Introduction
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. Three separate surveys were conducted, targeted at local law firms, local lawyers and former lawyers who had ceased practice between 1999 and 2001.
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.
Key Findings
Larger law firms were more profitable and enjoyed better growth prospects
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.
General corporate law was growing in market share, while conveyancing was in decline
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 law firms exporting legal expertise abroad
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.
Trend of lawyers quitting practice expected to continue, but majority remain contributing within the wider legal services industry
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.
Key Statistics
Legal Services Industry
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.
Local law firms employed 3,081 lawyers and approximately 6,000 support staff (both full-time and part-time staff) in 2000. 62% of lawyers in large firms are legal assistants, ie employed lawyers. In contrast, only 14% of lawyers in small firms are employed, the balance of about 77% are sole-proprietors or partners.
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.
Financial Profile Of 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
