Knowledge Highlights 9 May 2022
The framework for conditional fee agreements (“CFAs”) in Singapore has come into operation from 4 May 2022. The framework, established under the Legal Profession Act 1966, allows CFAs to be entered into between lawyers and clients in prescribed categories of proceedings including international and domestic arbitration proceedings, certain proceedings in the Singapore International Commercial Court, and related court and mediation proceedings.
CFAs are mutually agreed arrangements where a lawyer receives payment of a part, or all, of his or her legal fees, only in specified agreed circumstances, e.g. if a client’s claim is successful. CFAs may take the form of a “win, more fees”, “no win, no fees”, or a “no win, less fees” agreement.
The CFA framework applies to Singapore lawyers and law practices and certain registered foreign lawyers and foreign law practices.
To safeguard clients, various requirements have been prescribed in the Legal Profession Act 1966 and the Legal Profession (Conditional Fee Agreement) Regulations 2022.
CFA to be in writing and signed by client
A CFA must be in writing and signed by the client and must not provide for the remuneration or costs to be payable as a percentage or proportion of the sum recovered by the client. Such arrangements, often known as contingency fee agreements, continue to be prohibited in Singapore.
Provision of information to client
A lawyer is required to provide information on the CFA to the client before entering into the CFA including:
- The nature and operation of the CFA and its terms;
- The client’s right to seek independent legal advice before entering into the CFA;
- That uplift fees (i.e. fees payable to the lawyer in specified circumstances, which are higher than what would otherwise be payable if there were no CFA), if any, are not recoverable by the client from the opposing party in the contentious proceedings; and
- That, despite the existence of the CFA, the client continues to be liable for any costs orders that may be made against the client by the court or arbitral tribunal.
Terms and conditions of conditional fee agreement
Every CFA must include terms relating to the following:
- The particulars of the specified circumstances in which remuneration and costs or any part of them are payable to the lawyer under the CFA;
- If the agreement provides for an uplift fee, the particulars of the basis of calculation and an estimate of the uplift fee;
- There is a cooling-off period of five days after a CFA is entered into, during which either party may terminate the agreement via written notice;
- Any variation of the CFA must be in writing and expressly agreed to by all parties to the CFA. For a variation of the CFA relating to costs issues, there is a cooling-off period of three days after the CFA is varied, during which either party may terminate the variation agreement by written notice. Termination of the variation agreement will not affect the validity of the CFA or constitute a ground for the termination of the CFA; and
- That on the termination of the CFA during the five-day or three-day cooling-off period mentioned above, the client is not liable for any remuneration or costs incurred during the cooling-off period except those incurred for any service performed during the cooling-off period that was expressly instructed by or agreed to by the client.