LEGAL PROFESSION (AMENDMENT) BILL

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

4.42 pm

The Deputy Prime Minister and Minister for Law (Prof. S Jayakumar): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill is really an implementing Bill in that it amends the Legal Profession Act primarily to implement the recommendations of the Review Committee formed to evaluate the Joint Law Venture and Formal Law Alliance schemes, and the recommendations of the Third Committee on the Supply of Lawyers.

The Review Committee on the JLV and FLA schemes was chaired by former AG Mr Chan Sek Keong and included Justice V K Rajah, Senior Counsel Philip Jeyaretnam, President of the Law Society, and Senior Counsel Michael Hwang. The Committee’s main terms of reference were to review the JLV and FLA schemes, and to consider modifications to the

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schemes to ensure the required legal support for the strategic service sectors of the economy.

As recommended when the JLV and FLA schemes were set up in 2000, the review was carried out five years thereafter. Formed in July 2005, the Review Committee presented its report in January 2006.

The Third Committee on the Supply of Lawyers was also chaired by former AG Mr Chan Sek Keong (who had headed the previous two committees). Other members included Senior Counsel Philip Jeyaretnam, Professor Tan Cheng Han, Dean of the NUS Law Faculty, and law practitioners, Senior Counsel K Shanmugam and Dr Philip Pillai. The Committee was tasked to review the supply of lawyers (practising Singapore law) to meet the legal and business needs of Singapore. The Committee presented its report in July 2006.

The recommendations of both committees were accepted by the Government and publicly announced last year. The implementation of some of the recommendations requires amendments to the Legal Profession Act.

Those recommendations that do not require amendments to the Legal Profession Act have been implemented. For example, the Rules were amended last year to allow, on a discretionary basis, second class lower honours graduates from foreign law schools to qualify for the Singapore Bar. The SMU School of Law has been established as a second law faculty in Singapore, although some amendments to the Legal Profession Act are now required as a consequence of the establishment of the new law school.

Major changes

Let me explain some of the more important amendments in this Bill.

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Sir, one major recommendation of the Third Committee which this Bill gives effect to is allowing Singapore law firms to hire outstanding foreign lawyers to practise Singapore law in certain prescribed areas like banking, finance and corporate law. This will allow the blending of the experience and expertise of overseas legal talent

and the skills of our local lawyers to ensure that Singapore law firms are better able to compete in the global marketplace.

New section 130J in clause 23 provides for the registration of foreign lawyers to practise Singapore law in Singapore law firms under a newly established Special Scheme, which will be administered by the Attorney-General. This Special Scheme will enable local law firms to selectively tap on good foreign legal talent, without opening the floodgates suddenly to foreign lawyers in the practice of Singapore law.

These foreign lawyers must be of good standing in their home countries, and have high academic qualifications from reputable law schools or relevant work experience in areas like banking and finance. They must have at least one year’s offshore legal work experience in Singapore, and thereafter they must pass a stringent Qualifying Examination. These foreign practitioners may then be registered to practise Singapore law by the Attorney-General pursuant to the new section 130J and the rules which provide the details made under section 130K.

Once registered, they will automatically also become foreign practitioner members of the Law Society by virtue of the new section 40A. Foreign practitioners will also be subject to the safeguards instituted for the protection of members of the public, such as the requirement of professional indemnity insurance.

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Sir, another recommendation of the Third Committee is to allow a foreign lawyer to own up to 25% of the equity shares in or share of the profits of a Singapore law firm. This is provided for in the new section 130L.

Allowing foreign lawyers to have a stake in a Singapore law firm will help Singapore law firms to possess in-house foreign law expertise and grow their practices abroad. Whilst it may be relatively easy for a Singapore law firm to employ, say, lawyers from China to help them in their China practice, it is difficult for the firms to retain these lawyers and secure their commitment unless they are given a direct stake in the performance and growth of the law firm. Moreover, some foreign lawyers with the requisite skills and experience may not find a consultancy relationship with a local law firm to be satisfactory, even if the compensation package is high.

Hence, to ensure that Singapore law firms can continue attracting and retaining experienced and talented foreign lawyers, they will be permitted to own equity shares in and share profits of a local law firm, subject to an aggregate limit of 25% of the total equity shares in or profits of the local law firm. This will help Singapore law firms to expand their capabilities and reach out to the region. By giving regional lawyers working in the regional branches of a Singapore law firm a stake in the firm, I think this will also help local law firms to grow their practices in the region.

