THE LAW SOCIETY OF SINGAPORE
Learning Community Dialogue 1/2012
Allowing Singapore law practices
more flexibility to grow and enhance
international competitiveness
Mr Alvin Chen
Chief Legal Officer and
Director of Representation and Law Reform
7 June 2012
Insert document nam
THE LAW SOCIETY OF SINGAPORE
Topics
A. Introduction
B. SLPs employing corporate structures
C. Lawyers practising concurrently or
accepting executive appointments in
related law corporations
D. Collaborations between SLPs and
FLs/FLPs
THE LAW SOCIETY OF SINGAPORE
Topics
A. Introduction
B. SLPs employing corporate structures
C. Lawyers practising concurrently or
accepting executive appointments in
related law corporations
D. Collaborations between SLPs and
FLs/FLPs
Key Dates
Date
Event
6 Dec 2011
Public Consultation on Legal Profession
(Amendment) Bill opens.
First Reading of Legal Profession
(Amendment) Bill 2012.
18 Jan 2012
14 Feb 2012
1 Jun 2012
Second and Third Readings. Legal
Profession (Amendment) Act 2012
passed. MinLaw announces policy
changes to allow SLPs to become more
globally competitive.
Amendments to subsidiary legislation to
implement policy changes take effect.
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Key Legislative Changes
Act /Rules
Sections/Rules
Legal Profession Act (“LPA”)
130L, 130M & 130W
Legal Profession
(Professional Conduct) Rules
(“PCR”)
Legal Profession (Law
Corporation) Rules (“LCR”)
Legal Profession (Limited
Liability Law Partnership)
Rules (“LLLPR”)
Legal Profession
(International Services)
Rules (“ISR”)
5, 11 & 24
1A, 10-15
1A, 5 & 10-13
3A, 4-5, 8-9, 11, 14, 21, 3031, 33-35, 35A, 37, 39, 40,
41A &TheSecond
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Of Singapore
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THE LAW SOCIETY OF SINGAPORE
Topics
A. Introduction
B. SLPs employing corporate structures
C. Lawyers practising concurrently or
accepting executive appointments in
related law corporations
D. Collaborations between SLPs and
FLs/FLPs
Summary of key changes
Rationale: to encourage SLPs to form a related law
corporation to benefit from 2 tax incentives:
Development and Expansion Incentive
(Annex A – MinLaw Press Release 31 May
2012)
International Arbitration with Hearings
in Singapore
(Annex B – MinLaw Press Release 31 May
2012. Note: enhancements wef 1 July 2012)
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Concept of “related”
New/Subsidiary
(1) Shareholder
(2) Director,
consultant or
employee
Law Corporation
Existing/Parent
Rule 5 PCR
Rule 1A LCR
Rule 1A LLLPR
Related
Sole
Proprietorship OR
Partnership OR
Limited Liability
Law Partnership
OR Law
Corporation
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Law Corporation
(New/Subsidiary)
Law Practice
Required
(Existing/Parent) positions
(1) Shareholder
Sole Proprietorship
Sole
Proprietor,
Consultant
or Employee
Partnership
Partner,
Consultant
or Employee
LLP
LLP or
Partner,
Consultant
or Employee
LLC
LLC or
Director,
Consultant
orSingapore
Employee
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Law Corporation
(New/Subsidiary)
Law Practice
Required
(Existing/Parent) positions
(2) Director, Consultant
or Employee
Sole Proprietorship
Sole
Proprietor,
Consultant
or Employee
Partnership
Partner,
Consultant
or Employee
LLP
Partner,
Consultant
or Employee
LLC
Director,
Consultant
or Employee
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Concept of “related”
New/Subsidiary
Existing/Parent
Sole
Proprietorship
Law Corporation
S1
D1, C1 or E1
Related
Sole
Proprietorship
SP1, C1 or E1
SP1, C1 or E1
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Concept of “related”
New/Subsidiary
Existing/Parent
Partnership
(2-man)
Law Corporation
Related
Partnership
S1, S2
S1=P1, S2=P2
D1, D2
D1=C1, D2=E1
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Concept of “related”
New/Subsidiary
Existing/Parent
Partnership
(3-man)
Law Corporation
Not Related
Partnership
S1, S2, S3
S1=P1, S2=P2, S3=P3
D1, D2, C1
D1, D2 and C1 not
P, C or E
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Concept of “related”
New/Subsidiary
Existing/Parent
LLP/LLC
Law Corporation
S1
D1, D2, C1
Related
LLP/LLC
S1=LLP/LLC
D1=P1, D2=P2,
C1=P3
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Special rules applicable to related law
corporations
 Name of law corporation can be similar to
related SLP: Rule 10 LCR
 Concurrent appointments allowed: Rule 12
LCR/Rule 12 LLLPR
 Confidentiality obligation relaxed: Rule 24(1)
PCR read with Rule 11 LCR/section 81E LPA and
Rule 10 LLLPR/section 81T LPA
 Holding of shares: Rule 13 LCR/Rule 11 LLLPR
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Possible Issues to Consider
 Costs of setting up related law corporation
(including PI)
 Better to convert law practice to law corporation
to get the benefit of tax incentives?
