I read with interest today's news on the Government's push to open up the legal sector to international foreign law firms. This is not something new, and the talk about market liberalisation has been mentioned for some time.
It is inevitable that the Malaysian legal market will be liberalised and that foreign law firms will be allowed to practice, in some form or another, here in Malaysia.
The legislation allowing the entry of foreign law firms is still a bit hazy. But from the information that I have come across, it appears that foreign law firms will be allowed into Malaysia through the Joint Law Venture (JLV) vehicle. This is similar to the JLVs and the foreign law alliances allowed in Singapore. The suggestion for standalone foreign firms, as mentioned in the Star article, is being considered by the Bar Council.
This JLV vehicle could then assist in the transfer of expertise and knowledge from the foreign firms over to its local partners. Through the opening up of the legal market, local lawyers may then be able to enjoy secondments or even employment in foreign firms, not to mention gaining valuable experience in working on international transactions. The advantage offered to foreign firms is that they would then be able to truly offer a "one-stop" service on cross-border and international transactions, as well as enjoy cost-savings through the outsourcing of work.
In theory, this symbiotic relationship should be successful. In practice however, it may be less so. We can look at the Singapore experience, where it has implemented the JLV structure for the last 10 years or so. As noted by the recent Committee to Develop the Singapore Legal Sector, in a major review of the legal services sector, the JLV scheme has been of limited success. While the JLV was intended to provide a one-stop shop to clients, it has not always worked out to be so in practice.
The same Committee has recommended a big shake-up of the legal market in that, up to 5 foreign law firms, dubbed Qualifying Foreign Law Firms (QFLFs), will be allowed to employ Singapore-qualified lawyers to practice Singapore law in all areas except for litigation and general practice. The number of foreign law firms allowed in may be increased over time.
I personally welcome the liberalisation of the legal market. At a macro level, it may pave the way to an increase in volume and quality of high-end transactional work. At a micro level, it may help retain legal talent as Malaysian lawyers can obtain exposure to high-end international work through these foreign firms.
Nonetheless, restrictions still must be put in place. The areas of law such JLVs or foreign firms would be allowed to practice in would have to be set out clearly. Foreign lawyers would have to adhere to ethical rules governing the profession on a whole. Disciplinary proceedings would still have to apply to foreign lawyers. It will be a difficult balancing act. On one hand, market restrictions will have to be imposed, ensuring a mutually beneficial relationship for local and foreign firms. On the other hand, foreign firms will want to have free reign in the carrying out of its legal services in a foreign jurisdiction.
In the end, I don't foresee a flood of foreign law firms rushing in to set up shop here in Malaysia. With a possible downturn in the economy in the near future, and with some foreign firms cutting down its offshore presence in Singapore and in South-East Asia, would these same foreign firms want to come in here to Malaysia?
Lee Shih
Chair
Publications Committee
It is inevitable that the Malaysian legal market will be liberalised and that foreign law firms will be allowed to practice, in some form or another, here in Malaysia.
The legislation allowing the entry of foreign law firms is still a bit hazy. But from the information that I have come across, it appears that foreign law firms will be allowed into Malaysia through the Joint Law Venture (JLV) vehicle. This is similar to the JLVs and the foreign law alliances allowed in Singapore. The suggestion for standalone foreign firms, as mentioned in the Star article, is being considered by the Bar Council.
This JLV vehicle could then assist in the transfer of expertise and knowledge from the foreign firms over to its local partners. Through the opening up of the legal market, local lawyers may then be able to enjoy secondments or even employment in foreign firms, not to mention gaining valuable experience in working on international transactions. The advantage offered to foreign firms is that they would then be able to truly offer a "one-stop" service on cross-border and international transactions, as well as enjoy cost-savings through the outsourcing of work.
In theory, this symbiotic relationship should be successful. In practice however, it may be less so. We can look at the Singapore experience, where it has implemented the JLV structure for the last 10 years or so. As noted by the recent Committee to Develop the Singapore Legal Sector, in a major review of the legal services sector, the JLV scheme has been of limited success. While the JLV was intended to provide a one-stop shop to clients, it has not always worked out to be so in practice.
The same Committee has recommended a big shake-up of the legal market in that, up to 5 foreign law firms, dubbed Qualifying Foreign Law Firms (QFLFs), will be allowed to employ Singapore-qualified lawyers to practice Singapore law in all areas except for litigation and general practice. The number of foreign law firms allowed in may be increased over time.
I personally welcome the liberalisation of the legal market. At a macro level, it may pave the way to an increase in volume and quality of high-end transactional work. At a micro level, it may help retain legal talent as Malaysian lawyers can obtain exposure to high-end international work through these foreign firms.
Nonetheless, restrictions still must be put in place. The areas of law such JLVs or foreign firms would be allowed to practice in would have to be set out clearly. Foreign lawyers would have to adhere to ethical rules governing the profession on a whole. Disciplinary proceedings would still have to apply to foreign lawyers. It will be a difficult balancing act. On one hand, market restrictions will have to be imposed, ensuring a mutually beneficial relationship for local and foreign firms. On the other hand, foreign firms will want to have free reign in the carrying out of its legal services in a foreign jurisdiction.
In the end, I don't foresee a flood of foreign law firms rushing in to set up shop here in Malaysia. With a possible downturn in the economy in the near future, and with some foreign firms cutting down its offshore presence in Singapore and in South-East Asia, would these same foreign firms want to come in here to Malaysia?
Lee Shih
Chair
Publications Committee