07 January 2020

Singapore's top judge reveals government scrutiny of new law regulation

Chief Justice highlights 'worrying' lack of tech investment by local law firms as alternative legal service providers come under spotlight

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Singapore’s government is 'examining' how alternative legal service providers (ALSPs) are regulated amid concern over the slow adoption of new technology by local law firms, according to the city state’s most senior judge. Chief Justice Sundaresh Menon put the spotlight on legal services regulation in the city state during the formal opening of the legal year yesterday (6 January) when he noted that the emergence of ALSPs – which include the legal arms of the Big Four accountancy firms – had led to a “more crowded, competitive, diverse, and commercialised” marketplace.

He added: “Regulating legal services and ALSPs is a complex issue that MinLaw [The Ministry of Justice] has been studying closely and will continue to examine with care.”

Chief Justice Menon said last year he and fellow judges had spoken to 160 representatives of the legal profession across 16 focus groups as part of an “organised and multi-faceted” initiative by the authorities to respond to “seismic changes to our operating environment”.

He highlighted as a particular concern the failure of local law firms to adopt new technology when compared to their international rivals who were “developing in-house digital capabilities, recruiting technologists and project managers, and tapping on the expertise of external service providers”.

“It was worrying to hear that some senior practitioners, particularly in small and medium-sized firms, have not embraced technology due to a general resistance to change,” he said. “Given the increasing automation of routine legal tasks, such resistance raises difficult questions as to the longer-term sustainability of these practices.” 

Given a concerted and ongoing drive by Singapore in recent years to position itself as Asia’s leading international legal services and legal tech hub, any move to significantly tighten up the regulation of international practices seems unlikely. 

However, the many international law firms and ASLPs that operate out of Singapore will monitor developments closely.

The Singapore-based legal arms of the Big Four accountancy firms and other ALSPs, such as Lawyers on Demand, operate as licensed Foreign Law Practices, allowing them to practice foreign law.

This is the route taken by most international law firms, although nine firms, including Allen & Overy, Clifford Chance and Latham & Watkins, operate under the Qualifying Foreign Law Practice (QFLP) regime, which was launched in 2009 and allows them to practise in many areas of local law.

These licences are all up for review this year after the Ministry of Justice delayed the renewal of one batch of four licences in December 2017 and extended them instead, noting the financial performance of the firms had fallen short due to Asian economies’ “weaker than expected growth, drop in commodities prices and decrease in mergers and acquisitions”. 

“Deferring the decision to 2020 will allow the Ministry to better assess each firm’s performance and contribution to Singapore and their respective proposals for the new licence period,” the ministry stated.

Meanwhile, Cooley today (7 January) became the latest international firm to open for business in Singapore, a move it announced last July.

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