Sir, although the Bill prescribes an upper limit of 25%, there is provision for this limit to be revised by subsidiary legislation. Any revision will be carried out only after consultation with the Attorney-General and the Law Society and after a thorough review of how this new scheme works in actual practice.

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Other amendments

Sir, let me touch on some of the other proposed amendments.

Enhanced penalty for unauthorised practice

First, enhanced penalty for unauthorised practice. Currently, any person practising law without a valid practising certificate may be fined only up to $1,000, or sentenced to imprisonment of up to six months, or both. This penalty was prescribed way back in 1966 and has never been updated since. In the past two years, a few lawyers have been convicted of practising without a valid practising certificate.

Sir, a maximum penalty of $1,000 is inadequate in today’s context. This is a serious offence. Clause 8 of the Bill increases the maximum fine for a first offence to $25,000, and the penalty for a second offence to a maximum fine of $50,000, or imprisonment of up to 12 months, or both. A higher maximum fine will give the court the discretion to impose a deterrent fine proportionate to the seriousness of the offence without having to sentence the errant lawyer to imprisonment.

Similar increases in penalty are also made for the offence where a body corporate holds itself out to have the capacity or powers of a law corporation or limited liability law partnership when in actual fact it does not.

The Bill also provides a fast-track procedure for disciplinary proceedings against such errant lawyers, without the need to go through the Review Committee, Inquiry Committee and Disciplinary Committee hearings.

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The increased penalties are consistent with the punishments for offences of a similar nature in respect of other professions, such as those related to the practice of medicine.

In addition to the enhanced penalties, clause 9 will allow the court to order the person convicted of practising without a valid practising certificate to return to his clients or other persons all remuneration earned while practising without the certificate.

Mandatory Legal Practice Management Course

Let me turn to mandatory Legal Practice Management Course. Currently, lawyers who have been admitted as solicitors after 1st March 1997 are required to attend the Law Society’s Legal Practice Management Course if they wish to manage a law practice as a partner, director or sole proprietor.

To ensure that lawyers are equipped with the proper skills to manage a law practice, regardless of when they were admitted as solicitors, the Law Society has proposed that all lawyers be required to undergo the Legal Practice Management Course before they are allowed to manage a law practice as a partner, director or sole proprietor. My Ministry fully supports the proposal. This is provided for in clause 18.

Appointment of AG and SG as Senior Counsel

Let me turn to the provisions on appointment of Attorney-General and Solicitor-General as Senior Counsel.

Clause 7(b) provides for a holder of the office of Attorney-General or Solicitor-General, if he is not already a Senior Counsel, to be deemed appointed as Senior Counsel. The AG and the SGs are the most senior law officers and, by law,

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they rank in precedence in court before all other Senior Counsel. Moreover, the Attorney-General is a member of the Selection Committee for appointment of Senior Counsel. It is only logical that they should be deemed to be appointed as Senior Counsel.

Conclusion

To conclude, Sir, let me say that the changes to be made through this Bill will further develop and grow the legal services sector. But I want to add that these will not be the only measures that we will need to take. Sir, in this globalised world, the scene, as regards the legal landscape, is fast changing. We must be prepared to make further changes to keep up with the developments and ensure that our legal services sector remains vibrant and competitive.

Other countries are also considering making adjustments to their legal sectors to make them more competitive. For example, according to a recent Bernama report, Malaysia is considering further liberalisation of its legal services in view of the increased economic activity in mergers and acquisitions where international legal expertise was sought. We too cannot stand still.

Currently, a committee headed by Justice V K Rajah is undertaking a comprehensive review of the entire legal services sector. I understand that the committee will make recommendations to enhance Singapore's position as an international centre for the provision of legal services.

The committee is expected to submit its Report in the next few months. The committee may make further refinements to existing schemes or the introduction of new schemes. If the proposed measures can enhance the competitiveness of our legal services sector, contribute to our economic growth, and serve the wider

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national interest, then we will consider adopting them. And this may entail further amendments to the Legal Profession Act. In the meantime, however, we have proceeded with the proposed amendments so as not to hold up the changes which have been decided earlier on.

