Original Article By Tessa Oh | The Business Times |
As reported in the Business Times, Singapore’s Ministry of Law (MinLaw) has begun a comprehensive review of how foreign law firms operate and collaborate with local practices, aiming to simplify a complex system that has evolved over more than two decades. The move seeks to balance three key goals — maintaining Singapore’s open international legal market, ensuring fair collaboration between foreign and local firms, and preserving the independence of Singapore law practices.
Why the Review Is Needed
The review, led by Attorney-General Lucien Wong, comes amid concerns that Singapore’s current patchwork of licensing schemes — such as Joint Law Ventures (JLVs), Formal Law Alliances (FLAs) and Qualifying Foreign Law Practices (QFLPs) — has grown too complicated.
This complexity, the committee said, creates confusion and regulatory burden, discouraging potentially beneficial partnerships.
Singapore’s legal services sector has expanded sharply:
- Legal services exports rose from S$640 million in 2013 to S$1.74 billion in 2024.
- The number of Asian foreign law practices doubled between 2017 and 2023.
To sustain growth and competitiveness, MinLaw is seeking to streamline and modernise the licensing structure.
Proposed Reforms
The committee’s recommendations cover four main areas:
- Collaboration Criteria – All partnerships between local and foreign firms would be governed under a single, flexible general licence, instead of multiple frameworks.
- Independence of Local Firms – Singapore law firms must prove they remain “independent and substantive”, with sound finances and autonomous management.
- Local Lawyer Composition – Firms seeking collaboration must have:
- At least five Singapore lawyers;
- Three equity partners or directors with at least three years’ experience.
- Practice Scope and Oversight – Clearer definitions will prevent foreign firms from circumventing limits and practising Singapore law beyond permitted areas.
Capping Singapore Lawyers in Foreign Firms
To maintain focus on international work, foreign law firms will face stricter caps on Singapore lawyer composition:
- QFLPs: Cap reduced from 80% to 50%, with non-dual-qualified Singapore lawyers limited to 35%.
- Licensed foreign practices: Cap of one-third for firms with five or more Singapore lawyers.
- Revenue requirements: QFLPs must derive at least 65% of revenue from offshore work.
These rules prevent foreign firms from morphing into de facto local practices while ensuring local lawyers retain strong domestic independence.
Clarifying Profit Sharing and Oversight
The review also addresses concerns about profit distribution and dual appointments:
- The Director of Legal Services must approve any lawyer holding concurrent roles in both a local and a foreign firm.
- Clearer definitions will prevent firms from disguising profit transfers as “expenses” or “consultancy fees” to bypass caps on foreign profit participation.
Renewal of QFLP Licences
Singapore’s nine current QFLP firms — including Allen Overy Shearman Sterling, Clifford Chance, Latham & Watkins, Gibson Dunn & Crutcher, Linklaters, Norton Rose Fulbright, Sidley Austin, Jones Day, and White & Case — have had their licences extended for two years until end-2027.
These firms collectively employ over 550 lawyers in Singapore, with 40% Singapore-qualified, and generate over S$2 billion in offshore revenue.
This extension provides continuity while the new framework is finalised.
Conclusion
Singapore’s latest review of its legal licensing system represents an effort to modernise regulations, reduce administrative complexity, and protect local law firm autonomy.
With global law firms increasingly anchoring their Asia-Pacific operations in Singapore, the reforms aim to ensure the Republic remains a trusted international legal hub — open to collaboration yet firm on local independence and integrity.
