Contingency Fees in Singapore – unnecessary obstacle for access to justice?
Contingency Fee Arrangements are payment arrangements, whereby the legal fees payable to a lawyer by a client is determined by the outcome of the case’s proceedings. Under these arrangements, it is possible for a lawyer to arrange to be paid an agreed percentage of the client’s recovery and is paid nothing if the action is unsuccessful. The high cost of legal proceedings often results in many people being unable to bring their cases to court, simply because they cannot afford to do so. Article 7 of the UN Declaration of Human Rights states that “All are equal before the law and are entitled without any discrimination to equal protection of the law.” These arrangements offer a practical avenue for lower income individuals to stand on an equal platform as the state, of proper legal representation, and have the same access to justice when faced with a criminal charge. Unfortunately, this is illegal.
The history of contingency fee arrangements can be traced to the case of Re Trepca Mines (No 2)  3 WLR 955. Then, Lord Denning held that “The reason why the common law condemns champerty is because of the abuses to which it may give rise. The common law fears that the champertous maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses. These fears may be exaggerated; but, be that so or not, the law for centuries has declared champerty to be unlawful, and we cannot do otherwise than enforce the law, and I may observe that it has received statutory support, in the case of solicitors, in section 65 of the Solicitors Act, 1957.”
The concern here is that lawyers, having arranged to have their legal fees determined by the , will be tempted to cross legal and ethical lines for their own profit. This stance was written into Singapore’s statute, in the Legal Professions Act, where Section 18 of the Legal Profession Rules states that
- A legal practitioner or law practice must not enter into any negotiations with a client of the legal practitioner or law practice —
(a) for an interest in the subject matter of litigation or of any other contentious proceedings; or
(b) except to the extent permitted by any applicable scale of costs, for remuneration proportionate to the amount which may be recovered by the client in the proceedings.
Under this statute, lawyers can be charged if they arrange for any sort of payment structure with a client that allows them a financial stake in the outcome of the proceedings. This has remained a consistent stance in the Singapore Courts, where just this February the Law Society filed an action against one of its members for entering a contingency fee arrangement with his client.
Faced with the illegality of contingency fee arrangements, accused persons facing criminal charges who cannot afford legal representation can only turn to the Criminal Legal Aid Scheme.
To qualify for legal aid under the Criminal Legal Aid Scheme in Singapore, one must first pass the Means Test, a test which determines if an individual is in sufficient financial need to deserve legal aid. In order to pass this test, one must have a disposable income of not more than $10,000 per annum and a disposable capital of not more than $10,000. In 2013, only 17% of the population met this criterion, leaving 1 in 6 Singaporeans and PRs outside the coverage of the Scheme. Under the initial scheme, Only 431 people were given help in 2014 and 427 in 2013.
There have been efforts by Singapore’s Parliament to address this, and with the passing of the Legal Aid and Advice Act in 2013, the financial threshold that needed to be met was lowered under the enhanced Legal Aid scheme. The latest statistics from the Ministry of Law show that 2,433 people were helped under the enhanced scheme last year – more than five times the people who received help in 2014. While this shows good progress, the new scheme only covers 25% of the country’s population.
Steps toward the legalisation of contingency fee arrangements have already been taken in other countries. With the passing of the Access to Justice Act 1999 in the UK, the courts from which we took the basis of the statute in the first place have already moved to allow for such arrangements, albeit not in the context of criminal proceedings. It has also been already partially legalised in Singapore under the Civil Law (Amendment) Act 2016, where third party funders of case proceedings are allowed, provided the solicitor does not directly gain any financial benefit.
The main issue that concerns the legalisation of such fees is that of legal ethics, where lawyers might abuse the system, crossing moral lines for the sake of economic gain. However, is there not a line already drawn with the current system of billable hours, where lawyers are “rewarded” for slow, inefficient work. Making the ethical decision for professional conduct might extend in a similar manner to lawyers, should the contingency fee payment be legalised in Singapore. If Singapore’s Courts and Parliaments find a way to reconcile the ethical and legal considerations of this issue, Singapore could take a big step toward having complete access to justice for its citizens.
Written in 2018 by Darryl Lau