The Ministry of Law, together with the Singapore Department of Statistics, carried out a comprehensive census of law firms and lawyers in Singapore in November 2001. The objective was to help formulate policies to better position the legal services sector to face the challenges ahead.

Three separate surveys were conducted, targeted at local law firms, local lawyers and former lawyers who had ceased practice between 1999 and 2001 (see Annex A). A total of 77 questions (including more than 200 part questions) were posed. The respective response rates to the surveys were:-

• 99% (748 out of 753) for law firms;
• 75% (2,331 out of 3,120) for lawyers; and
• 38% (238 out of 624) for lawyers who had ceased practice.

The information gathered from the Census suggests a legal industry undergoing consolidation and restructuring, against the backdrop of a weak economy and stagnation of revenue from traditional sources such as litigation and conveyancing. The legal profession is facing increasingly intense competition for business and talent and the need to adopt sound business and management practices, while upholding its traditional professional standards.

A summary of the main findings of the Census is set out at Annex B. The key ones are highlighted below:-

Large law firms fared considerably better compared to the medium-sized and small firms in terms of greater revenue per lawyer, higher profits per partner and better growth. There was room for medium-sized law firms to achieve greater synergy and efficiency, as well as band together to achieve a critical mass for sustained growth. As for the small firms, they have to decide how to regroup, re-engineer, move into new niches or review their roles in order to survive as inevitable changes impact upon the overall legal services sector.

Law firms had expected revenue from traditional sources such as conveyancing and litigation to stagnate. Conveyancing scale fees have been liberalised while the litigation process has also become more efficient. On the other hand, markets dominated by larger firms, such as general corporate law, showed promising growth potential. There were also significant contributions from relatively new areas of practice such as intellectual property (IP) law and info-communications technology (ICT) law. These shifts will likely encourage a further redistribution of legal talent as practitioners seek to specialise further or transit into alternative areas of practice that are likely to be in demand in the future.

Many medium-sized and large law firms were taking on regional as well as international cases with cross-border transactions. Many other firms surveyed also indicated interest in entering overseas markets, with Malaysia, China and Thailand the top 3 choices. There were also a good number of firms involved in supplying international and domestic arbitration services.

The legal profession has been in a state of flux with significant numbers of lawyers leaving the profession, especially the younger ones. Lawyers who had left expressed their discontent with their long working hours, heavy workload and salaries which they felt did not compensate them adequately for their toils. Some found alternative employment that offered higher pay and fewer working hours while others moved on to pursue their own interests. However, the majority of lawyers preferred to stay in the wider legal services industry as in-house legal counsel or as lawyers in offshore or overseas law firms.

There are signs that the law firms are gearing up to meet these challenges. Many firms indicated they were planning to merge, with some intending to form Joint Law Ventures or Formal Law Alliances. Many small firms and sole-proprietorships also indicated they had plans to cease practice.

The Ministry of Law will examine further the areas of concern highlighted through the Census and their policy implications. In doing so, the Ministry of Law will be working closely with members of the legal fraternity and other relevant agencies to explore how best to continue to strengthen the legal infrastructure and industry in Singapore to meet the challenges of an increasingly competitive economic environment.

The full scope and content of the information gathered from the study is available in the publication, Census of the Legal Industry and Profession, 2001.

Issued by: Ministry of Law

Annex A

As part of the study, three surveys were conducted for three distinct groups of respondents - the law firms, the lawyers and lawyers who had ceased practice:-

In conducting the Census, the Ministry of Law waived the rights to information on individual firms and lawyers as an assurance of the confidentiality of the information obtained. The Ministry of Law was granted access only to the aggregated information obtained and compiled by the Singapore Department of Statistics.

The Singapore Department of Statistics received the last of the survey returns in April 2002. Thereafter, a total of 116 tables of statistics on the legal services industry and profession and another 15 tabulations of the written comments were compiled for publication.

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Annex B

Of the 729 law firms in operation in 2000 that responded to the Census of the Legal Industry were 631 small firms, 83 medium-sized firms and 15 were large firms. The total revenue of all Singapore law firms was estimated to be $849 million based on the survey returns.

Larger law firms had higher revenue per lawyer. Small firms contributed 22% of the revenue in the legal services industry but were the largest employer of Singapore lawyers, absorbing 36% of the lawyers in 2000. Medium-sized firms contributed 31% of the revenue and employed 29% of the lawyers. Large firms contributed 47% of the revenue but employed only 35% of the lawyers.

