Malaysia to open doors to global firms practising local law

Malaysia is gearing up to open its legal market to international law firms, with new legislation set to come into effect this summer.

Up to five international law firms could secure licences to enter the country later this year as Qualified Foreign Law Firms (QFLF) should the Legal Profession Amendment Act 2012 become law by summer as planned.

According to the Malaysian Bar Council, successful firms will need to demonstrate international Islamic finance capacity in order to qualify for the QFLF licence, which will be valid for three years initially and will allow them to set up their own offices practicing in specific areas, excluding those such as family law and local litigation.

The Act will also pave the way for overseas firms to form partnerships with local outfits, which would also be able to hire overseas lawyers.

Firms to have so far expressed an interest in Malaysia include Trowers & Hamlins, Allen & Overy, Norton Rose and Herbert Smith Freehills. Trowers, which last year opened a non-trading representative office in Kuala Lumpur, said it intended to apply for the QFLF licence, while the other firms are yet to confirm any concrete plans.

Commenting on the process, head of the Malaysian Bar Council Lim Chee Wee said: “The Bar is working closely with the Attorney General’s chambers to finalise the rules and the selection committee guidelines, and we hope to have the law in force in the first half of this year and issue licenses shortly thereafter.”

Lim also clarified that foreign lawyers, both licensed and unlicensed, will continue to be able to appear as counsel or arbitrators in both domestic and international arbitration proceedings in Malaysia, and will not be affected by the new laws.

Malaysia’s decision to open up its legal market to overseas firms follows similar moves by authorities in Singapore and Korea in recent years, with Singapore last month handing out four additional licences to practice local law to international firms.

But it comes amid concerns about freedom within the Malaysian legal market after a local lawyer, Datuk VK Lingam, was charged with contempt in April last year for challenging a federal court decision. Lingam called on Conservative MP and One Brick Court barrister Sir Edward Garnier QC.

According to court documents, the application for Garnier to appear in the Malaysian courts on an ad hoc basis was dismissed on 10 January after suggestions that the country did not need to rely on the advice of “white” people.

Garnier has since appealed the refusal, while the contempt hearing itself is due to take place on 6 March. He said: “It will give law firms something to think about. It will be an additional factor for international law firms to consider when wondering whether to set up a presence in Malaysia.”

Related: Links among just four firms to win Singapore licences after 23 apply