Conditional fee agreements ("CFAs"), which were previously prohibited under Singapore law, are now allowed for specific contentious proceedings. On 4 May 2022, the framework for CFAs in Singapore came into operation, opening the door for lawyers and clients to enter into a wider range of permitted fee arrangements.
This development has been keenly anticipated in the legal industry, serving to enhance litigation funding in Singapore and support the dispute resolution needs of businesses and individuals. The costs of traversing a commercial dispute can be potentially prohibitive. With the introduction of CFAs, disputants with strong claims will have greater access to justice, being able to pursue their claims without being hindered by cash flow issues.
What is a CFA? – Traditionally, in lawyer-client fee agreements for dispute resolution, lawyers were prohibited from having fees contingent on the outcome of a contentious matter. The new CFA framework allows for lawyers and clients to enter into CFAs, in which lawyers may receive payment of all or part of their legal fees only in specified circumstances (for example, where the claim is successful).
In what situations are CFAs allowed? – The CFA framework applies to Singapore lawyers and law practices, as well as certain registered foreign lawyers and foreign law practices. CFAs are only applicable to certain disputes, including international and domestic arbitration proceedings and proceedings in the Singapore International Commercial Court, as well as related proceedings.
What are the requirements of a CFA? – The CFA framework sets out certain requirements for a valid CFA. This includes requirements on the form of the CFA, the information that must be provided to the client, and the inclusion of certain prescribed terms.
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