concerns, which is really that the parties who will come in will be global giants, very different in size from our large local law firms, would we be able to compete? It is a fair question but the answer does not and cannot depend only on whether our larger local law firms will face more intense competition. They undoubtedly will. And the point is they have to accept the challenge. We must remember that the decision to liberalise was taken because we believe that it is for the overall economic interest of Singapore. It should also benefit the legal services sector as a whole.

Mr Sin Boon Ann raised the possibility of loss of our legal heritage and whether we are pursuing economic interests at any

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cost, even to the detriment of our local legal profession. Well, I think clarity of terminology is important. What do we mean by "legal heritage"? Or what does Mr Sin refer to when he says legal heritage? Our legal heritage comprises our common law tradition, including the body of local case law, our judiciary, our legal service, our law firms and individual practitioners, who together comprise the Bar. The changes will not affect large parts of this legal heritage. They will affect the larger law firms if the larger law firms do not prepare themselves for competition, and it will affect the interests of the more senior partners of the top few law firms. I have some sympathy as I have said, for the point that has been made, but we have to consider that against the potential benefits to Singapore as a whole.

Competition can be brutal but can we forever protect our biggest law firms from competition? That is the question. Should we do so? Mr Sin says we need more time. Now, let us look at amount of time that we have had. First of all, it has been more or less completely protected up to now and, secondly, in 1999, the signals were sent that we need to start opening up and the joint-law ventures were introduced. Our law firms, particularly the big ones, have had almost 10 years to deal with the potential opening up.

In December last year, the proposed liberalisation was announced. Another year was given. Licences will only be issued in December this year. So, those who are competitive and prepared will do well in the new environment. Those who do not prepare may find it quite challenging to carry on in the same shape and form without making structural changes.

A further point was made that our local law firms will find it difficult to attract lawyers, young lawyers, because the foreign law firms will pay more and

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will attract them. Undoubtedly. But let me ask the reverse question: what is the solution? Is it to put up barriers to make sure that our local young lawyers have no choice but to work in Singapore law firms? Can that be a total solution? From a public policy perspective, when we have to balance the interests of the profession as a whole and Singapore as a whole, including the benefits to the young lawyers, can we put the interests of a few law firms ahead of the interests of the vast majority of younger lawyers? I am not saying that the few law firms do not have a point.

As I said, I have some sympathy for the points that are made. But how long can we continue in a protected environment which, from a non-lawyer's perspective, benefits only a small minority? Can we do that? Would that be equitable? Why should our young lawyers who come out of law school be denied the opportunity to earn two or three times as much as what they might earn in a Singapore law firm and they can improve their skill sets? In this context, we must remember, because we are talking about legal heritage, that it is important to emphasise that a number of areas would continue to be ringfenced – constitutional and administrative law, conveyancing, criminal law, family law, succession law, trust law for individuals and litigation.

Mr Sin Boon Ann asked how would the provision of seamless service help the foreign institutions, the financial institutions which have asked for this. But I think the answer is obvious. First of all, they say that they will benefit, and I assume that they have no vested interest when they make this point. Secondly, from any market perspective, telling the international financial institutions that whenever they want to deal with law in Singapore, they need to use at least two or three law firms and go to a foreign law firm for international law advice and the

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Singapore law firm for Singapore law advice and pay two sets of bills, as opposed to going to one-stop centre, I think it is a no-brainer. The real question, as I come back to it, is that our law firms have built to a certain size and have a certain tradition, some of them go back to 100 years. Mr Sin Boon Ann mentioned them, they will face very stiff challenge and if they do not gear up, they may find themselves in a very, very challenging atmosphere. Should we liberalise and take on those challenges and put our law firms through those challenges? What are the benefits? That is a balancing exercise.

I think one can take the view that I have taken. I grant that some can take the view that Mr Hri Kumar and Mr Sin Boon Ann have expressed. But after years and years of looking at this, the balancing exercise is now tilted towards liberalisation.

