"Door is open for more foreign law firms here "01.06.2012
Source: The Business Times
The pace of liberalisation in Singapore's legal sector is set to kick up another notch, as the government stands ready to issue a second round of Qualifying Foreign Law Practice (QFLP) licences to foreign law firms.
The Law Ministry yesterday announced it will be accepting applications for more QFLP licences between June and August, and will announce the awarding of new licences by the end of the year. Firms will then have six months to set up their Singapore office.
The QFLP licence allows a foreign law firm to practice Singapore law, with certain restrictions - and a second round of licences means that local players cannot afford to rest on their laurels.
This latest move continues a drive started by three of Singapore's biggest law firms in 2007. Back then, Cavinder Bull of Drew & Napier (now, a Senior Counsel), Senior Counsel Alvin Yeo of WongPartnership (now, senior partner of the firm) and Lee Eng Beng (now, a Senior Counsel and managing partner of Rajah & Tann) were part of a committee, led by Justice VK Rajah, which signed off on a report that strongly pushed for the opening up of the sector to foreign competition and the QFLP scheme.
Six QFLP licences were awarded in 2008 - to Clifford Chance, Allen & Overy, Latham & Watkins and White & Case, among the top 10 law firms in the world, and to Herbert Smith and Norton Rose, among the top 60 in the world.
Lee Suet Fern, senior director of local specialist corporate firm Stamford Law Corporation, noted recently: "These QFLPs licences have been granted to players with global reach and branding: Goliaths whose size and reach make even Singapore's old and established players look like Tom Thumbs."
When asked how many licences would be awarded this time, Law Minister K Shanmugam said it would depend on the quality of the applicants. "We are looking for firms that can add value by bringing fresh foreign work into Singapore, of international quality, and who can add a significant premium to our legal scene," he said.
He would not say if he has received expressions of interest from any particular firm or country. Most law firms approached by The Business Times said they welcomed the move, but there were those who warned that the businesses of both local and foreign law firms, including those which already have QFLP licences, might be affected.
Concerns have previously been expressed that more QFLPs would take away some of the work now going to the big local law firms and other QFLP firms, which will then in turn encroach on the turf of the second-tier firms.
Stefanie Yuen Thio, joint managing director of boutique law firm TSMP Law Corporation, said: "As Singapore seeks to build its status as a financial and legal hub, the only way to attract businesses to come here is to assure them that they can use their counsel of choice, including their international lawyers. In order to do that, we must have an open legal industry."
She added, however, that the firms awarded QFLP licences must be "truly committed to building their Singapore practice, much like international banks such as Citibank and Standard Chartered Bank have strong capabilities in both international and local banking".
"The concern is where QFLP licences are obtained only for the bragging rights, and the firms continue to use Singapore only as a servicing hub for their regional work," she said.
Rajah & Tann's Mr Lee said that the announcement of the second round of licences did not come as a surprise to him, but added that "it will be interesting to see how many new licences will be issued".
"I would expect that the number will not be less than six, as that was the number of licences that was issued in the first round. But if six or more licences are issued this round, there will then be a significant number of QFLPs in the market.
"It remains to be seen how much impact such a large number of QFLPs will have on the Singapore firms. Singapore firms will have to think about how best to compete, present the best proposition to their clients, and retain their share of the market and the talent pool."
Putting such concerns in the context of national interests, Mr Shanmugam said: "The majority of the major law firms wanted this opening up. One of my aims (when the QFLP scheme was first implemented) was that the opening up should be done in a calibrated way, so that our local law firms will be given the opportunity to compete better.
"Four years after the QFLPs licences were first issued, they have held their own. But it's an evolving market and they have to stay on top of the competition. This is something they were aware of when they were strongly in favour of the opening up."
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