It's been a long wait, and I even blogged about this back in 2007, but it does look like Malaysia will be liberalising its legal sector to allow foreign law firms to be set up here. It is also very likely that the amendments to the law will be pushed through this year.
The exact details are still very sketchy and I have not read any official material from the Bar Council on this yet. It does seem though that foreign firms can adopt two different models if they wish to enter Malaysia. The first would be a form of a joint law venture, where the foreign firm would have to JV up with a law firm. The JLV vehicle will then be allowed to practice in selected areas of the law, and this is mainly confined to high-end corporate, Islamic finance and international arbitration work. It would only make sense that this JLV can advise on both foreign and Malaysian law. The question I have is whether the JLV can only advise and practice Malaysian law through Malaysian-qualified practitioners. This again would only make sense, or at least the JLV would naturally need a sufficient pool of Malaysian-trained lawyers in order to supplement any advice or work on Malaysian law.
In terms of the second model, this would be a standalone foreign firm. This sounds similar to Singapore's Qualified Foreign Law Firm vehicle where a foreign law firm would be allowed to set up on its own without the need for a local Malaysian law firm partner. Again, it would seem that the foreign law firm would need Malaysian-trained lawyers to advise on Malaysian law. The exact practice areas for a standalone foreign firm may be very limited though, and I am pretty sure that Islamic finance would be one of the areas. Bank Negara has been very keen on this. Based on the Singapore experience, will there be a tight control and 'audit' process for determining the qualifying foreign law firms for both the entry of the JLV and the foreign firm? Will there be limited licenses?
It is pretty certain that in the end, the foreign firms will only be limited to specific areas of corporate practice, Islamic finance and international arbitration work. Areas such as Court litigation, criminal work, conveyancing and probate would be ring-fenced away.
Once there is such liberalisation, I can see some of the Singapore law firms formalising their branch offices here in Malaysia. Rajah & Tann already has a presence in KL through Kamilah & Chong and similarly Allen & Gledhill through Rahmat Lim & Partners. It will be interesting to see the impact of the liberalisation on the local law firms. One aspect is that it may lead to more competition for firms to gain and retain legal talent. Salaries may go up as a result of that. The other aspect is that it may push local firms to up their game and to improve on the way they practice.
2 comments:
If foreign firms aren't allowed to practice litigation, do you think their entry into the Malaysian scene affect litigators' salaries?
Generally, firm salaries do not differentiate on whether you are practicing corporate or litigation. So if salaries move upwards, then this should cut across the board for both corporate and litigation lawyers.
There may still be areas of law which foreign firms could engage in litigation or litigation-like work, for instance international arbitration, Islamic finance litigation and maritime litigation. We'll have to wait and see what is rolled out under the legal framework.
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