Framework for Conditional Fee Agreements in Singapore Comes into Operation & More News Here

Introduction

Conditional payment agreements (“CFAs“), which had been beforehand prohibited underneath Singapore legislation, at the moment are allowed for particular contentious proceedings. On 4 May 2022, the framework for CFAs in Singapore got here into operation, opening the door for legal professionals and purchasers to enter into a wider vary of permitted payment preparations.  

This improvement has been keenly anticipated in the authorized trade, serving to reinforce litigation funding in Singapore and help the dispute decision wants of companies and people. The prices of traversing a industrial dispute could be doubtlessly prohibitive. With the introduction of CFAs, disputants with robust claims may have larger entry to justice, having the ability to pursue their claims with out being hindered by money move points.

The CFA framework is contained in the Legal Profession Act and the Legal Profession (Conditional Fee Agreement) Regulations 2022 (“CFA Regulations“). Following a public session on the proposed framework, the Legal Profession (Amendment) Bill was tabled for First Reading in Parliament on 1 November 2021 (coated in our earlier Legal Update, out there right here). The Bill was handed in Parliament on 12 January 2022 (coated in our subsequent Legal Update, out there right here), and has now come into drive.

In this Update, we offer an summary of the important thing parts of the newly operational CFA framework, together with the permitted forms of CFAs, the conditions in which CFAs are allowed, and the necessities for a legitimate CFA.

What is a CFA?

Traditionally, in lawyer-client payment agreements for dispute decision, legal professionals had been prohibited from having charges contingent on the end result of a contentious matter. The new CFA framework permits for legal professionals and purchasers to enter into CFAs, in which legal professionals might obtain cost of all or a part of their authorized charges solely in specified circumstances (for instance, the place the declare is profitable).

Examples of CFAs would come with:

1. Win, extra payment – The lawyer would obtain greater charges upon a profitable declare.
2. No win, no payment – The lawyer wouldn’t obtain charges if the declare is unsuccessful.
3. No win, much less payment – The lawyer would obtain decrease charges if the declare is unsuccessful.
4. Uplift charges – If a sure consequence is achieved, the authorized charges charged can be greater than what would in any other case be payable.

In What Situations are CFAs Allowed?

The CFA framework applies to Singapore legal professionals and legislation practices, in addition to sure registered international legal professionals and international legislation practices.

CFAs are solely relevant to sure disputes. The CFA Regulations prescribes the contentious proceedings to which a CFA might relate, which at present contains the next:

1. International and home arbitration proceedings, in addition to associated courtroom proceedings (e.g. keep of proceedings functions, enforcement of awards, mediation proceedings); and
2. Proceedings in the Singapore International Commercial Court, in addition to associated proceedings (e.g. attraction proceedings, mediation proceedings).

What are the Requirements of a CFA?

The CFA framework units out sure necessities for a legitimate CFA. This contains the next:

1. Form – The CFA have to be in writing and signed by the consumer;
2. No contingency charges – Renumeration or prices payable can’t be calculated as a proportion of the quantity of damages awarded to the consumer (also referred to as contingency charges);
3. Provision of knowledge – Before a CFA is entered into, the lawyer should present the consumer with sure prescribed info on the CFA in plain language, and the consumer should signal and date an acknowledgement that they’ve acquired and understood such info. The prescribed info contains the character and operation of the CFA and the consumer’s proper to hunt unbiased authorized recommendation; and
4. Prescribed phrases – The CFA should embrace sure prescribed phrases, together with a cooling-off interval of 5 days from when the CFA is entered into, and three days from any variation to the CFA referring to prices.

These necessities serve to determine the formalities for a legitimate CFA, in addition to implement sure protections for purchasers in opposition to any abuse of the CFA. In explicit, the necessities search to make sure that the consumer is totally knowledgeable of the CFA and what it means, and has an affordable alternative to again out of the CFA through the cooling-off interval.

Concluding Words

The new CFA framework is a crucial milestone in litigation funding in Singapore, widening the scope of price preparations which purchasers and legal professionals can enter into, and permitting for the crafting of preparations which accommodate the precise monetary scenario of the consumer. It additionally serves to additional improve Singapore’s place as a dispute decision hub.

Parties contemplating using CFAs ought to search to discover the choices out there to them in phrases of the forms of permitted CFAs and the conditions in which CFAs are allowed. For additional queries, please be at liberty to contact our workforce under.

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