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THE LAW SOCIETY OF SINGAPORE. Learning Community Dialogue 1/2012 Allowing Singapore law practices more flexibility to grow and enhance international competitiveness . Mr Alvin Chen Chief Legal Officer and Director of Representation and Law Reform 7 June 2012. Insert document name.

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

THE LAW SOCIETY OF SINGAPORE

Learning Community Dialogue 1/2012 Allowing Singapore law practices more flexibility to grow and enhance international competitiveness

Mr Alvin Chen

Chief Legal Officer and

Director of Representation and Law Reform

7 June 2012

Insert document name


Topics

THE LAW SOCIETY OF SINGAPORE

Topics

  • Introduction

  • SLPs employing corporate structures

  • Lawyers practising concurrently or accepting executive appointments in related law corporations

  • Collaborations between SLPs and FLs/FLPs


Topics1

THE LAW SOCIETY OF SINGAPORE

Topics

  • Introduction

  • SLPs employing corporate structures

  • Lawyers practising concurrently or accepting executive appointments in related law corporations

  • Collaborations between SLPs and FLs/FLPs


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Key Dates

The Law Society Of Singapore4


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Key Legislative Changes

The Law Society Of Singapore5


Topics2

THE LAW SOCIETY OF SINGAPORE

Topics

  • Introduction

  • SLPs employing corporate structures

  • Lawyers practising concurrently or accepting executive appointments in related law corporations

  • Collaborations between SLPs and FLs/FLPs


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Summary of key changes

Rationale: to encourage SLPs to form a related law corporation to benefit from 2 tax incentives:

Development and Expansion Incentive

(Annex A – MinLaw Press Release 31 May 2012)

International Arbitration with Hearings in Singapore

(Annex B – MinLaw Press Release 31 May 2012. Note: enhancements wef 1 July 2012)

The Law Society Of Singapore7


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Concept of “related”

New/Subsidiary Existing/Parent

Sole Proprietorship OR Partnership OR

Limited Liability Law Partnership OR Law Corporation

Law Corporation

Rule 5 PCR

Rule 1A LCR

Rule 1A LLLPR

Shareholder

Director, consultant or employee

Related

The Law Society Of Singapore8


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

The Law Society Of Singapore9


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

The Law Society Of Singapore10


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Concept of “related”

New/Subsidiary Existing/Parent

Sole Proprietorship

Law Corporation

Sole Proprietorship

Related

S1

SP1, C1 or E1

D1, C1 or E1

SP1, C1 or E1

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Concept of “related”

New/Subsidiary Existing/Parent

Partnership

Law Corporation

Partnership

(2-man)

Related

S1, S2

S1=P1, S2=P2

D1, D2

D1=C1, D2=E1

The Law Society Of Singapore12


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Concept of “related”

New/Subsidiary Existing/Parent

Partnership

Law Corporation

Partnership

(3-man)

Not Related

S1=P1, S2=P2, S3=P3

S1, S2, S3

D1, D2, C1

D1, D2 and C1 not P, C or E

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Concept of “related”

New/Subsidiary Existing/Parent

LLP/LLC

Law Corporation

LLP/LLC

Related

S1=LLP/LLC

S1

D1, D2, C1

D1=P1, D2=P2, C1=P3

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Special rules applicable to related law corporations

  • Name of law corporation can be similar to related SLP: Rule 10 LCR

  • Concurrent appointments allowed: Rule 12 LCR/Rule 12 LLLPR

  • Confidentiality obligation relaxed: Rule 24(1) PCR read with Rule 11 LCR/section 81E LPA and Rule 10 LLLPR/section 81T LPA

  • Holding of shares: Rule 13 LCR/Rule 11 LLLPR

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Possible Issues to Consider

  • Costs of setting up related law corporation (including PI)

  • Better to convert law practice to law corporation to get the benefit of tax incentives?

  • Apportionment of expenses/work for same matter handled by both subsidiary law corporation and parent law practice

  • Extent of benefit of tax incentive(s)

  • Type of work that can be done by a related law corporation

The Law Society Of Singapore16


Topics3

THE LAW SOCIETY OF SINGAPORE

Topics

  • Introduction

  • SLPs employing corporate structures

  • Lawyers practising concurrently or accepting executive appointments in related law corporations

  • Collaborations between SLPs and FLs/FLPs


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Previous position

Rule 5(1) PCR: Lawyer shall not practise either as consultant or member of more than one law practice.