Larger law firms also operated with a wider base of legal assistants. For every 100 equity partners, there were 17 legal assistants with the small firms, 150 legal assistants with the medium-sized firms and 340 legal assistants with the large firms.

Larger law firms reported they had reaped higher profits and enjoyed better growth. The net profit per equity partner in a large firm in 2000 was $740,000, more than 7 times that earned by an equity partner in a small firm. Large firms experienced a cumulative revenue growth of 52% from 1998 to 2000 compared to 15% reported by the small firms.

Smaller firms had a higher cost structure. Small firms expended 54% of their revenue on operating costs, compared to 18% incurred by the large firms. Larger firms also employed more legal assistants to help lower their manpower costs.

Litigation and Alternative Dispute Resolution, General Corporate Law and Conveyancing and Real Property Law were the top three legal practice in Singapore by revenue in 2000. Large firms led the market in General Corporate Law with 69% of the market share. The revenue generated from Litigation and Alternative Dispute Resolution was more distributed among the law firms. Small firms and large firms held 30% and 42% of the market share respectively. Small firms and large firms also held 28% and 36% of the market in Conveyancing and Real Property Law respectively.

Law firms expected Litigation and Alternative Dispute Resolution to generate 41% of the industry revenue in 2003, about the same as 2000. Law firms anticipated General Corporate Law to generate 25% of the industry revenue in 2003, an expansion from 22% in 2000. There was also a 36.5% revenue increase for General Corporate Law from 1999 to 2000. Law firms also projected a contraction in Conveyancing and Real Property Law from 21% of the industry revenue in 2000 to 15% in 2003. In addition, law firms forecasted that Intellectual Property Law & Info-communications Technology Law would account for 9% of the industry revenue in 2003, a slight increase over 8.7% in 2000. There was also a 21.8% revenue increase for Intellectual Property Law & Info-communications Technology Law from 1999 to 2000.

Many medium-sized and large law firms were taking on regional and international cases with cross-border transactions. 76 law firms, of which 27 were medium-sized firms and 5 were large firms, handled cases which involved Singapore law and at least one other national law. 176 firms, or 24% of all law firms surveyed, indicated they had been or felt they were in a position to offer legal services to another country. The top 3 countries cited were Malaysia, China and Thailand. In the area of arbitration, 65 firms reported revenue of $13 million from international and domestic cases, acting either in the capacity of arbitrator or as counsel for one of the disputing parties.

More law firms sent their lawyers for attachment stints with foreign law firms overseas. 17 law firms indicated they had sent lawyers for attachment stints for up to 12 months. The firms commented that these attachment stints had been successful in transferring expertise from foreign firms to local lawyers.

Law firms had harnessed technology to boost their productivity and enhance the value of their services to clients. Use of emails, LawNet and EFS (Electronic Filing System) were found to be relatively pervasive. For instance, 72% of law firms used email to receive instructions and advise clients. 56% of law firms had a subscription to LawNet and 69% of law firms installed systems to support EFS.

There are signs that law firms are restructuring. 118 firms, including 4 large and 13 medium-sized firms, indicated that they were planning to merge with another local firm. 84 firms also indicated plans to reduce focus or cease some areas of practice. Among them, 55 firms cited conveyancing as an area on which to reduce focus or to cease practice.

More young lawyers were leaving the profession. 74% of ex-lawyers who responded to the survey had worked for less than 7 years before they ceased practice. Female respondents aged less than 35 years represented 49% of all survey respondents and formed the largest group of lawyers who ceased practice.

The top 3 reasons for leaving the profession cited by ex-lawyers who responded to the survey were, namely, "Heavy workload and long working hours", "Remuneration is not commensurate with workload and stress" and "To pursue other interests, aspirations and career".

4 out of 10 ex-lawyers indicated they had a pay rise and fewer working hours in their occupation after they had ceased practice. Only 1 out of 10 indicated they chose to work longer hours. Another 2 out of 10 ex-lawyers stayed out of the job market.

The majority of lawyers who left practice stayed in the wider legal services industry. 54% of ex-lawyers took up law-related positions, primarily as in-house counsels and lawyers in offshore firms. 25% of ex-lawyers exited the legal services industry completely to work in positions unrelated to law.