Fatal flaws in Malaysia’s Legal Profession (Group Law Practice) Rules 2018

Almost five years after the first draft rules to introduce the “group practice” model to Malaysian law firms, the Legal Profession (Group Law Practice) Rules 2018 (“GLP Rules”) have been gazetted, and will be coming into operation on 30 June 2018. The GLP Rules are available here.

The group practice model — which allows law firms to band together in a larger set-up and share resources while retaining the separate firm identities — has the potential to greatly benefit smaller law firms in particular.

Unfortunately, the GLP Rules that have been finalised and put forward by the Bar Council are flawed, and this will very likely result in the interest in, and benefits from, the group practice model being severely limited.

I have previously (jointly with several other lawyers) raised my concerns about the flaws in the draft version of the GLP Rules to the Bar Council, but the Bar Council has opted to retain some of the more damaging flaws in the final version. I will not repeat all the previously-expressed concerns, as they are available at the following links:

  • Memo to the Bar Council on the Proposed Legal Profession (Group Practice) Rules 2013 (26 July 2013). A group of members of the Malaysian Bar (Edmund Bon Tai Soon, Fahri Azzat, Foong Cheng Leong, Marcus van Geyzel, New Sin Yew, Seira Sacha Abu Bakar, and Shanmuga Kanesalingam) submitted a memo dated 29 July 2013 to the Bar Council (in response to a request for feedback from the Small Firms Committee on the draft group practice rules). In particular, we explained why the restriction on individual member firms from having branch offices is unnecessary and unjustifiable.
  • Letter to the Bar Council on the Proposed Legal Profession (Group Practice) Rules 2013 (10 February 2014). Frustrated with the lack of progress by the Bar Council in revising and finalising the draft rules, a group of small law firms (Messrs Bon Advocates, Messrs Foong Cheng Leong & Co, Messrs Nizam Amer & Sharizad, Messrs Peter Ling & van Geyzel, Messrs Raj, Ong & Yudistra, and Messrs Rashid Zulkifli) proceeded to revise the draft rules and submit this to the Bar Council via a letter dated 7 February 2014. These revisions were in line with the comments made in the earlier memo dated 29 July 2013, but proposed to increase the limit on the number of lawyers in each member firm from five to a more reasonable eight.
  • Bar 69th AGM, 14 March: Group Practice motion filed (7 March 2015). On 6 March 2015, a motion regarding the proposed group practice rules was filed to be debated at the Malaysian Bar’s AGM on 14 March 2015. The motion was proposed by Edmund Bon Tai Soon, and seconded by Amer Hamzah bin Arshad, Foong Cheng Leong, Yudistra Darma Dorai, Abdul Rashid bin Ismail, Ong Yu Jian, and Jamie Wong Siew Min. The motion contended that the restrictions in the Bar Council’s proposed rules were unreasonably onerous, and pointed out that Singapore and Hong Kong have introduced the group practice model with far fewer restrictions. The Bar Council’s proposed restrictions that were said to be unreasonable included the limit of five lawyers per member firm, and the prohibition on member firms from having branches. The motion also referred to and attached the earlier memo dated 29 July 2013 and letter dated 7 February 2014 with revised draft rules.

I have also previously shared my comments on the Bar Council’s restrictions in the proposed group practice rules in an interview with The Malay Mail Online on 6 November 2015.

The GLP Rules that were finalised by the Bar Council and that will come into operation on 30 June 2018 maintain the unnecessary and unjustifiable restrictions on member firms from having branch offices and from having more than five lawyers. Throughout the consultation process, the Bar Council has not offered any explanation or justification for these restrictions.

From a practical perspective, a law firm with even four lawyers would be discouraged from joining a group practice, as this would restrict the firm from expanding in future, or even temporarily hiring two more lawyers as part of a potential growth strategy. It would not make commercial sense for such a firm to invest money, time, and effort into forming and growing a group practice if the unreasonable five-lawyer limit may mean that a successful group practice that results in increased profitability and potential growth would see the firm having to exit the group practice that it has helped to establish and build up.

With these flawed GLP Rules, it appears that the Bar Council is simply paying lip service in appearing to introduce the group practice model which could potentially benefit members of the legal profession in Malaysia, but imposing unnecessary and unjustifiable restrictions that will ensure that it will be impractical for most law firms to successfully adopt the group practice model.

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