Mr de Souza asked: are we going to stop at five? Are we going further? What is the direction? Let us be clear that the direction has been set. The speed, the pace of progress, how far we go, how many more licences are issued – those are matters that we must look at carefully. With experience and, as we work through this, with the initial set of licences, we will proceed at a pace that is comfortable. Also, in the context of all the issues that have been raised, we are mindful of the impact on the larger local law firms. It will be a calibrated approach – a limited number of licences, help our firms upgrade themselves, give them a bit more time and, over a period of time, we will see how the market moves.

In this context, Mr Sin Boon Ann mentioned Hong Kong and I think if I am not wrong, Mr Hri Kumar mentioned Hong Kong as well. Hong Kong may not be the best example because Hong Kong was a colony and the English law firms in Hong Kong could not really be considered foreign. They had a substantial number of

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benefits. So, that is not a good example. Really, we have to look at it ourselves in Singapore and look at what our local law firms have enjoyed up to now and see how much of that can be preserved while we open up to competition.

Mr Banerjee, in contrast to the Members who made these comments, suggested that we should be even more liberal in opening our legal sector so as to attract more legal talent and international law firms to set up in Singapore. These views show that there is a range of opinions that is possible in this area and we have taken a measured approach. I think it is better for us to proceed cautiously and make sure we get it right. Also, local and foreign firms need to adjust to the new paradigm, and we will see how it works out.

Mr Alvin Yeo spoke about the importance of the joint law ventures in allowing a local law firm to upgrade itself by partnering with an international law firm. He hopes that this will be taken into account in the implementation of the EJLV and QFLP schemes. The Joint Law Venture scheme is an important scheme. It was introduced in 2000, and I certainly and personally believe that they are an excellent way for local firms to upgrade and acquire new skills.

Mr Sin Boon Ann said that it does not really work in the transfer of technology. I think it depends on the law firm. It has worked with some and it has not worked with others. That is a fair statement. The issuing of new QFLP licences does not detract from the EJLV scheme. They offer an additional mechanism for foreign firms which would not want to go into the joint ventures. But the importance of the Joint Law Venture scheme explains why we have significantly enhanced it, and these enhancements were explained in my speech. They are intended to create a more balanced partnership between the local and international law firms in a joint

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venture and it should make the joint law venture arrangement even more attractive and, hopefully, persuade more joint law ventures. We will take a very proactive approach towards firms that want to structure the EJLV scheme in a way they prefer and, if it is a sensible structure or a workable structure and they want to go further, we will try and play a proactive and positive role.

Mr Kumar, in the context of speaking about outflow of talent from local law firms, mentioned also the Legal Service and asked what am I going to do about it. I am not sure whether the question was rhetorical, but the fact is both public and private sectors constantly face the challenge of attracting and retaining talent and, undoubtedly, with this opening up and given that there is already a shortage of lawyers in Singapore, that challenge is going to be quite acute. The Legal Service has exceptionally bright officers and many of them are young. It is in this context quite imperative that a lot of attention is paid to attracting, retaining and managing talent within the Legal Service so that the Government gets the kind of advice that the Singapore Government deserves. The Legal Service officers need to know that there is a clear career path for them and the terms of service in the Legal Service have to be competitive with the private sector, particularly, in the new competitive environment. And as the Minister for Law, and insofar as it is within my power to do so, this is an issue that I will be very concerned with.

Dr Teo and Mr Banerjee suggested that it was too onerous to require all complaints to be supported by a statutory declaration. Mr Banerjee suggested that the Law Society should decide which complaints should be referred to the Inquiry Committee. Every letter of complaint or misconduct is referred by the Governing Council of the Law Society to the Chairman of the Inquiry Panel. He

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then appoints a two-man Review Committee, comprising a lawyer and a judicial or legal officer, to serve and decide if the complaint is frivolous, vexatious, misconceived or lacking in substance, and submits a written report to the Council if it is so found. The point is, if a complainant believes that he has a legitimate complaint, there is absolutely no reason why he should not put it down by way of a statutory declaration. That way, everyone's mind gets focused and they know that if they complain, they better get the facts right and make a serious complaint. It will deter a large number of people who either do not believe in their facts or it does not really matter to them but they just want to file a complaint. That is the purpose.

Dr Teo asked why lawyers should be given protection over other professionals, such as doctors, architects and engineers. I would like to clarify that complaints against professionals in these professions must, in fact, be supported by statutory declarations. The proposed amendment therefore brings the legal profession in line with these other professions.