Sir, I beg to move.

Question proposed.

Ms Ellen Lee (Sembawang): Mr Speaker, Sir, the Legal Profession (Amendment) Bill, as explained by DPM and Minister for Law, amongst other things, targets at the need to boost the supply of lawyers, impose higher penalties for errant lawyers and heighten collaboration between local and foreign law firms. The main aim of the Bill is to implement the recommendations made by the Review Committee formed to evaluate two schemes - the Joint Law Venture (JLV) and Formal Law Alliance (FLA) schemes - as well as the recommendations of the Third Committee of Supply of Lawyers. In December 2005, the Government set up the Third Committee on the Supply of Lawyers to review the supply of lawyers as part of its periodic reviews to ensure that the supply of lawyers keeps pace with demand. The last review was done in 2001. The report noted the rising demand for legal talent as well as the attrition of the Singapore Bar in recent years.

Recommendations made by the Committee

Among the recommendations made by the Committee is to consider the flexibility of setting up a second Law School in Singapore to produce an additional estimated 90 students per year per term. It also recommended allowing Singapore law firms to hire foreign legal talent who may eventually qualify to practise Singapore law in the areas of finance, banking and corporate work, and other areas of legal or regional practice as may

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be approved by the Attorney-General, provided they pass a Qualifying Examination. The Joint Law Venture and the Formal Law Alliance schemes were launched in 1999 to allow local firms to collaborate with foreign law firms to provide a convenient and efficient mode for delivery of legal services in cross- border financial transactions. While the Review Committee found the range of legal services in foreign laws and Singapore law available here satisfactory, several recommendations were made to enhance the schemes. Apart from these, the Bill also proposes to enhance the penalty for lawyers practising without a practising certificate.

Another change looked into is that all lawyers must complete a Legal Practice Management Course before being allowed to practise as a sole proprietor, or a partner in a law firm, or a director in a law corporation. Let me assure you, Sir, that I fully support the two points that I have just mentioned.

Sir, I followed the report of the Third Committee of Supply of Lawyers with great interest when it was first released because this is an area that is close to my heart, as a practising lawyer. So I would like to share some of my concerns regarding the new changes in the Legal Profession (Amendment) Bill. Separately, on a more personal note, I would like to share why I feel that good role models are important to motivate younger lawyers to remain in the profession.

First, establishment of SMU Law Faculty. Sir, in August 2007, the Singapore Management University (SMU) School of Law will welcome its first cohort of law undergraduates. This is in line with the recommendations made by the Third Committee of Supply of Lawyers to set up a second Law School in Singapore to help augment the number of

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law students. While I welcome the idea that SMU has been given the opportunity to develop a new Law School in Singapore, I do have my concerns nonetheless. My chief concern is whether we have the brightest and the best of legal academia to cater to two Law Schools. With the modular and buffet spread of law topics and subjects at university level at NUS, if SMU were to at least have the basic or even replicate the competitive spread to be as good a Law School, will there be sufficient legal academia with quality to spread across both law faculties in NUS and SMU? Sir, this is notwithstanding that some of these academics are teaching at our business schools of NUS and NTU.

Second, how to motivate the young lawyers to stay? Sir, the recommendations made by the Committee have given me the impression that its focus has been to tap talent. Regrettably, it did not attempt to address the issue of why law firms face shortages of lawyers, particularly the new and young entrants.

Sir, in recent years, there has been a rising demand for lawyers but at the same time, many have left the practice. Why did so many young lawyers leave the practice? What caused them to be disillusioned and gave up practising law after investing years of training and sheer hard work? This question stirred my heart greatly and caused me to wonder why I stayed on and, more importantly, still believe in the legal profession, despite all the upheavals for the past 26 years of my practice.

I chose law because I wanted and believed, and I still believe, I could contribute to the advancement of justice and equality, and betterment of society. I was blessed with a number of good role models that showed me what a lawyer could and should do.

As a young student, and later a lawyer, I drew inspirations from so many great role models. For instance, Minister

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Mentor, the late Mr David Marshall, Prof. Jayakumar, Dr Thio Su Mien, Prof. Tommy Koh, some of our past Law Society Presidents, including the current President, some distinguished Judges, past and present, noted for their fairness and wit, and lawyers, both senior and junior, whom I deeply respect for their integrity and defence of the defenceless, such as Mr Subhas Anandan, and many others whose names do not make it to the press often but are nevertheless doing much good work in Singapore and beyond.

