Conditional Fee Agreements Between Lawyers and Clients Now Allowed in Singapore for Specific Cases
From 4 May 2022, lawyers and clients can now enter into Conditional Fee Agreements (CFAs) with respect to solicitors’ fees in relation to specific legal proceedings. CFAs were previously prohibited in Singapore.
What is a Conditional Fee Agreement?
A “conditional fee agreement” means an agreement between the lawyer and the client which provides for the lawyer’s remuneration and costs to be payable only in specified circumstances, such as when the claim is successful.
Examples of the types of agreements that lawyers and their clients may enter into include “no win, no fee”, “no win, less fee” or “win, more fee” agreements. Lawyers and clients are free to negotiate and agree on the final terms of the CFA, subject to the general requirements in the CFA framework. However, fee agreements where remuneration is payable as a percentage of the damages awarded (otherwise known as contingency fees) are still prohibited.
The CFA may also provide for an uplift fee. An “uplift fee” refers to the fees payable to the lawyer in specified circumstances, that are higher than what would otherwise be payable if there were no CFA. These can be in the form of a gross sum or hourly rate, and are unrelated to the sum of damages awarded to the client.
When are CFAs allowed?
Lawyers and their clients can enter into a CFA with respect to the following proceedings:
- international and domestic arbitration proceedings;
- court proceedings (whether inside or outside Singapore) arising from or connected with arbitration proceedings;
- application for a stay of proceedings and any other application for the enforcement of an arbitration agreement;
- proceedings for or in connection with the enforcement of an arbitration award;
- proceedings before the Singapore International Commercial Court (SICC); and
- mediation proceedings arising out of or connected with the above.
Why this is Important
For many of our clients involved in a dispute or a potential dispute, the main concern is cost – how much the arbitration fees, tribunal fees, legal fees and expenses will be over the course of the dispute. Some parties may be dissuaded from pursuing their meritorious claims due to the perceived high costs and/or due to cashflow issues. With this new development, lawyers and clients can arrive at more flexible arrangements in relation to legal fees that can take into account the client’s financial position, which ultimately provides the client with more options and an enhanced access to justice.
Harry Elias Partnership International Arbitration Group
Harry Elias Partnership regularly provides advice on complex international commercial disputes. We have extensive experience in advising and successfully representing multinational entities in commercial arbitration. As a full-service Singapore law firm, we have full rights of audience before all tiers of Singapore Courts. We are therefore well placed to advise and support our clients in any arbitration-related court applications before the Singapore Courts.
Our team is focused on helping our clients achieve their commercial and legal objectives and we remain sensitive to our clients’ needs. If you are interested in learning more about CFAs and how this can help you manage your financial position, please do not hesitate to contact us at our details below.
For further information, please contact:
Head, International Arbitration
Partner | Harry Elias Partnership LLP
[email protected] | +65 6361 9835
Foreign Legal Associate | Harry Elias Partnership LLP
[email protected] | +65 6361 9821
For more information, please contact our Business Development Manager, Ricky Soetikno, at [email protected].