Mr Banerjee made the reverse point which is that statutory declarations should be done away with all these professions, but I think that is a matter of judgement, and as a matter of philosophy, I have explained why we believe that there should be statutory declarations. To make a statutory declaration is not a very difficult thing. A complainant needs to only approach one of the Commissioners for Oaths listed on the Law Society's website who will assist him or her to fill in the form, as set out in the First Schedule of the Oaths and Declarations Act. That is certainly not any more difficult than approaching a lawyer in the first place and getting advice, which the complainant is likely to have done. And, really, this requirement should be considered against

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the impact of disciplinary proceedings on the lawyer's reputation and livelihood. A complainant who has a genuine complaint is unlikely to be deterred by this requirement.

I move to the issues raised by Mr Palmer on timelines. I agree that undue delay in the process is not desirable. On the other hand, the lawyer himself will want to ensure that a proper process is in place to consider his case. There has to be due process. We are dealing with a quasi criminal process that may destroy reputations and livelihoods, sometimes forever. Justice hurried is justice denied. A balance has to be struck, and we will try to do that.

The Inquiry Panel will be streamlined. First, we are reducing from 12 to seven, the minimum of years standing required for the Chairman and the Deputy Chairman of the Inquiry Panel. This expands the available pool of advocates and solicitors who can be appointed to the Panel and will help to speed up the process. Second, we are allowing members of the Review Committee who did not dismiss a complaint to be appointed to serve on the Inquiry Panel for that complaint. Their familiarity with the complaint and the Review Committee's reasoning will help to expedite the inquiry. Third, we are imposing a number of timelines on the Inquiry Panel for the first time, for example, requiring the Chairman of the Panel to constitute a Review Committee within two weeks of receiving a complaint, and throughout the process, we have imposed timelines. While we have streamlined the Inquiry process, we have not seen the need to do away with the Inquiry Panel, as suggested by Mr Palmer. The Inquiry process involves a lay person. That is important. We do expect to see significant improvement in the disciplinary process but, over time, if the speed does not improve, we will review the process.

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In this context, let me deal with the point that Mr Low Thia Khiang made. He said that in 1986, when the amendments were moved by my predecessor, the lay person was for the first time introduced in the Inquiry Committee and the Disciplinary Committee. He said that was necessary for transparency and for it not to be seen as a fix amongst lawyers, so a lay person was introduced. He asked if those reasons are no longer valid and that is why we are doing away with the lay person.

I think he proceeds from a misunderstanding of what is happening with these amendments. First of all, in the past, there was an Inquiry Committee and a Disciplinary Committee and then the Supreme Court took over. What is happening, in order to make the complaint go through faster and, therefore, in fact, help the public and the complainant, we are doing away with the Disciplinary Committee stage. We are having the Inquiry Committee and then moving it straight to the Disciplinary Tribunal. In the Disciplinary Tribunal, the Chairman and the other members are now appointed by the Chief Justice. So, it is a very serious process. It is completely transparent in the sense that the complainant can take part and give evidence, and everything is formal, recorded. Therefore, after the Inquiry Committee's process, the lawyer, who is subject to the complaint, if it moves further, goes straightaway into the Disciplinary Tribunal process. In that process, it does not make sense to inject a lay person, partly because they have found, through experience over 20 years, that that really delays proceedings. Secondly, in such a formalised process, the lawyers would be the best judges. The Chairman has got to be a retired Judge, Judicial Commissioner or a Senior Counsel and he is appointed by the Chief Justice. If anyone is unhappy, he can go further. So the complainant is not shut out.

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Dr Teo asked the rationale on the Disciplinary Tribunal, why there is an introduction of a two-man tribunal,

and he himself proposes a three-man tribunal. What all these comments show is that, whichever route we take, there can be no satisfying everyone. Some want a bigger panel, others a smaller one. So, let me try and explain what has been the fundamental driving rationale for us. It is to:

(1) ensure that the complainant's complaint gets heard quickly;

(2) make sure that the hearing takes place with due process and the lawyers' interests are also protected; and

(3) do it all in a way that does not bring the whole process into disrepute.

