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Remarks By the Minister for Law, Professor S Jayakumar, during the Committee of Supply Debate 2003 (Ministry of Law)
Posted on Thursday, March 13, 2003 - 10:00 PM

The following are the remarks made in Parliament by the Minister for Law, Professor S Jayakumar, during the Committee of Supply Debate 2003 (Ministry of Law) on Thursday, 13 March 2003.

Census of the Legal Industry and Profession

I would like to thank Members who have spoken on the legal profession, arbitration and info-communications and intellectual property laws. First, on the legal profession, let me respond to the questions by Prof Chin, Ms Indranee Rajah, Mr R Ravindran and Mr Chandra Mohan.

I agree with Prof Chin that the legal profession plays an important role in helping Singapore in its quest for competitiveness. It is in this context that we view the legal profession should not be overly despondent. Members are concerned about the mood of the profession. It is not just the legal profession whose mood is affected. There are many changes which they have to adapt to, changes such as the abolition of scale fees in conveyancing.

Attrition of lawyers

We should not wring our hands when some lawyers are leaving the profession. I tend to share the view of Ms Indranee Rajah that it is not wholly unexpected to see lawyers leaving the profession. It is a reflection of the changing legal practice environment and a rather mobile labour market.

Last year in this debate, I said that we should first understand the underlying reasons behind why lawyers were leaving. This was one of the main reasons why my Ministry worked together with the Department of Statistics to conduct the first ever comprehensive census of the legal services industry and profession.

The Census, which has just been completed, has in fact shown that there were a variety of reasons why lawyers were leaving practice. Some were unhappy about their long working hours, heavy workload and some felt there was inadequate compensation. Others left to pursue their own interests or careers.

But then I do not think these reasons are unique to the legal profession. In fact we are living in a society where there are going to be more choices.

The survey revealed that slightly more than half (54%) who left chose to work in law-related positions, such as in-house legal counsels, lawyers in offshore firms or even in overseas practice. So in a sense, they have not left the legal sector as such. I do not think our investment in their legal training has been futile.

What about those who went to other sectors? Prof Chin might recall that in the seventies when I was in the Law Faculty, we saw that in other countries, good lawyers were also playing non-legal roles in public administration, business and in the private sector. Prof Chin and I were tasked by the then Chancellor, Tony Tan, to embark on that study. At that time, nearly all the local law graduates ended up in the private sector. Now, they end up in different places. As I have said, while we will not ring the alarm bells, we will continue to monitor attrition trends to ensure that there is sufficient talent in the legal sector.

As for the young lawyers leaving practice, the Law Society already has in place counselling schemes as well as social and welfare activities to help young lawyers cope with stress. The Law Society has started an outreach programme to allow young lawyers to share experiences and strengthen camaraderie within the profession. I think it is important for senior members of the Bar to interact with the younger members to share with them their experiences. That is one of the reasons why dining was introduced.

Census background

Members have asked about the Census. One of the reasons why we conducted the Census was because there has been so much anecdotal evidence and reports. That was why an empirical study was conducted.

In this context, I would like to spend some time highlighting the key findings of the Census. The study was targeted at local law firms, lawyers and ex-lawyers who had left the profession. The Census returns have since been compiled and published and will be made available for sale to the public.

We had excellent response rates — 99% for law firms, 75% for lawyers and 38% for lawyers who left practice.

Consolidation and restructuring

What do these findings tell us? The Census findings reflect a legal services industry undergoing consolidation and restructuring. The legal profession is grappling with the challenges brought upon by increasing competition, while trying to maintain professional standards and service quality.

Larger law firms were clearly more profitable and had better growth prospects than the smaller firms. They had higher revenue per lawyer and higher profits per partner. Operating costs of the large law firms were on average only one-third those of small firms on a per revenue basis.

The Census shows that our law firms are aware of the benefits that can be reaped from exploiting economies of scale.

Changing focus of practice

Law firms expect revenue from litigation and conveyancing to continue to stagnate or even shrink. However, general corporate work and new areas like intellectual property (‘IP’) and info-communications technology (‘ICT’) law seem to show some potential for growth in the coming years.

Prof Chin is right to say that for lawyers to stay relevant, they have to upgrade their skills and move into new growth areas of practice. On this, the Census findings showed that there were 168 lawyers currently specialising in IP and ICT law. 77 firms indicated that they had serious plans to expand their ICT practice, while 122 firms indicated likewise for their IP practice. So if we take those findings, I am encouraged by the growing awareness of our law firms of the new areas to go into.

New markets

Law firms also reported positive interest in taking on regional as well as international cases with cross-border transactions. Many law firms were also keen to enter overseas markets, particularly in ASEAN and China. This regionalisation and globalisation of legal practice is a step in the right direction.