With such great passion and energy, these legal dignitaries have made it their vocation to serve the people and the country to maintain peace and stability and the due process of law. Singapore owes much to them for its reputation as one of the best legal systems in the world. I believe that if the curriculum could have a module on these distinguished persons and their contributions to society, we could inculcate something in the young law students to want to make it their mission to embark on the same trodden path.

Perhaps, we should not be stressing too much about technology and materialism that we churn out lawyers who seem to miss the fundamentals of being a lawyer in the first instance. Of course, the dilemma is that we must have law students trained in technology, finance and business, so that they could one day become judges or lawyers who have to handle or determine such issues. But these could be done alongside the need to impart humanitarian values and ethos.

Third, has the good work by lawyers gone unnoticed? Sir, on the subject of having a curriculum to impart to our young law students on the good work done by past or existing local lawyers and judges, I would like to mention another observation that I have made. Since March this year, the Law Society's

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electronic bulletin, E Jus News, carried an invitation to attend "a dialogue on the preservation of the legal heritage of the former Supreme Court Building and City Hall Building." The Government has announced that the former Supreme Court and City Hall Buildings would be converted into art galleries. The Steering Committee of the National Art Gallery hopes to seek views from the legal profession on the drafting of the preservation guidelines for the former Supreme Court and City Hall Buildings - the preservation of the physical infrastructure, the use of space for commercial purposes and how best to preserve the legal heritage of these buildings. The dialogue session will be held next Thursday, 19th April 2007, at 6.00 pm.

Sir, when I first read that notice, I wondered why the Government showed so much interest in preserving buildings but not the good work done by lawyers and judges, past and present. I would like to ask that the Government include the significant good work done by our Judiciary, the legal fraternity and the academia of Singapore from the early years of nation-building till today to be included in these two buildings as part of our legal heritage. Sir, I strongly urge the Government to consider this proposition. This will be a good testament that the Government values local talent and upholds the important contributions that these people - our local heroes and heroines - have done for Singapore.

Sir, there are enough bad publicity on errant lawyers and those who embezzled clients' money. Except for two notorious ones who are still at large, those caught have been punished and struck off the roll. The media, in reporting these black sheep, had not been very sensitive to the backlash it creates on the vast majority of the good lawyers in the legal profession. It is unfortunate but that should not deter us from searching and upholding really

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good role models to inspire young Singaporeans. There are already so many honourable and respectable lawyers who volunteer their time and expertise not for the glory or the awards to be given by the President on National Day. We can find them in so many Government bodies, and my personal observation is that the Ministries of Law and Home Affairs seem to have the largest concentration of volunteer lawyers. Many other lawyers are also volunteering their time and expertise in statutory boards, churches, temples, mosques, grassroots organisations, meet-the-people sessions, and many other voluntary welfare organisations quietly and without calling any attention to themselves. Granted that we may never prevent bad sheep in the legal profession, but there are so many good ones to bury the bad. Sir, it is time that we saluted these good role models and make known their stories and sacrifices to the younger law students.

My fourth and final point, Sir, is on empowering the Council of the Law Society to handle money-laundering. My other observation is that clause 15 amends section 71 to empower the Council of the Law Society to make certain rules relating to make money-laundering. I find it strange that the Law Society should be tasked to make these rules when the Police Commercial Affairs Department (CAD) already has a unit to handle money-laundering. Would it be more appropriate for the law enforcement officers to handle and investigate into such a serious offence?

Sir, with that, I support the Bill.

Prof. Jayakumar: Sir, I thank Ms Ellen Lee for her support of the Bill. She has raised several interesting and important points. First, I wish to commend her for her passion for the practice of law which I

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hope will inspire younger entrants to the legal profession.

Let me deal with some of the points that she has raised. First, about the setting up of the new Law School. She is concerned whether there would be enough suitably qualified professors to cater for both the NUS and SMU Law Schools. As our legal sector grows, additional professors will be required for the increase in the number of law students, whether they are educated in one or two law schools. After the numerous discussions I have had, I am confident that the law schools will be able to recruit suitably qualified numbers of faculty staff, both locally as well as from overseas.