 Apportionment of expenses/work for same
matter handled by both subsidiary law corporation
and parent law practice
 Extent of benefit of tax incentive(s)
 Type of work that can be done by a related law
corporation
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THE LAW SOCIETY OF SINGAPORE
Topics
A. Introduction
B. SLPs employing corporate structures
C. Lawyers practising concurrently or
accepting executive appointments in
related law corporations
D. Collaborations between SLPs and
FLs/FLPs
Previous position
Rule 5(1) PCR: Lawyer shall not practise either as
consultant or member of more than one law
practice.
Rule 11 PCR: Lawyer shall not accept any
executive appointment in any company.
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Now
Rule 5(3) PCR: Lawyer may practise concurrently
in 1 law corporation and another law practice
related to the law corporation.
Rule 11(1)-(3) PCR: Lawyer shall not accept any
executive appointment in any company other than:
- a company of which each shareholder is the sole
proprietor or partner of the law firm OR a LLP/LLC
OR a partner of the LLP/director and shareholder
of the LLC; or
- the LLC.
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Rationale for new Rule 11 PCR
To allow SLs working in a SLP to hold executive
appointments in companies set up by the SLP for
related activities e.g. patent agent and other IP
related services.
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Possible Issues to Consider
 Company under Rule 11 PCR need not be a
related law corporation? If so, no concurrent
practice allowed (if company is merely a law
corporation)?
 Can company carry out non-law related
activities? If so, still limited by section 83(2)(j)
LPA, Rule 10 PCR and Council PDs.
 Is lawyer holding executive appointment in
company still bound by PCR?
 Meaning of “executive appointment”.
 PC implications for concurrent practice.
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THE LAW SOCIETY OF SINGAPORE
Topics
A. Introduction
B. SLPs employing corporate structures
C. Lawyers practising concurrently or
accepting executive appointments in
related law corporations
D. Collaborations between SLPs and
FLs/FLPs
4 categories
 SLPs which employ foreign lawyers in their local
practices
 SLPs which tie up with FLPs based overseas
 SLPs which tie up with FLPs based in S’pore
either through JLV or FLA
 QFLPs
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Foreign Collaboration Requirements
Rule 3A ISR:
1. SL:FL ratio of at least 2:1
2. SL partner: FL partner ration of at least 2:1
3. MP must be SL and at least 2/3 of voting rights
in management/executive committee must be held
by SLs
4. At least 2/3 of firm’s equity share held by SLs
5. At least 2/3 of voting rights in firm vest in SLs
6. Cumulative amount of payment out of profits by
SLP to FLs and/or FLPs during any financial year
not to exceed 1/3 of SLP’s profits
(1-5: general; 6: profit)
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SLPs which employ FLs within their
local practices
 FLs can take higher profit and equity share in
SLP – from 25% to 33%.
 FLs with existing approvals to hold up to 25%
need to apply to AG for approval to increase
holdings to 33%.
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SLPs which tie up with FLPs based
overseas
 FLs within overseas FLP can take higher profit
and equity share in SLP – from 25% to 33%.
 FLP based overseas can also take profit and
equity share in SLP up to 33%
 Concurrent partnerships permitted in SLP and
overseas FLP for lawyers who are partners in
overseas FLP and granted approval to take profit
and equity share in SLP
 AG’s approval required for all
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SLPs which tie up with FLPs based in
Singapore
 enhanced FLA framework
 FLs and FLP can take up to 1/3 share of profit and
equity of SLP
 FLs can concurrently be partners in SLP and FLP BUT
AG must be satisfied that no actual or potential conflict
of interests
 QFLPs can enter into FLAs with SLPs
 AG’s approval required for all
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SLPs which tie up with FLPs based in
Singapore
 enhanced JLV framework
 FLs and FLP can take up to 1/3 share of profit and
equity of SLP
 both FLs and SLs can concurrently be partners in
constituent SLP and JLV BUT AG must be satisfied that
no actual or potential conflict of interests
 QFLPs can enter into JLVs with SLPs
 AG’s approval required for all
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Possible Issues to Consider
 Is profit-sharing between SLP and FL/FLP
allowed?: see sections 130B(7), 130C(7), 130L(1)
& new 130L(6) LPA (overrides Rule 39 PCR).
 Sharing of client information between SLP and
FLP in JLV/FLA: see sections 130B(7), 130C(7)
 Sharing of office premises between SLP and FLP
– Council’s approval required? See amended Rule 9
PCR.
 Concurrent practice in a SLP and FLP based in
Singapore not allowed in non-enhanced JLV/FLA
scenarios?
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Enquiries
Contact the Representation and Law Reform
department at:
represent@lawsoc.org.sg
THE LAW SOCIETY OF SINGAPORE
Thank You