MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE - FINANCIAL YEAR 1ST APRIL, 1989 TO 31ST MARCH, 1990
Mr Speaker, Sir, if I may take on Mr Davinder Singh's point first. His first point was whether we would review the adequacy and effectiveness of our bankruptcy and insolvency laws. I would like to assure him that I will ask the Attorney-General's Chambers to look into this and to see whether we should review and reform our insolvency laws in the light, as he said, of the revised insolvency laws in the United Kingdom. Having said that, I should also add that, as I recall, the revisions which were made in the United Kingdom on the insolvency laws was after considerable discussions. I believe it was based on a report known as the Cork Committee Report which showed that the matter was considerably complex and complicated. I think it took the Committee some seven years to produce its report. And when the Bill was tabled in the United Kingdom Parliament, just to give an idea of the complexity, I think there were more than a thousand amendments to that Bill. The point I am making is that I agree with him that we should look into this and this will be done. But we must also bear in mind that the matter is quite complex and complicated. In a sense, we can benefit from the United Kingdom having gone through this complexity but we need to see how it can be adapted to our own circumstances and situation. As to this other point about amending the Companies legislation on wrongful trading, although the Companies Act comes under the portfolio of my colleague, the Minister for Finance, I think he would not mind if I were to say that in a discussion with the Attorney-General not long ago, I was informed that the Companies Act is being looked at with a view to amending parts which require updating and revision. And one of the areas which will be looked into is the desirability of including provisions on wrongful trading modelled, say, on the changes that have been made in the United Kingdom. So I can assure him that that will also be looked into. Then he made an interesting suggestion that the Official Assignee and Public Trustee's Office should consider a device of employing outside practitioners on a contingency basis. I think this has two aspects. The first aspect is employing outside lawyers. There may be merit in this, not just for the Official Assignee and Public Trustee, but perhaps in other areas where legal work is involved. And I am prepared to look into this suggestion. In other words, what he has in mind is, I take it, not very different from the legal aid situation where the Director of Legal Aid has a panel of some 200 practitioners and certain cases, which are not handled by the lawyers on the Legal Aid Bureau staff, can be assigned out to practitioners. We can examine the merits of this idea. I can see some advantage in this and if there is no conflict of interest situations, it may be an idea worth pursuing. The second point, which was connected to the first, was that such outside practitioners be paid on a contingency fee basis. Of course, the idea of a contingency fee basis would be incorporating into our legal system something new. I know that in the United Kingdom, the Green Paper, which has been tabled recently, has proposed a contingency fee system to be introduced in the United Kingdom. It has given rise to considerable controversy amongst the legal circles there. Whether we should introduce it here, in part or in whole, has to be considered very carefully. I would not like to take a position at the moment. First, we should have this debated amongst the lawyers themselves in the Law Society of Singapore, and I would like to have their views. Secondly, it would be also useful, if not prudent, to see what are the eventual solutions which are arrived at in the United Kingdom as a result of the Green Paper proposals. As I understand it, the contingency fee system where the lawyer's remuneration depends on the outcome of the case. It is well practised in the United States. But I also understand that in the United States the contingency fee system applies in the context of lawyers representing the clients in litigation. The difference in r Davinder Singh's proposal is that the outside practitioners would be deployed not necessarily for representing clients but for investigative purposes, which casts a slightly different complexion on the matter. Whether it is practical or not is something that has to be weighed very carefully. I do not want, to prejudge the question of contingency fees except to point out that this would be a departure from well established professional norms here. I guess there must have been some good reasons why the contingency fee system which is practised in the United States was never adopted here, although we should not be averse to change. Some have pointed out that if you have a contingency fee system there is a danger that cases may be compromised because the lawyers are anxious to get their remuneration as quickly as possible. There is also a possibility that the introduction of a contingency fee system may also result in more litigation and therefore overloading the system with even more cases. I believe here was an article in the Straits Times recently which quoted the former Lord Chancellor, Lord Hailsham, as saying that when you have a contingency fee system unscrupulous lawyers may be tempted to cut deals behind the scenes in order to get their cut quickly. In other words, there are pros and cons, and I would like to tread in this area cautiously without having precluded any option or answer to Mr Davinder Singh's question. But it will be helpful if this matter was debated amongst the lawyers in the first place. If I may go on to Dr Ho Tat Kin's proposal. I agree with him partly and I disagree with him partly. Let me explain. I fully agree with him when he presents, as a desirable objective, that the legal infrastructure must be such that it strongly supports the overall national objective of making Singapore a sound, effective financial centre, and that when you have the infrastructural legal services that promote that objective, it makes it more attractive for multi-national investors and regional investors to come here. I fully agree with him and I think that we should try to see in what ways this can be improved. Where I disagree with him is his conclusion in his speech that such infrastructure does not exist at the moment and such expertise is not available here for the regional investor. Perhaps more can be done but I do not agree with him that there is no such expertise now. How do you go about getting the legal infrastructure? There are two aspects to it. One, there is a certain amount that the Government itself can do to bring about the infrastructure and the rest is really up to the lawyers themselves. The Government has for some time now recognized the importance of this and has done considerably to bring about the infrastructure. To give you an example, 10 years ago, I think there were only one or two foreign law firms here but the policy has been liberalized. Today, I think we have about 27 foreign law firms here. In other words, they are not doing Singapore law but the laws of other countries, advising clients on international business law, international financial law, and laws of their own countries. Of the 27 such firms here, I think two or three are without resident offices here. They employ over 80 foreign lawyers and the nationality of these companies is a tremendously wide cross-section: United Kingdom, Canada, Australia, Swedish, Dutch, French, Indonesian, Indian, I think even a Panamanian law firm. So over the past few years, just to give you one example, we have liberalized the policy by allowing these foreign law firms here so that there is that expertise immediately available here. But even if the law firm of a particular country is not here, the Government has also, as widely recognized, provided a very good communication system in Singapore - telex, fax, telephone. If a lawyer in Singapore is faced with a problem which has trans-national dimensions, there is no difficulty in getting almost overnight an opinion or drafts of documents or drafts of agreements by communicating with a law firm in Canada, US, UK or in Europe. The law firms of any country in the world, our Singapore lawyers can plug in and get their expertise instantaneously. That is a result of the excellent communication system we have. So it does not necessarily mean that the law firm must be here physically. This, in fact, is what many law firms are doing here, including our Singapore law firms. As to what the lawyers themselves can do, I am not sure whether Dr Ho Tat Kin's suggestion of mergers between foreign law firms and local law firms is necessary to achieve that. I am not sure whether it can be done also because a foreign law firm operates in its country according to its legal system, its legal traditions and professional ethics and rules. For example, in the United States there is such a thing as contingency fees. In Singapore it will be professional misconduct for a lawyer to accept contingency fees. So a merger between a foreign law firm and a Singa- pore law firm poses certain problems. But a merger is not necessary, as lawyers will tell Dr Ho Tat Kin, because many of the leading law firms in Singapore for some time have established relationships with certain of their counterparts, leading law firms in Europe, UK and the United States, and this association achieves the same kind of objective that Dr Ho Tat Kin is asking for. So, in short, I agree with his objectives and the Government has done quite a bit in trying to promote the infrastructure and I think the lawyers and leading law firms are also doing that. Perhaps what really remains is for more law firms to become aware of the potential that exists and to take heed of what Dr Ho Tat Kin has brought up in his speech.