In January 2019, the Bar Council of Malaysia submitted to the Attorney General the proposed reforms to the Legal Profession Act (LPA). One area that will be amended will be the provisions involving foreign lawyers and foreign law firms entering Malaysia to advise clients. I have written about Malaysia’s liberalisation of legal services previously.
The UK Law Gazette highlighted some concerns of further restrictions on foreign lawyers being able to enter Malaysia to advise on non-Malaysian law aspects. I clarify this area of proposed reform under Malaysian law.
Under the LPA. the relevant section that governs the fly-in-fly-out requirements is section 37. Essentially, section 37(2A) of the LPA sets out that any unauthorised person who does any act which is customarily within the function or responsibility of a Malaysian advocate and solicitor, including but not limited to advising on law, whether Malaysian law or otherwise, shall be guilty of an offence.
Proposed Additional Requirements for Fly-In-Fly-Out
Following from that, section 37(2B) of the LPA sets out the limited fly-in-fly-out exception for a foreign lawyer who will enter Malaysia to advise on non-Malaysian law.
I set out below the comparison of the existing section 37(2B) and the proposed additions in the red highlights:
From the above, you can see that there is already an existing limit of 60 days in a calendar year for a foreign lawyer to enter Malaysia to provide legal services. The Bar Council has proposed two additional requirements.
First, the foreign lawyer has to either provide such legal services within a registered foreign law firm in Malaysia or a Malaysian law firm, or is brought in to Malaysia by such a registered foreign law firm or Malaysian law firm.
Second, the registered foreign law firm or the Malaysian law firm shall notify the Bar Council of the entry of the foreign lawyer into Malaysia within 7 days of the foreign lawyer’s arrival.
I also add that there is no proposed change in the law for foreign lawyers acting in arbitral proceedings in Malaysia. Section 37A of the LPA will remain unchanged in that all these restrictions on fly-in-fly-out will not apply to arbitral proceedings in Malaysia. Foreign lawyers can continue to act as arbitrators, to represent parties, and to advise and assist in arbitral proceedings.
These proposed amendments are quite similar to section 50B(2) of Hong Kong’s Legal Practitioners Ordinance. Section 50B(2) allows for a fly-in-fly-out provision of 90 days in any 12-month period and where the foreign lawyer offers his services from within a foreign law firm or from within a Hong Kong firm.
(2) A person who is qualified to practise foreign law and who—(a) from within a foreign firm but not as a foreign lawyer; or(b) from within a Hong Kong firm but not as a solicitor or foreign lawyer,offers his services to the public as a practitioner of foreign law, does not commit an offence under subsection (1) so long as he does not so offer his services in any 12 month period for more than 3 continuous months or more than 90 days.
First, there may be some ambiguity on the requirement that “the foreign lawyer does so from within a registered foreign law firm … or a Malaysian law firm“. Does this mean that the foreign lawyer would have to park himself physically in the premises of the foreign law firm or Malaysian law firm? The foreign lawyer cannot attend meetings with clients outside of the firms’ premises?
Second, I can see why the Bar Council wants the notification requirement. This is in order to effectively monitor the 60-day limit within one calendar year. The fly-in-fly-out provision and these restrictions are to strike a balance. On the one hand, to allow for liberalisation of foreign lawyers to enter Malaysia to allow clients to have access to non-Malaysian law advice. On the other hand, if foreign lawyers are regularly flying in to Malaysia to advise, then these foreign lawyers and foreign firms should consider establishing a registered foreign law firm instead or establish the international partnership (i.e. joint venture) with a Malaysian law firm.
Third, it remains to be seen if the Bar Council will also set out further rules or regulations to govern the conduct of the fly-in-fly-out foreign lawyers. It may be that there is no jurisdiction to impose disciplinary or regulatory restrictions on these type of foreign lawyers. But with the proposed mandatory link between the fly-in-fly-out foreign lawyer and the s0-called ‘sponsoring’ registered foreign law firm/Malaysian law firm, Bar Council would have powers to impose rules and regulations on these ‘sponsoring’ registered foreign law firm and Malaysian law firm.
To get an idea of the scale of the foreign law firms advising Malaysian clients, you can have a read of the major legal directories. Chambers Global ranks expertise based abroad advising Malaysia in Corporate & Finance, Projects Infrastructure and Energy, and Shipping. Legal 500 also ranks the foreign firms based abroad and with an active Malaysian practice. Hence, we see the likes of Allen & Overy Singapore (which markets itself as having a dedicated Malaysian desk), Clifford Chance Singapore (also featuring its Malaysia work), and Norton Rose Fullbright Singapore all being ranked.
I think the presence of international law firms, with their depth of experience, improves the entire ecosystem in Malaysia. Malaysian clients also easily get access to the non-Malaysian law advice that they require. Malaysia’s Bar Council will then have a delicate balancing act in terms of regulating the presence of such foreign law firms and foreign lawyers flying in.