As far as the government is concerned, we are fully supportive of these endeavours. EDB has been tasked to be the lead agency to promote legal services, and IE Singapore has been helping local law firms establish their presence in overseas markets.

Response of law firms and lawyers

So I would say that these are signs that law firms and lawyers are gearing up to meet these challenges. 118 firms indicated that they were planning to merge, including four large and 13 medium-sized firms. 59 firms intended to form Joint Law Ventures or Formal Law Alliances. Several sole proprietors indicated plans to cease practice. Lawyers who had been in conveyancing practice reported intentions to practise in other areas of law such as corporate law or to quit practice altogether.

Continuing legal education

In moving his last cut, Prof Chin said that lawyers must update themselves in new areas such as IP law and ICT law. The legal profession must also continue to improve itself by upgrading its skills to stay relevant and competitive.

I am glad that the Singapore Academy of Law and the Law Society have been playing their role in providing continuing legal education to lawyers through legal seminars, workshops and conferences. SAL has also organised seminars touching on new and niche areas such as IP law, technology law as well as biotechnology and life sciences.

I think the way to go forward is for MinLaw to work with NUS, the Law Society and the Singapore Academy of Law to evaluate the Census findings, decide the implications and follow up actions.

Legal Services Working Group Recommendations

I agree with Ms Indranee Rajah that there are many advantages we can exploit to develop Singapore into an arbitration hub and we have to gear up for this area.

On this, there has been considerable discussion on this idea over the past year, notably in the Legal Services Working Group (‘LWG’). This is the group that Ms Indranee Rajah has been a member of and has made considerable contributions to. The LWG was co-chaired by Mr K Shanmugam and Solicitor General Mr Chan Seng Onn.

The LWG in its report to the ERC had recommended that Singapore be promoted as an alternative dispute resolution services centre for the region, especially in international arbitration.

The LWG recommended a four-pronged strategy: (a) create a Singapore brand of ADR; (b) active marketing and promotion of arbitration services; (c) government support and funding; and (d) encouraging other leading ADR institutions to set up sub-centres in Singapore.

Government’s response

The Government has accepted these recommendations and is fully committed to work with the other agencies to establish Singapore as the international arbitration centre of choice in the region.

But to succeed cannot just require MinLaw’s or the Government’s effort. A Singapore Inc approach is required, involving many parties including the legal profession, the arbitral fraternity and the business community and, of course, the Singapore International Arbitration Centre (‘SIAC’).

Benefits of arbitration

If we succeed in our efforts, we stand to reap tangible economic benefits arising from greater demand for domestic legal services, and tremendous indirect economic spin-offs. There are also strategic benefits such as strengthening our legal services sector and supporting business infrastructure.

Singapore’s strengths

As Ms Indranee Rajah has said, Singapore already has many strengths to attract parties to have their cases heard here. These strengths include Singapore’s reputation for neutrality and impartiality, our accessible geographical location, top quality judicial system and legal expertise; sound laws and low legal costs.

Last year, the Government decided to exempt from tax, income earned by foreign arbitrators for arbitration work performed in Singapore. We have also amended the arbitration provisions in the law. This will enhance Singapore’s attractiveness to foreign arbitrators hearing cases here.

SIAC

We should capitalise on these strengths and intensify our efforts to promote the international arbitration business. In all this, SIAC, Singapore’s key arbitral institution, will champion the cause.

SIAC has made very good progress. I am aware that SIAC plans to achieve more. SIAC is gearing itself to meet this challenge and position itself to be a key arbitration institution in the region.

I know that SIAC is actively discussing with the business community, including the Singapore Business Federation (‘SBF’), to involve the business community in a way that can enhance the linking up of legal and commercial expertise, and to better promote and market Singapore’s arbitration services abroad.

With these moves, Singapore should be well positioned for future growth and expansion, and build on what we have already achieved to date.

Government funding and support

As far as MinLaw is concerned, we will play a facilitator role to ensure that arbitration legislation remains progressive and relevant, and encourage the building up of local arbitration expertise. We will also provide some funding for promotion and marketing of arbitration services in Singapore.

EDB has been appointed the champion agency to drive the development of the legal services industry. I know that EDB is committed to help SIAC, ICC and other players to promote the arbitration business in Singapore; as well as develop the infrastructure and capabilities necessary to succeed. MinLaw will work closely with EDB towards this end.

Encouraging the establishment of other ADR centres

Mr Chandra Mohan made the general point that the Government should encourage not just arbitration, but also mediation. I know that my Senior Minister of State has replied that MinLaw will improve the Community Mediation Centres (‘CMCs’) which have been successful. Where resources and facilities are available, we will continue expanding the CMCs. We are committed to encourage international arbitration, domestic arbitration and commercial mediation. We will also explore how the present regime of mediation can slowly be extended to cover other areas.

