Conditional Fee Agreements in Singapore: When Are They Allowed?

Since May 2022, Singapore lawyers have been able to offer a genuinely new kind of fee arrangement, one where payment depends partly on the outcome of your case. This is a meaningful shift from the traditional model, though it comes with real limits worth understanding clearly. This guide explains exactly when Conditional Fee Agreements are allowed in Singapore, and what they actually involve.

What a Conditional Fee Agreement Actually Is

A Conditional Fee Agreement, commonly known as a CFA, is an arrangement where a lawyer’s fees, or part of them, are payable only in specified circumstances, typically where the client succeeds in their claim or defence. This is distinct from the traditional model of paying regardless of outcome, and represents a genuinely new option introduced under the Legal Profession Act following amendments that took effect on 4 May 2022.

The Crucial Distinction: CFA Versus Contingency Fee

This is the single most important thing to understand before considering a CFA. A CFA is not the same as a pure contingency fee, sometimes called a “no win, no fee” arrangement calculated as a percentage of the damages recovered. Singapore law explicitly prohibits legal fees from being calculated as a percentage or proportion of the sum recovered in any proceedings, meaning true contingency fees, familiar from American legal practice, remain banned here even under the new CFA framework.

The Types of CFA Structures Permitted

Within this framework, lawyers and clients can agree to various structures, including a “win, more fee” arrangement, where the lawyer receives their standard fee plus an additional uplift if the client succeeds, a “no win, no fee” arrangement, where the lawyer receives nothing if the client is unsuccessful, or a “no win, less fee” arrangement, where the lawyer receives a reduced fee regardless of outcome, with a further amount payable only upon success.

Which Types of Proceedings Actually Qualify

CFAs are not available for every kind of legal matter. The framework specifically applies to prescribed categories of proceedings, including international and domestic arbitration, certain proceedings before the Singapore International Commercial Court, and related court and mediation proceedings connected to these. This means CFAs are generally not available for more everyday matters such as personal injury claims, family disputes, or routine civil litigation in the ordinary courts, which remain governed by traditional fee structures.

Requirements Before You Can Enter a CFA

Before a CFA is executed, your lawyer is required to give you specific information about how the arrangement works, and you must sign and date a written acknowledgement confirming you have received and understood this information. You also retain the right to seek independent legal advice before entering into the agreement, a genuine safeguard given how significant this kind of fee arrangement can be.

You Remain Liable for Adverse Costs Even Under a CFA

It is worth understanding this clearly. Even with a CFA in place, if you lose your case, you may still be ordered to pay the other party’s costs, since a CFA only addresses your own lawyer’s fees, not your potential liability toward the opposing side if the court or tribunal orders costs against you.

The Uplift Fee Is Generally Not Recoverable From the Losing Party

If your CFA includes an uplift or success fee on top of your base fee, this additional amount is generally not recoverable as part of any costs order made against the losing party, meaning the uplift genuinely comes out of your own recovery rather than being an extra amount the other side is required to cover.

Disbursements Are Typically Handled Separately

Expenses such as arbitral institution fees, expert witness fees, and other disbursements are usually billed and paid in the ordinary way throughout the matter, separate from the conditional portion of your lawyer’s own fee, since firms are often reluctant to make these third-party costs conditional given the risk of being unable to recover them if the case is unsuccessful.

Why This Framework Was Introduced

The Ministry of Law introduced this framework partly to enhance access to justice, giving individuals and businesses an additional funding option for pursuing meritorious claims they might not otherwise be able to afford, and partly to level the playing field for Singapore lawyers competing internationally in arbitration and SICC-related work, where lawyers in some other jurisdictions have long been able to offer similar arrangements.

How This Fits Alongside Third-Party Funding

CFAs are part of a broader, gradual evolution in how Singapore approaches funding for disputes. Third-party funding, where an external funder covers costs in exchange for a share of any recovery, was permitted for certain categories of proceedings from 2017 onward, and CFAs represent a further, related step in this same general direction, both carved out from Singapore’s traditional, strict prohibition on maintenance and champerty that once made any outcome-linked funding arrangement impermissible.

Getting Independent Advice Before Signing

Given how significant a CFA can be, both in terms of the financial structure and what happens if your case does not succeed, it is genuinely worth taking up your right to independent legal advice before signing one, rather than treating the acknowledgement you sign as a mere formality. Understanding exactly what triggers the success fee, and what your total financial exposure looks like in both the winning and losing scenarios, matters considerably before you commit.

Comparing a CFA Against a Traditional Fixed or Hourly Arrangement

Before choosing a CFA over a traditional fee structure, it is worth genuinely comparing the two. A traditional hourly or fixed fee gives your lawyer no direct stake in the outcome, which some clients find reassuring in terms of the advice remaining entirely objective. A CFA, by contrast, aligns your lawyer’s financial interest with a successful outcome, which some clients find motivating, though it is worth discussing openly with your lawyer how this alignment might, or might not, affect the strategic advice you receive along the way.

Why Firms May Still Be Selective About Offering CFAs

Even within the permitted categories, not every firm will necessarily offer a CFA for every matter, since a lawyer entering into this kind of arrangement is taking on genuine financial risk tied to the outcome of your case. Firms typically assess the merits of a case carefully before agreeing to a CFA structure, meaning the availability of this option in practice depends partly on how strong your lawyer genuinely assesses your prospects to be.

Frequently Asked Questions

Can a CFA be used for a straightforward personal injury claim in the regular courts?

No, personal injury claims in the ordinary courts fall outside the prescribed categories of proceedings where CFAs are currently permitted, so traditional fee structures continue to apply to this kind of matter.

Is there a cooling-off period if I change my mind after signing a CFA?

Certain variation agreements connected to a CFA include a short cooling-off period during which either party can terminate by written notice, though the specific terms depend on your particular agreement, which is worth reviewing carefully.

Can foreign lawyers practising in Singapore also offer CFAs to their clients?

Yes, the CFA framework extends to Singapore law practices as well as certain registered foreign lawyers and foreign law practices operating in Singapore, subject to the same underlying requirements.

Does a CFA mean I pay nothing at all if my case is unsuccessful?

This depends on the specific structure you agree to, since some CFA arrangements still involve some payment regardless of outcome, such as a “no win, less fee” structure, so it is important to understand exactly what your specific agreement provides for before signing.

Can disputes about a CFA itself be resolved without going to court?

Yes, disputes specifically about a CFA, including questions about its validity or termination, are generally first referred to mediation, and if unresolved, arbitration, under relevant Law Society processes, rather than immediately proceeding to litigation.