So, that is what we are trying to do. Members will remember that, in my speech, I pointed out that the original proposal by Justice Rajah's committee was for the tribunal to come down to one-man to make it even faster. But the Law Society was very unhappy about that and, after long discussions with the Law Society, we decided that we will go with a two-man tribunal. We believe that a three-man tribunal is likely to face the same problems with the current four-man tribunal where the hearing times effectively doubled over a few years and we do not want to go back to that. The Law Society understands the importance of making sure that the process is speedily and effectively carried out and has promised that matters would be dealt with in a timely fashion with a two-man tribunal. But, as I said, we will monitor the situation. If it appears to reach a stage where it is really unacceptable, we will have to relook at it.

Dr Teo asked about the remuneration of Disciplinary Tribunal members and he suggested that cost for the tribunal should be shared among the complainants,

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lawyers and the Law Society, and that it should not be from public funds. Sir, the President of the Disciplinary Tribunal will be a former Judge or Judicial Commissioner or Senior Counsel, as I said. The second member will be a senior practitioner of 12 years' standing. These are very senior lawyers in the profession who can command premium rates from their clients. They will spend time hearing the trial and writing grounds of decision. That will take a significant amount of time. What is envisaged is not payment of market rates but a very small honorarium to recognise their professional effort in dealing with the Disciplinary Tribunal proceedings. Advocates and solicitors are officers of the Supreme Court. Once the Law Society refers a complaint to the Tribunal, tribunal proceedings are managed by the Supreme Court. In fact, as I said in answer to Mr Low's point, the Chief Justice appoints the President and the other member. The complainant and the Law Society are party to the complaint, and asking them to fund the tribunal that hears the case may cause them to consider the issue of cost as a factor in whether to bring or proceed with a complaint, and we certainly do not want that. There is public interest involved. As I said, advocates and solicitors are officers of the court and, therefore, it is only sensible that the very small honorarium is paid out of public funds, and this has been discussed with the Supreme Court.

Mr Hri Kumar asked about increased penalties. He has noted that there is a disparity in the increased maximum penalties the court may award against legal officers who are non-practising solicitors, as opposed to practising solicitors. He has also made a number of other points about doctors. I will come to that as well. I think it is important to view this in the light of the context in which such lawyers practise. A practising lawyer

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deals with and has direct access to much larger sums of money than legal officers who are non-practising solicitors, especially those involved in corporate practice.

Mr Hri Kumar mentioned that the upper limit for doctors stands at $10,000 whereas that for lawyers is $100,000. Mr Kumar has got to go back to the rationale for this. Again, this was considered by the committee last year. They proposed $100,000, and I am not sure whether the Ministry of Health has looked at the issue vis-a-vis doctors. But I am sure, if Mr Kumar raises it with the Ministry of Health, they will look at it and Mr Kumar will be greatly enamouring himself with doctors in the process. But to be more serious about the point, for lawyers, without cross-disciplinary analysis, this has been looked at in the context of lawyers. What is appropriate in the context of the amounts that are dealt with by lawyers, in the context of the practice that lawyers carry on? For example, $100,000 was considered appropriate by the committee, and the Government did not see any reason for taking a different approach.

Mr Kumar also raised the point about why lawyers are subjected to five years' suspension whereas doctors are only subjected to three years' suspension. The point is that a five-year suspension has always been there in the statute books. Again, it is something that the legal profession and the Ministry of Law, together with the Law Society, have considered appropriate. It is the upper limit. I do not think too many lawyers get suspended for that period of time.

Dr Teo queried if these amendments were only minor and more was needed to regulate the conduct of lawyers. In this House, we have heard a variety of views, but I think one point which has consensus amongst everyone except Dr Teo is that this is actually quite a substantial

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amendment. It is a major step. It is a paradigm-shifting step. And the changes relating to the disciplinary process are very substantial. The whole disciplinary mechanism has been reviewed. Timelines have been imposed on every step, and parts of the process which have impeded a quick and efficient disposal of the disciplinary process have been removed or streamlined so that it will be seen as effective and responsive.

