Will Singapore Immigration Politics Impact Law Firms?

, The Asian Lawyer

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protest against the government at Hong Lim Park on February 16, 2013 in Singapore

Singapore’s government has long sought to enhance the island nation’s status as a hub for the global financial and legal services industries. But that goal is potentially coming into conflict with populist sentiment against increased immigration by foreign workers.

Though foreign lawyers and firms have so far not been specifically targeted, a number who have lived and worked in Singapore for years say they are worried the profession will eventually be affected by more general measures being implemented in response to the public outcry.

There is also more immediate concern that immigration politics may factor in government decisions on renewal of Qualifying Foreign Law Practice (QFLP) licenses, which allow designated foreign firms to practice local law in certain areas. In exchange, those firms agreed to recruitment and revenue targets for their Singapore offices, targets that a number say they will not meet.

“You do sense a greater degree of nationalism creeping in,” says the head of one global firm’s Singapore office. “Going forward, it might be more difficult to bring people here from elsewhere in the network.”

The Singapore-based lawyers who spoke to The Asian Lawyer uniformly requested anonymity because of the political sensitivities involved. Some are with firms that are in the process of seeking renewal of their QFLP licenses.

Though discontent with the immigration-friendly policies of the ruling People’s Action Party has been long-simmering, a government proposal earlier this year to counteract the country’s low birthrate and aging demographic profile by boosting population from 5.3 million today to 6.9 million in 2030 has become a rallying cry for the political opposition. It has also sparked a series of large protests in a country long known for its social order.

As elsewhere in the world, much of the anger is focused at low-skilled migrant workers, who are seen as a drain on social services. But there is also some bitterness directed at highly skilled expatriates from the West and elsewhere in Asia—many Singaporeans think they drive up living costs for everyone else and taking well-paid jobs that might otherwise go to locals. That group includes foreign lawyers, whose numbers have almost doubled in the past six years to over 1,000 today.* The number of local lawyers has also grown in that time but at a much lower rate.

Singapore has long been a welcoming destination for expats, and they are highly visible in the country’s business districts. Though he doesn’t see that changing anytime soon, one Western lawyer who has lived and worked in Singapore on and off for almost two decades says there has been a palpable change in mood over the past year or so.

“I’ve heard several people here say they’re feeling the resentment,” he says. The lawyer says the PAP, which has held power in Singapore for some 50 years, clearly feels pressure to act after the opposition did better in the 2011 election than it has ever done before.

“They’ve felt the need to respond to the criticism that things are too expensive,” he says.

In September, the Singaporean government announced new rules requiring companies to “consider Singaporeans fairly” before applying for permits for foreign workers. Starting next August, employers will need to advertise positions on a government-sponsored website before giving jobs to expats, and their hiring patterns will be scrutinized and benchmarked against similar companies to see if they are acting in a discriminatory manner.

A number of other countries have similar policies, and it remains to be seen how hard a line Singapore takes on new employment passes. The Singapore managing partner says seniors lawyers are unlikely to be affected—jobs that pay a base salary of over $9,560 per month are exempt from the advertising requirement. Moreover, Singapore heavily encourages international firms to base regional managing partners and practice heads there. But support staff and some junior associates could be a different story.

Another partner with an international firm echoed that worry. “We are concerned that the next time we apply for work passes for some of our support staff, this will be an issue,” he says.

Still, many lawyers say Singapore has been committed for so long to turning itself into a leading international legal and financial center that they simply can’t see the government letting things go too far.

“I’m really not too worried,” says the Asia managing partner for one U.K. firm. “Singapore is still very much in the business of encouraging professionals to operate there. The fact that you might have competing constituencies in Singapore or anywhere else is not that unusual.”

The six international law firms that were given the first QFLP licenses in December 2008—Allen & Overy, Clifford Chance, White & Case, Latham & Watkins, Norton Rose Fulbright and Herbert Smith Freehills—may soon find out if the Singaporean government is taking a new approach to the global legal profession. Their five-year licenses are currently up for renewal.

In designing its policies, the Ministry of Law has long kept three major goals in mind: to bolster Singapore’s status as an international legal center, to create more job opportunities for local lawyers and to facilitate the transfer of skills and know-how from the global profession into the local one. It’s been a matter of debate whether the QFLP program has proven effective in furthering the last two goals in particular.

In a speech about the QFLP program last year, Law Minister K Shanmugam noted that the six firms had added a combined 200 lawyers to their Singapore head counts since the end of 2008. But he also acknowledged that two-thirds of those had been foreign-qualified expats rather than local lawyers.

Sources at some of those firms have acknowledged to The Asian Lawyer that they are not going to hit the hiring or revenue targets they set in their QFLP applications. One source says questions about local hiring are expected to dominate the renewal process.

Singapore’s Ministry of Law responded to questions about its review of firms’ QFLP licenses with the following statement: “The QFLP licenses were awarded based on the firms’ proposals and commitments, which include manpower commitments for their Singapore office. The fulfillment of their manpower commitments will be one of the factors taken into account together with other commitments made by the firm when the QFLP licence is due for renewal.”

One senior partner with a QFLP firm says he think it’s unlikely his firm will lose QFLP status for falling short in terms of hiring. He says the Singapore government will likely be reasonable in understanding why firms might not be able to meet targets set in 2008, just before the global financial crisis. The partner expressed concern that the government could press QFLP firms to expand into new practice areas in order to boost local hiring.

“The most important question for us is whether expanding into new practices makes economic sense,” he says.

Another QFLP firm’s Singapore office head agreed, noting that the market has become much more competitive in the past few years, with a large number of new firms entering the market. That has made it much harder for the QFLP firms to meet their own economic targets and in turn justify increased local hiring.

Still, he thinks the fact that the number of foreign lawyers has doubled could be an issue in the current environment. Which is odd, since he thinks the government would have been celebrating that fact not too long ago.

“You could say they’re becoming victims of their own success,” he says.

*Correction, 12/11/13: The previous version of this article incorrectly stated that the number of foreign lawyers in Singapore has almost doubled to over 2,000. It has almost doubled to over 1,000. We regret the error.

Email: alin@alm.com.

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