Managing Partner and Head of Dispute Resolution, Bazul Ashhab, recently shared his thoughts on Conditional Fee Agreements (CFAs). CFAs are a form of payment agreement whereby lawyers are only paid if their clients’ claim is successful. His thoughts below:
The discussion on whether conditional fee arrangements (CFAs) should be permitted in Singapore and if so, to what extent, is long overdue. The prohibitions on such agreements stem from the public policy considerations which proscribe maintenance and champerty, to protect vulnerable litigants, and to guard against potential misconduct and conﬂict of interest for lawyers. However, other common law jurisdictions like the United Kingdom, Australia, Canada had already begun to depart from the old system nearly 20 years ago.
For an impecunious claimant, CFAs provide access to justice. However, CFAs do not have to be limited to use by impecunious litigants. Many companies today are challenging hourly-rate remunerations for lawyers. These companies want their lawyers to have more skin in the game and will prefer lawyers sharing the proceeds of victory. The sophisticated commercial clients who are familiar to CFAs in other jurisdictions will embrace the proposed changes. Even those entities which are not familiar with CFAs will be delighted to move away from hourly rates. This also deals with the misconception that some minority may have lawyers that are not motivated enough to explore settlement to bring an end to the dispute quickly.
The proposed changes to introduce CFAs will cement Singapore’s position as a hub for dispute resolution. However, regulations need to be worked out to safeguard the interests of clients. I support the idea of a “cooling off period” during which the clients may, by written notice, terminate the agreement. I would also suggest a cap on the uplift which a lawyer can charge. I would also consider disclosing such fee arrangements during costs submissions.