Dr Teo mentioned specifically The Straits Times report about six rogue lawyers on the run. The new Solicitors' Accounts Rules were significantly tightened in 2007. After the Opening of the Legal Year, the Chief Justice appointed a Judge to chair a working committee to look into the conveyancing system and consulted various stakeholders. I understand that the committee tendered its report to the Chief Justice. These issues require careful consideration. Let us see what they propose. If more changes are necessary, the Government will not hesitate to make them.

Ms Ellen Lee has expressed concern over the amendments for medical examination.

First, let me say that, in moving these amendments, the paramount interest has always been that of the lay client and the general public. The point really is that the general public must have confidence in the legal profession. The Law Society's powers come with adequate safeguards. In cases where the Law Society issues a direction to a solicitor to stop practising until he has submitted himself to a medical examination, the Society is required to make an application to the High Court for an order within seven days. So, the onus is on the Law Society. And if it does not do so, its direction lapses as if no application is made. So, if the Law Society makes a direction against a lawyer, it has to apply within seven days. If it does not apply, then that is the end of the direction.

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Second, in deciding on an application of this nature, the High Court Judge has to be satisfied that the solicitor's fitness to practise does indeed appear to have been impaired by reason of his physical or mental condition. Then, the Judge will order the solicitor to submit to a medical examination. The registered medical practitioner concerned must also meet such criteria as a Judge may specify in making his determination. Mr Kumar asked on this point. The Bill is silent on the specific point whether the Judge appoints or the practitioner can specify because discretion is given to the Judge. As in the normal way, parties can nominate a medical practitioner for the Judge to approve. And if he does not feel that that person is appropriate, he can direct the parties to go back and look for someone else, or he can direct a specific medical practitioner. But by and large, I think these issues will be dealt with as a matter of commonsense. A medical practitioner of a certain experience and expertise can be specified and, ultimately, the Judge would have final control.

The Judge can have regard to his observations and he can direct the medical practitioner to look at the solicitor. The doctor can look at the results of any tests he carries out on the solicitor and any facts which are communicated to the medical practitioner by the Attorney-General, the counsel or any other person. The solicitor is also given rights to ensure that he is given the opportunity to state his case. There is a provision for him to apply to the Council or the High Court, as the case may be, if he has any proof of a change in circumstances or any good cause for the direction to be rescinded or the court order to be set aside. In the first place, at the hearing, he can represent himself or get a fellow practitioner to represent and state his case. It is only when the Judge is satisfied that the process moves further.

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Ms Ellen Lee has raised several practical issues, such as how the medical practitioner would adjudge fitness to practise and whether there is an onus on law firms to inform the Law Society that a lawyer may be mentally impaired. The issue of fitness to practise would need to be assessed, based on the facts of each case, bearing in mind the type of mental or physical problems the solicitor concerned is facing, and other relevant facts, including the demands on the area of practice. It is not practical to legislate all of these. The safeguard here is that it is the courts which will make the determination concerning the solicitor in question, taking into account all relevant facts, including the assessment of the medical practitioner.

The amendment must be viewed in context. At present, the Act already allows the Law Society to intervene for various good reasons, such as bankruptcy, abandonment of practice and so forth. Now, the Law Society can also intervene if a solicitor is incapacitated by illness or accident to such an extent as to be unable to attend to his practice, or if he is found to be of unsound mind. The proposed amendment is necessary to fill a gap in the range of circumstances and is in sync with the other provisions that are already there.

At least Members from the legal profession here would know of the 2007 case of Law Society vs Chiong Chin May Selena where the Court of Three Judges had to deal with a lawyer who suffered from manic-depressive psychosis. Apparently, her condition was known to some others, but the Law Society had no powers to intervene on grounds of mental illness at that time. Subsequently, she appeared before the Court of Three Judges, accused of breaches of Solicitors' Accounts Rules. She was suspended from

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practice for a year. In its judgment, the Court of Three Judges commented that it was timely they considered the amendments for appropriate steps to be taken to examine the fitness of solicitors in sole proprietorships.

As to whether law firms have the responsibility to inform the Law Society that any solicitor under their employ may be mentally impaired and the attendant issues of liability and obligations, these are practical and indeed ethical issues which the Law Society should work through in consultation with the law firms. The key concern here is to strike the right balance between protecting the rights of the solicitor concerned and ensuring that the Law Society can deal with situations where the malfeasance of a member of the profession may affect public confidence in the legal profession as a whole.

