(Contributed by R Jayabalan, Chairperson, Bar Council Small Firm Practice Committee)
The Legal Profession (Group Law Practice) Rules 2018, which came into operation on 30 June 2018, is a culmination of the Bar Council’s initiative over the years — through its Small Firms Practice Committee — to introduce rules to permit small law firms to operate through a Group Law Practice while maintain their individuality and remaining as separate entities.
The Legal Profession (Group Law Practice) Rules 2018 had been drafted by the Bar Council, approved by the Attorney General under section 77 of the Legal Profession Act 1976, and gazetted on 25 June 2018.
A copy of the Legal Profession (Group Law Practice) Rules 2018 (in Bahasa Malaysia and English) is accessible here.
The Objective
Up to five small firms are allowed to operate as a Group Law Practice, from a common premises with shared facilities, resources and infrastructure. By operating as a group, the small firms can reduce their operating costs, increase their skill sets, and maximise their potential, marketability and competitiveness in an increasingly competitive legal environment.
The Benefits
By operating from a common premises and sharing facilities and resources — such as furnishings, equipment, subscriptions, library, and staff — small firms can reduce their operating costs. This is the most striking benefit.
In addition, by operating as a group with several firms doing work in various areas of law, the small firms will be able to offer a wider range of legal services, thus increasing their marketability and attractiveness to potential clients. This will result in a higher level of client procurement and client retention for small firms.
Small firms will be able to promote themselves as a larger “firm”, become more attractive to clients, and draw higher fee-earning work. Clients — especially “big clients” — will have more confidence to entrust the small firms with complex and high-fee-earning work.
The level of job satisfaction in legal practice will also improve. Sole proprietors and small partnerships will no longer feel isolated in their office and practice, as there will be increased opportunities for consultation, legal discourse and networking. The group practice setting will benefit younger lawyers, as they will have reliable fellow practitioners within arm’s reach, who can provide guidance and mentoring. It will also be an easy source of referrals for small firms.
Group Practice in Other Jurisdictions
In preparing the framework for Group Law Practice, the Bar Council studied the group law practice models in Australia, Hong Kong and Singapore.
In Hong Kong, two or more firms may operate from the same address as separate firms in mutual cooperation. The group law practice is not a legal entity or partnership, and is identified by a Chinese or English approved name that includes the term “Group Practice”. A firm in the group may use the group name in conjunction with the law firm name, but the latter should carry more prominence. The group is to be managed by a company whose directors and shareholders are employees under the group, and the company cannot engage in any activity other than the management of that group law practice.
In Singapore, two or more firms can practise under a group name as separate firms in mutual co-operation. The group is not a partnership, and shall bear an approved name that includes the words “Group Law Practice”. A law firm in the group can use the group name with its firm name. The group is to be managed by a manager. The firms in the group may operate a common office account to meet the group’s common expenses. Each firm in the group must still maintain its own office account and client accounts.
Main Features of a Group Law Practice
The Bar Council will maintain a register of Group Law Practice. Firms that wish to operate as a Group Law Practice must apply to the Bar Council for approval.
A Group Law Practice shall consist of between two to five small law firms operating from a shared premises at a common address. A small firm is a firm with not more than five advocates and solicitors, and without a branch office. A Group Law Practice cannot have a branch. A firm cannot be a member of more than one Group Law Practice.
A Group Law Practice is to bear a name approved by the Bar Council, which includes the words “Group Law Practice” or “Amalan Undang-Undang Berkumpulan” as part of its name. The name should not be one that is or may reasonably be regarded as being, among others, ostentatious, misleading, sensational or in any other way unbefitting the dignity of the legal profession, or is so similar to other existing Group Law Practices as to be likely to cause confusion.
The name of a Group Law Practice is to be displayed on a nameplate outside the premises of the Group Law Practice, and the nameplate shall also display the names of all the firms in the group. The nameplate shall be in such form as determined by the Bar Council.
A firm in a Group Law Practice shall use the Group Law Practice name together with the name of the firm in its documents and stationery — including letterheads and business cards — provided that the firm’s name shall be more prominent than the Group Law Practice’s name.
The Group Law Practice is not a legal entity, and a notice to this effect is to be displayed prominently within the office of the Group Law Practice. It is not a partnership — the firms cooperate with each other without being partners — and a notice to this effect is to be given to the clients of the respective firm. Each firm in the group is to be liable for its own debts and liabilities and bear its own professional indemnity insurance premium, and subscriptions and levies payable to the Bar Council and the Bar Committee.
Each firm in the Group Law Practice continues to exist as a separate legal entity, and shall maintain its own office account and its client accounts. However, any firm in a Group Law Practice may operate a common bank account for the purpose of meeting the common expenses of the group.
All the firms in a Group Law Practice must operate from a common address or premises and may share facilities and infrastructure such as staff, subscriptions, furnishings, equipment and library.
A firm which joins or withdraws from a Group Law Practice must notify the Bar Council of the same, in writing, within fourteen days.
A firm in a Group Law Practice may request another firm in the same group to undertake work instructed by a client of that firm, provided that the client has consented in writing. A firm in a Group Law Practice may act for a party in a matter where another firm in the same Group Law Practice is acting for the other party in the same matter, provided that both parties have given their consent in writing. A notice to this effect shall be displayed prominently within the office of the Group Law Practice.
The sole proprietor (if any) of a firm in a Group Law Practice shall, with the permission of the Bar Council, appoint another firm in the group to act in his or her stead in the event of incapacity or death.
In line with the introduction of the Group Law Practice, Ruling 7.03 of the Rules and Rulings of the Bar Council — that prohibited sharing of premises by law firms — has been amended to allow firms operating as part of a Group Law Practice to share premises.
The Group Law Practice is an innovation in legal practice introduced by the Bar Council, to provide more practice options for Members of the Bar. The Group Law Practice does not change the fundamentals of the conventional firm-based practice, but has the potential to add more value and quality to small firms’ practice.
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