'No win, no fee' agreements for certain legal proceedings allowed in Singapore

According to a statement by Singapore’s Law Ministry (MinLaw), under the new conditional fee agreement (CFA) framework, lawyers and their clients can choose to enter into “no win, no fee”, “no win, less fee”, or “win, more fee” agreements.

Arbitration expert Chen Han Toh of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, said:” These changes enhance Singapore’s attractiveness for the resolution of international commercial disputes. Singapore-based lawyers can now offer innovative fee arrangements for the sharing of the risks and rewards of litigation. This can circumvent financial constraints which may otherwise stifle the pursuit of legitimate claims.”

The CFA framework will apply to Singapore lawyers, law firms, selected registered foreign lawyers and foreign law firms. CFAs will also be permitted in other selected legal proceedings including international and domestic arbitration proceedings, some proceedings in the Singapore international commercial court (SICC), and related court and mediation proceedings.

The MinLaw has published some rules to avoid potential abuse of CFAs.

Under the rules, a lawyer must provide the CFA’s nature, operation and terms to the client before entering into a CFA. The client must be informed of their right to seek independent legal advice before entering into the CFA, and that they remain liable for any costs orders made by the court or arbitral tribunal. If the client wins the proceedings, they cannot recover the lawyer’s uplift fee as part of their legal costs from the opposing party.

The CFA must also include specified terms. They include details of the fees to be paid to the lawyer; details of any applicable uplift fee; a five-day cooling-off period for both lawyers and clients plus a further three-day cooling off period for any variations related to costs; and the need for any changes or termination of the agreement during the cooling off period to be made in writing. Clients do not pay for fees incurred during the cooling-off period other than those for services performed during that period that were expressly instructed or agreed by the client.

Singapore’s lawyers will continue to be bound by existing rules of professional conduct that prohibit overcharging.