Mr Hri Kumar asked why a lawyer should be in contempt of court if he should refuse an examination, and he contrasted it with the situation of doctors. Lawyers are not the same as doctors in this particular context. A lawyer is an officer of the court and subjected to the discipline of the court. The courts always have the power to decide who can appear before them, what the framework should be and what the conduct of that lawyer should be. Therefore, if it appears to a judge that an advocate and solicitor, an officer of the court, is of an unsound mind or requires medical treatment and the doctor refuses, then the judge should have the power to give such a direction. If the lawyer wishes, I suppose what the lawyer could do is to say, "Look, I will give up my certificate voluntarily. Would you please consider not making this order against me, in return for which I will not practise?" The Act does not preclude that. What we have done is to give a substantial amount of discretion to the judges.

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Mr Sin Boon Ann asked why do we have clause 36 which restricts judicial review. In fact, he said "ousted" judicial review. "It is an important constitutional safeguard. Why are we doing this?" I would clarify that judicial review is not "ousted". What we are doing is deferring it, because what has happened in the past is that even before the tribunal proceedings and disciplinary proceedings are over, there were repeated applications for judicial review, which then dragged on and delayed the entire proceedings, vastly contributing to delays. So, the approach has been to finish with the process, then you go for judiciary review. Anyway, when you go before the Court of Three Judges, you can raise all

the arguments that you could have raised during the judicial review. So the lawyer is, to that extent, not in any worse-off position but what he cannot do now is to try and interrupt or delay the ongoing proceedings.

Mr Christopher de Souza asked why allow rule-making and move it away from Parliament. Sir, this is a very considered decision. The principles have to be debated here and they are all in the Act. What is moved into rule-making is the day-to-day conditions of running a business. It does not make sense to invite all these law firms, give them a licence, prescribe the conditions, and we cannot pretend that we can today envisage the changing business environment as it moves month-to-month and year-to-year. And when they move, the Attorney-General must have the flexibility to move quickly to deal with the changed circumstances, and, therefore, deal with them as part of the licensed conditions because he is now regulating the conduct of their business that needs a light touch, a flexible touch, and it cannot be done through an Act of Parliament, which may require frequent amendments. That does not make sense and it will not allow them to create the most optimal conditions under which the law firms can operate.

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Mr Sin Boon Ann again asked if we are pursuing economic benefit at any cost. I do not think the answer is we are pursuing economic benefit at any cost. I have already identified the calibrated approach we are taking, and the overall cost benefit analysis, and what goes into the equation. Ultimately, I agree with him that it is a question of judgment. In this case, our judgment happens to be different from his. I will put it that way.

Mr de Souza asked me what is my vision of the legal landscape, going forward. Let me try and summarise it this way. We want our local lawyers in Singapore law firms, in foreign law firms, we want them to be world-class and we want them to get the best training and exposure possible. We would like a vibrant, cosmopolitan legal sector where foreign law firms and Singapore law firms compete on even terms and add to the vibrancy and the potential of our status as an international legal market. We want all of these to create a situation where our economy receives a boost and the kind of support that it deserves from the legal profession, which the professionals and the financial services sector say they are not getting now.

Some of them are getting it and some of them are not getting it, and the whole point is try and move further, to make sure that nothing holds back the growth of this entire sector and making sure, at the same time, that lawyers in our legal profession benefit by increasing their legal and technical expertise by accessing the best knowledge in the world.

Whether or not you accept that vision, contrast that with what would be the case if we do not open up. It will continue to be a protected legal market. The primary beneficiaries would be a few people. We will prevent our young lawyers from being able to work in

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Singapore for the top law firms in the world and we will continue to receive complaints, whether rightly or wrongly, from international financial institutions that they are not able to access the best legal expertise in Singapore. So, those are the two contrasts. One is current, it is not a scenario I am painting. That is the current situation. The scenario is: by making these changes, can we move to this vision?