Sir, when the university legal education was first introduced in Singapore, there were very few lawyers and no legal academics to begin with. And we all know that we succeeded in building a Law School that has trained lawyers who are able to work around the world and cities in London, New York, Hong Kong and Shanghai. I think we are in a much stronger position to develop faculty staff for a second Law School now.

She has also expressed opinion that the Third Committee on the Supply of Lawyers had focused on tapping talent, and not so much addressing the issue of why there is a shortage of lawyers. Sir, lawyers may leave the legal profession for a variety of reasons. Some may discover other passions, some may want to do something else with their life, to do non-legal work and so on. Actually, these factors are not peculiar to the legal profession. I think it reflects modern-day realities and circumstances.

Some lawyers who stop practising law in a law firm or corporation have taken up positions as inhouse counsels. Others have moved to places, like in London and Hong Kong, to practise law. Sir, these are

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forces at work which we cannot fight against. But in planning for the supply of lawyers, we need to take these realities into account, and not assume that every single lawyer whom we train will end up practising law. The Committee's mandate was therefore on whether the supply of lawyers should be increased rather than how to stem the outflow of lawyers, although I want to add that I do not disregard the importance of the factor and it is something that my colleagues and I have been discussing.

I agree with the general thrust of her speech, that it is important for our law schools to provide a balanced and rounded legal education. From my own experience as a former law teacher, I would say that this is not something that we can easily achieve through specific course content or specially devised courses or appropriate teaching methodology or getting the right academic staff.

The Member's specific suggestion that the Law School curriculum should include a module on distinguished legal luminaries and their contributions to society to inspire young law students follow in their footsteps, I think I will have to leave this suggestion with the two law schools to consider. My own view is that it may not be necessary to be so prescriptive. I am confident that our law schools will develop their own approaches to train lawyers in a way that it can inspire the next and future generations of lawyers.

Next, Ms Lee would also like the Government to include the significant good work of our own Judiciary, our legal fraternity and academia from Singapore from the early years of our nation building till today, and she would like it to be included in the former Supreme Court and City Hall Buildings as part of our heritage. The person in charge of that is my colleague, the Minister for Information,

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Communications and the Arts. I am sure he is going to consider that. I agree with the Member that our rich legal history should be preserved in some form, but I would not want to pre-empt the plans that MICA may have for the National Art Gallery for the two historic buildings. But I would like to encourage her to vigorously raise this point at the dialogue organised by the Steering Committee of the National Art Gallery, which I assume she will attend if she is free. In any case, the new Supreme Court, as she knows, indeed has a gallery that chronicles significant milestones and developments in Singapore's legal history as well as the major legal milestones since the founding of Singapore in 1819.

Lastly, she asked why the Law Society should be making rules relating to money-laundering and not the CAD. I am sorry that I did not touch on this because I did not take that to be a controversial provision. But since she has raised this, I think I should clarify that it is not as if we are passing the buck to the Law Society to do the work of other agencies. The criminal law enforcement agencies will, of course, be very much involved in investigating money-laundering offences. However, lawyers, like banks, are at the frontline of the fight against money-laundering, as they receive and hold moneys on behalf of their clients.

The Law Society which is responsible for regulating the professional conduct of lawyers will therefore be making rules really intended to help prevent lawyers from unwittingly becoming involved in criminal money laundering. That is the objective. The Law Society's controls and monitoring will provide a first line of preventative measures against money laundering by promoting good governance in law firms. The Law Society's rules will prohibit lawyers from holding anonymous accounts because, just like banks, they have to report suspicious transactions.

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Lawyers will also be required to take reasonable efforts to establish the identity of their clients and the nature of the business relationship when acting for clients in certain transactions and to retain records of such efforts. The Law Society already has powers under the existing provisions of the Legal Profession Act to enact such rules. The amendment in clause 15 is therefore to enable rules to be made to confer on the Council of the Law Society powers of inspection to ensure that such rules are complied with. Sir, I hope I have explained the ambit of this new proposal.

Finally, let me thank her again for her support of the Bill.

Question put, and agreed to.

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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. - [Prof. Jayakumar].

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