Rule 11 PCR: Lawyer shall not accept any executive appointment in any company.

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Now

Rule 5(3) PCR: Lawyer may practise concurrently in 1 law corporation and another law practice related to the law corporation.

Rule 11(1)-(3) PCR: Lawyer shall not accept any executive appointment in any company other than: - a company of which each shareholder is the sole proprietor or partner of the law firm OR a LLP/LLC OR a partner of the LLP/director and shareholder of the LLC; or

- the LLC.

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Rationale for new Rule 11 PCR

To allow SLs working in a SLP to hold executive appointments in companies set up by the SLP for related activities e.g. patent agent and other IP related services.

The Law Society Of Singapore20


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Possible Issues to Consider

  • Company under Rule 11 PCR need not be a related law corporation? If so, no concurrent practice allowed (if company is merely a law corporation)?

  • Can company carry out non-law related activities? If so, still limited by section 83(2)(j) LPA, Rule 10 PCR and Council PDs.

  • Is lawyer holding executive appointment in company still bound by PCR?

  • Meaning of “executive appointment”.

  • PC implications for concurrent practice.

The Law Society Of Singapore21


Topics4

THE LAW SOCIETY OF SINGAPORE

Topics

  • Introduction

  • SLPs employing corporate structures

  • Lawyers practising concurrently or accepting executive appointments in related law corporations

  • Collaborations between SLPs and FLs/FLPs


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

4 categories

  • SLPs which employ foreign lawyers in their local practices

  • SLPs which tie up with FLPs based overseas

  • SLPs which tie up with FLPs based in S’pore either through JLV or FLA

  • QFLPs

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Foreign Collaboration Requirements

Rule 3A ISR:

1. SL:FL ratio of at least 2:1

2. SL partner: FL partner ration of at least 2:1

3. MP must be SL and at least 2/3 of voting rights in management/executive committee must be held by SLs

4. At least 2/3 of firm’s equity share held by SLs

5. At least 2/3 of voting rights in firm vest in SLs

6. Cumulative amount of payment out of profits by SLP to FLs and/or FLPs during any financial year not to exceed 1/3 of SLP’s profits

(1-5: general; 6: profit)

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

SLPs which employ FLs within their local practices

  • FLs can take higher profit and equity share in SLP – from 25% to 33%.

  • FLs with existing approvals to hold up to 25% need to apply to AG for approval to increase holdings to 33%.

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

SLPs which tie up with FLPs based overseas

  • FLs within overseas FLP can take higher profit and equity share in SLP – from 25% to 33%.

  • FLP based overseas can also take profit and equity share in SLP up to 33%

  • Concurrent partnerships permitted in SLP and overseas FLP for lawyers who are partners in overseas FLP and granted approval to take profit and equity share in SLP

     AG’s approval required for all

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

SLPs which tie up with FLPs based in Singapore

  • enhanced FLA framework

    • FLs and FLP can take up to 1/3 share of profit and equity of SLP

    • FLs can concurrently be partners in SLP and FLP BUT AG must be satisfied that no actual or potential conflict of interests

    • QFLPs can enter into FLAs with SLPs

       AG’s approval required for all

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

SLPs which tie up with FLPs based in Singapore

  • enhanced JLV framework

    • FLs and FLP can take up to 1/3 share of profit and equity of SLP

    • both FLs and SLs can concurrently be partners in constituent SLP and JLV BUT AG must be satisfied that no actual or potential conflict of interests

    • QFLPs can enter into JLVs with SLPs

       AG’s approval required for all

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Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

Possible Issues to Consider

  • Is profit-sharing between SLP and FL/FLP allowed?: see sections 130B(7), 130C(7), 130L(1) & new 130L(6) LPA (overrides Rule 39 PCR).

  • Sharing of client information between SLP and FLP in JLV/FLA: see sections 130B(7), 130C(7)

  • Sharing of office premises between SLP and FLP – Council’s approval required? See amended Rule 9 PCR.

  • Concurrent practice in a SLP and FLP based in Singapore not allowed in non-enhanced JLV/FLA scenarios?

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Enquiries

Enquiries

Contact the Representation and Law Reform department at:

[email protected]


Learning community dialogue 1 2012 allowing singapore law practices more flexibility to grow and enhance international competitiveness

THE LAW SOCIETY OF SINGAPORE

Thank You


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