Singapore passed its legislation to allow foreign law firms to own stakes in local legal practices or share in their profits under legislative changes proposed by Law Minister K. Shanmugam today.
The Southeast Asian city will also relax the rules for the admission of experienced foreign trial lawyers, he told Parliament. Shanmugam has said Singapore won’t “turn back” after licensing six foreign firms in December 2008 to practice local corporate law.
The decision to allow foreign law firms to own stakes in local practices may help proposed tie-ups such as one between London-based Allen & Overy LLP and Singapore’s Allen & Gledhill. The two firms said in November they were in preliminary talks on proposals to combine, subject to any necessary regulatory approvals in Singapore.
Allen & Overy, Clifford Chance LLP, Norton Rose LLP, White & Case LLP, Herbert Smith LLP and Latham & Watkins LLP were awarded the six qualifying foreign law practice licenses in 2008. The firms made commitments to double their revenue, staffing and profits in Singapore in five years.
Lawmakers including Hri Kumar and Christopher De Souza, both lawyers and from the ruling party, raised concerns about the further opening of Singapore’s legal industry.
“In a firm where the final decision lies abroad, the bottom line becomes paramount,” said Kumar, a lawyer with Drew & Napier LLC in Singapore.
“Does the minister foresee our legal industry heading the direction of Hong Kong where international law firms dominate nearly every area of law and is that a consequence the government favors or is prepared to accept?” he asked.
The decision to allow foreign law firms to take stakes lies with local law practices, Shanmugam said in response. The proposed change isn’t a “mandate” that domestic law firms are required to followed, he said. The changes will take effect in the second quarter.
Hong Kong has attracted at least 14 U.S. law firms to offer advice on local law since 2010 when it was the world’s busiest market for initial public offerings. London-based firms have dominated legal advice to financial institutions in the former British colony.