Sir, I think I have answered all the questions. But this move should not be seen as being against any particular sector, group or law firm. As I said, and I firmly believe, that if our law firms can compete, they will survive and prosper.

5.36 pm

Mr Sin Boon Ann: Sir, I would like to thank the Minister for his very comprehensive reply and response to the comments that have been made earlier in relation to the Bill. I just have a couple of clarifications or comments, if you may, Mr Deputy Speaker.

The first point relates to competition or lack of it, and the point that was made was that by opening up the sector to competition, it will lead to improvement of the legal services in our sector. Sir, if you recall, in my speech earlier, I am not against competition. My point was essentially one of fair competition and it was acknowledged by the Minister in his speech that if we open up the legal services, can we be sure that the competition or the playing field itself will be fair?

One significant point that comes to mind immediately is competition for talent. It is essentially a no-brainer that a young law graduate looking at prospects and options will be more inclined to join

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up with foreign firms that offer better pay, better perks, better opportunities, travel or otherwise, and advancement in his career. What kind of impact or knock-on effect will this have on local firms to hire these talents from our law schools and how will this affect our future development and, above all, our competitiveness and ability to then compete with these bigger firms? So, that is essentially a point that we have to think about when we talk about competition. As I said earlier, I am not against competition. My only question is: can the Government be sure that, in doing this at this time, in moving at such haste and speed, we are basically ensuring that all will be fair at the end of the day?

The second point that was made by the Minister is that young lawyers, because of the present set-up and situation, are not given the option. I think the truth of what is happening in the market at the moment is that we are seeing an increasing migration of young lawyers with a few years' experience to other jurisdictions – China and Hong Kong – and, in itself, Singapore firms are having to compete to retain these talents. So it is not as if these lawyers are not given the options to go into foreign firms to widen their exposure, training and sharpen their cutting edge in legal practice. And increasingly, speaking for my firm alone, we are losing many, many good lawyers to these foreign firms. As it is now, without opening up the legal profession to foreign firms or competition, we are not able to keep these talents within our shores. So I am not sure whether young lawyers, as said by the Minister, have restricted options in their career choices in choosing which firm to practise.

Thirdly, there was a point made about the transfer of technology and the seamless provision of services in cross-border work. If I recall, some years back when we –

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Mr Deputy Speaker: Order. Mr Sin, please make the clarification rather than debating it.

Mr Sin Boon Ann: Sir, I think that it is important that I touch on these few points. I think it is quite clear that seamless provision of services –

Mr Deputy Speaker: Order. Mr Sin, please make your clarification.

Mr Sin Boon Ann: Yes. Will the Minister please clarify that seamless provision of services was contemplated in the Joint Law Venture policy when it was first mooted, and, perhaps, the Minister would wish to enlighten us on this.

The next point essentially has to do with legal heritage. Is the Minister not aware, or perhaps the Minister would clarify, that the law firms which have a long and illustrious history in Singapore play a very important role in the development of legal knowledge, tradition, practice, where there is a very close bond and relationship between law firms, practices, law schools, law committees, review committees and public service work? Can the Minister be sure that these same time-honoured traditions will be maintained by these foreign firms who may be totally alien to our culture and practice?

The last point of clarification is the question of whether or not we are a protected profession. I would say that, increasingly, the local law firms are moving with the changing times. We are facing competition ourselves when we go out to places like China and India, and having to compete the same. It is not as if time has stood still for these law firms. They are also putting their acts together and trying to meet the demands of globalisation and changing practices. Perhaps the Minister may wish to note that as well.

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Mr Shanmugam: On the first point about competition, would it be fair, Mr Sin Boon Ann said that foreign law firms offer better pay, better conditions and, therefore, it is a no-brainer that Singapore lawyers will gravitate towards the foreign law firms. I should take that point with the third point he made, which is that there is no restriction on young lawyers because those who want to go overseas have plenty of options. They want to work for a foreign firm, they can go overseas. It is not as if they do not have options and, therefore, why open up?

