Fine-tuning Singapore's scales of justice
Taking litigation scale costs for solicitor-and-client fees off the table for now is the right move.
At the second townhall meeting last Thursday between the Ministry of Law and the legal profession, Minister for Law K. Shanmugam announced that the proposed litigation scale costs for lawyers' fees would be dropped from the Civil Justice Commission's (CJC) consultation paper.
In 2015, the Chief Justice established the CJC to review Singapore's civil justice system, with the goal of modernising the litigation process. The CJC's report, issued last month, contained wide-ranging recommendations including overhauling the court process.
One proposal was the implementation of scale costs for litigation, with professional fees pegged rigidly and solely to the monetary amount in dispute. However, that quickly became a point of contention as stakeholders were concerned that this would affect the quality of legal services as the scale did not take into account the nature or complexity of each case.
Mr Shanmugam personally attended a Law Society townhall on Nov 12 alongside one-fifth of the profession - a massive turnout - where the lawyers expressed concerns over the impact this would have on the administration of justice. A second townhall was convened barely a week later at which the minister announced that the scale costs for lawyers' fees would no longer form part of the proposal. It is off the table, for now.
The fee proposal was part of ongoing efforts by the Ministry of Law and the courts to enhance Singapore's judicial system. Changes are necessary and welcome for Singapore to develop into an innovative international legal hub, while continuing to make access to justice available to the public.
To this end, industry innovations - ranging from more flexible fee arrangements to a tech-assisted small claims resolution process - could be solutions. However, a fixed scale of costs would not, to my mind, be effective and may instead be counterproductive.
The reasons for this bear further scrutiny.
ACCESS TO JUSTICE FOR THE PUBLIC
Having a fixed scale of costs appears, on the surface, to serve the public by keeping legal expenses down. Dig deeper and cracks in the argument appear.
The proposal was an "opt out" system - lawyers could agree with their clients that the scale would not apply. While this may appear to widen client choice, it is more likely that practitioners with a stronger bargaining position - essentially senior counsel and larger firms - could negotiate out of the scale. Without the constraints of scale costs, such lawyers would have more resources to advance their client's case, magnifying the unevenness of the litigation playing field against poorer litigants.
Some people are concerned about litigants with valid claims who cannot afford lawyers, even with the reduction in fees from scale costs. This is where the active pro bono culture of Singapore firms - big and small - has filled the gap.
In the rallying cry uttered by Chief Justice Sundaresh Menon at the Mass Call ceremony to admit new lawyers in 2013, he said: "A visceral sense of distress sets in when society perceives that the scales of justice do not balance evenly between those who can and those who cannot access suitable legal representation. As members of the profession dedicated to justice, it is incumbent upon us to do what we can to ensure that this does not happen... Providing pro bono services is a necessary part of making this a reality."
But pro bono is a call that can be met only when practitioners are able to charge reasonable rates for their legal services to clients who are not financially needy, allowing them the economic buffer to take on needy cases for free. Under the proposed scale costs, it is estimated that the professional fees would have been less than half of current commercial rates.
SCALE COSTS ARE ANTI-COMPETITIVE AND MAY ENCOURAGE LITIGATION
Price-fixing is bad economics. The legal industry's past conveyancing scale costs, pegged to the property's value, were removed so that the free market could set the value for professional services. The same ought to apply to litigation fees, which should depend on the nature and complexity of the dispute, and the evidence required; not just the sum claimed.
Fixed costs may also - counter-intuitively - encourage litigation. If litigants know that their professional fees are capped, they may be incentivised to fight to the bitter end and take their chances in the courts instead of settling, even if that was the best way to conclude the case. This may lead to more, and protracted, litigation. It is detrimental to the efficiency of the courts, creating the moral hazard of potential conflicts of interest between litigant and counsel.
INTERNATIONAL LEGAL HUB AND DEVELOPING TALENT
Singapore has worked hard to establish itself as a legal hub. The Singapore International Arbitration Centre, a leading arbitration institute, has grown faster (in the number of new cases) than more established competitors like London's Court of International Arbitration. Singapore has also set up the Singapore International Commercial Court (SICC) and the Singapore International Mediation Centre.
A world-class dispute hub needs a world-class domestic Bar. A scale costs regime communicates the exact opposite; that the capability of our Bar is generally commoditisable, homogeneous and unexceptional.
One big factor in establishing Singapore as a forum for dispute resolution is the depth, breadth and maturity of its case law. This was emphasised by Chief Justice Chan Sek Keong at the Singapore Academy of Law Conference in 2011 when he said that "our ultimate objective is to build up a large body of local jurisprudence, so that local decisions can be cited first instead of English decisions".
Under the scale costs regime, lawyers will not have the resources to delve into more novel or complex aspects of the law. Instead, they may be constrained into making basic arguments that just about get the job done, not arguments that advance Singapore law.
A top legal centre needs quality human capital. Our established law faculties have continued to rise in international rankings, with the National University of Singapore's Law School ranked 15th in the world and top in Asia for the past two years. But law firms will have difficulty attracting these candidates if they are unable to offer the interesting and complex work of the international firms, which are not bound by scale costs in arbitrations or cases before the SICC, both forums where they can practise freely.
If access to justice requires a high quality of legal practitioners, then litigation scale costs may be counterproductive.
For these reasons, many lawyers welcomed the minister's announcement of the withdrawal of professional scale costs and appreciate the Law Ministry's and the CJC chair's decisive actions. But our profession cannot see this as a reprieve.
We live in an age of disruption, and lawyers are not immune. We must ready ourselves for threats that are bigger and more existential in nature than litigation scale costs, not least artificial intelligence, outsourcing, and alternative providers of unbundled legal services. At the same time, we need to continue to seek innovative ways to meet the calling to provide access to justice for the man in the street.
• Thio Shen Yi, a Senior Counsel, is joint managing partner, TSMP Law Corporation.
Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.