Decriminalising Regulatory Offences

Prof Chin asked about decriminalisation and whether this will be done this year. He will recall that at last year’s budget debates, SMS (Law) Assoc Prof Ho Peng Kee had informed the House that the Attorney General’s Chambers was in fact studying whether and in what circumstances certain minor criminal offences could be re-classified as non-criminal infringements; and to consider whether the use of administrative and civil sanctions, as enforcement mechanisms, can replace or complement criminal enforcement through criminal sanctions.

I am happy to announce that the study has been completed. We have reviewed this and the conclusion is that there is merit in promoting greater use of non-criminal sanctions for some regulatory offences. But I confirm that we are proceeding step-by-step and we cannot expect, like some European countries, a move to decriminalise serious offences like drug abuse.

Today, a large number of regulatory offences are prosecuted by Government departments and statutory boards which carry criminal convictions.

The criminal process is not the only possible approach to secure compliance with regulatory requirements. Administrative sanctions can also be used in appropriate cases to encourage compliance. This can be achieved without compromising our tough stand on maintaining law and order.

Therefore, a differentiated approach may be warranted in cases where a breach of the regulation would not, for example, attract the stigma and disqualifications associated with criminal convictions.

We will work with regulatory agencies to encourage them to adopt a responsive approach and regulate using a calibrated range of sanctions, ranging from administrative actions that ‘encourage’ compliance, to more severe administrative actions (eg suspension or revocation of licence) and finally to punitive civil penalties and so on. I think if we have differentiated between the use of criminal and non-criminal sanctions, we could project Singapore as a pro-business regulator while upholding the integrity of our markets.

This is in fact the approach taken by countries such as the US, UK and Australia. In Singapore, there are already a few pieces of legislation that provide for non-criminal sanctions. Prof Chin gave an example which he rightfully can take credit for. Other examples are found in the more recent Telecommunications Act and the Securities and Futures Act. More can be done. I think we should be slow to criminalise errant behaviour which carries no moral turpitude but are regulatory in nature. When we embark on this exercise, we look at rules which outlive their purposes, rules that may be breached without moral turpitude, or offences that should not in general attract criminal sanctions. We have found, for example, that it is a criminal offence to have a tombstone that does not conform to certain rules in terms of size.

MinLaw, together with AGC, is assisting Ministries and regulatory agencies to review their legislation with the view to complementing or replacing criminal sanctions with administrative actions and civil penalties. It will take some time, and we cannot promise that it will take place this year. It will not be an omnibus legislation to decriminalise offences, but will be in an ad-hoc way, as and when Ministries are reviewing it.

Intellectual Property

Review of intellectual property laws: participation from many sectors

Finally, in the point made by Prof Chin, I agree that IP is very important for our economic growth. In our efforts to ensure that our laws on IP are up to date, we have to involve all the Ministries, Statutory Boards and the private sector. This is because it involves laws, policies and also the study of the experiences of other countries. Therefore, I agree with him that we must make Singapore an attractive place for IP creation and management.

Similar to what he has advised, we have worked with many players — not just research scientists and engineers and other inventors, but also businessmen, financiers, deal-makers, lawyers, judges and institutions of higher learning. After all, IP is not a topic for the lawyers or the legal services alone. It has to involve legal and business issues.

Our first role is to put in place the underlying infrastructure, and to help ensure that there is a high level of IP awareness. For this objective, we have worked very closely with MTI, MITA and other agencies, like EDB, A*STAR, SPRING Singapore, IE Singapore and so on.

Over the past 18 months, in addition to dialogues with our public sector colleagues, MinLaw officials have engaged in in-depth consultations with more than 200 representatives of the business, legal and educational communities, to understand their perspectives and get inputs on what Singapore needs and how we can best proceed.

Promoting IP awareness and capabilities training

As a result of all these dialogues, we have identified an important gap. There is still a relatively low level of awareness amongst our inventors and entrepreneurs on what IP is and how to manage it. Therefore, we need to develop a pool of skilled IP professionals and IP-savvy businessmen in Singapore and this is quite urgent.

Our businessmen need to know what IP they own, how to protect it and how to exploit it. In order to meet this need, we have established the IP Academy in January 2003. It will cater to a wide range of audiences, offering programmes for researchers, professionals and businessmen. Here, with regards to the point that Prof Chin has mentioned, that we must also establish linkages with other research institutions in the world, I have no doubt that the IP Academy is already addressing this.

We are fully supportive of the points made by Prof Chin and we hope that the information given will make him fully confident that my Ministry and others are proceeding energetically in this area.

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