I think there is a logical conundrum that Mr Sin Boon Ann is falling into and it is this: by making the point that when we open up, the foreign law firms will be more attractive in Singapore to Singapore lawyers. He recognises that by way of the current regulations, we are actually preventing it, which means we are restricting the options for the Singapore lawyers. So, it does not jive with his point which he made later on – what is the problem for the young lawyers? They can go overseas. That is precisely the point. If they want to work for a foreign law firm now, they have to leave Singapore. We are forcing them to leave Singapore. Why should we do that? He recognises that foreign law firms in Singapore will pay more, will give better conditions, and it will be more attractive. How do we, at the same breath, then say that all of that should be denied? It is a logical fallacy on his part, I am afraid.

So, the point really is: where does the balance in policy making lie? Do we protect the local law firms in their current structure and deny, if necessary, the opportunities for the younger lawyers, and deny the request of the consumers, in order to preserve the existing benefits? Or do we move in a way that we hope the local law firms are able to compete and, at the same time, open up the choices for the consumers and the younger lawyers? Where the balance lies, as I said, is a question of judgment.

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Let me deal with his final point before I deal with whether we are moving with too much haste and speed. Mr Sin Boon Ann, by way of his questions, is making the point that the major law firms contribute significantly to the legal heritage, to the Singapore legal scene and in a variety of ways they have enriched the legal culture in Singapore. I would be the last person who would disagree with that. Mr Sin can hardly expect me to say that is not correct. That is indeed so. But when you deal with these policy issues, I think one has to leave aside emotion and look at it in terms of the benefit to the public in public policy terms – where the benefits to Singapore lie. Do they lie in the continued pre-eminence of Drew and Napier, Allen and Gledhill, Wong Partnership and Rajah and Tann, to name the four largest law firms, and the benefit of the crop of senior partners in those law firms and the attendant benefits that come with a number of large law firms contributing to the legal scene? Or does Singapore's interest really lie in opening up the market and allowing broader competition and allowing a broader choice to our young lawyers and hoping that, one day, both the foreign law firms and Singapore law firms will have a substantial number of Singapore qualified lawyers at management positions and, as a result, create a more vibrant, economic legal market? When that calculation comes through, it cannot be dominated by emotions.

On haste and speed, are we moving with too much haste and too much speed? I do not want to repeat, but I think I have made the point.

It is 10 years since we first started the move. It will be a year since we announced it. Some say we are moving too slowly; some say we are moving too fast. We take the approach that we think it is right, based on the calculation and judgment of a number of

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factors which cannot be objectively quantified.

Mr Christopher de Souza: I would like to thank the Minister for his bold vision of what he predicts the landscape in the legal profession will be in 10 to 15 years' time. I think, if I could take one certainty out of that bold vision, it is that there will be further liberalisation and that is my concern. Would the Minister clarify what he deems or predicts will be the further liberalisation in those areas that are excluded in the current form? For example, in litigation, will the litigation Bar, often cited as a very strong and well-qualified Bar, be reduced to mere voice boxes in the Court where QFLPs or JLVs do almost all the preparatory work and the Bar just argues in Court?

I asked for this clarification, bearing in mind that, under current law, there is a very high threshold the party must meet in order for that party to have a QC represented in Court. This illustrates that we deem our litigation Bar to be very strong. Will the QFLPs endanger that?

May I have the Minister's clarification?

Mr Shanmugam: Well, at least the vision is bold. It is far worse if we do not have a vision and we move. So, I think, Members and I are in agreement that we are moving in the right direction or, at least, we have identified the right kind of vision. While there may be disagreements as to whether we will get there with the current process, he understands where we want to go.

What is now excluded, would it, in future, be included in the opening up? Sir, in this sort of policy areas, I think it is very wrong for the Government or the Minister to lay down in concrete terms, these are the tramlines which we will not cross. We have identified the current situation, and we say these are the areas that we believe should continue to be

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ringfenced. We have, and for good reasons, not said this will be opened up, nor have we said this will not be opened up. I think, really, one must assess it. It is feeling your way through a new situation, you open up those areas where the consumer demand has been the greatest, look at it, and as you work with this new paradigm, our experiences would tell us what further we ought to do or ought not to do. That is the best answer I can give to Mr de Souza. We do not, today, have a policy of saying that these areas will further be opened up, nor have we said these will never be opened up.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Shanmugam].

Bill considered in Committee; reported without amendment; read a Third time and passed.