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The Malaysian Bar stands firmly behind the increase of scale fees chargeable for non-contentious matters under the Solicitors’ Remuneration Order 2023 (“SRO”) which took effect on 15 July 2023, and wholly disagrees with the views set out by the Malaysia Competition Commission (“MyCC”), Real Estate and Housing Developers’ Association (“REHDA”), and an unnamed retired judge.1,2,3
It is interesting to note that despite such statements stating that it is against the cost-of-living aspiration of the Government, the National House Buyers Association (“HBA”) had issued a statement on 21 July 2023 with detailed analysis that this is not the case. In fact, the increase of scale fees is in tandem with the times, and while Malaysians are facing challenging times, professionals — including lawyers — are equally affected.4 HBA also added that the increase in legal fees will be offset by the increase in legal discounts in respect of purchases from licensed housing developers.
The legitimate right to regulate and review the scale fees chargeable for non-contentious matters is incontrovertible as it is stipulated in section 113 of the Legal Profession Act 1976 (“LPA). It facilitates the establishment of a Solicitors Costs Committee (“SCC”) to decide on such review of costs. The SCC consists of the Chief Judge of Malaya, a representative each from the Attorney General’s Chambers and the Office of the Chief Registrar of the Federal Court of Malaysia, and four representatives from the Malaysian Bar. It is not the Malaysian Bar that has the final say. Section 113(3) of the LPA is instructive that the relevant stakeholders are tasked to look into balancing what is in the best interest of consumers vis-à-vis the quality of legal services provided by the legal profession in coming up with what is fair and reasonable in terms of scale fees.
It is also worth noting that the LPA is a piece of legislation that has existed way before the Competition Act 2010 (“CA 2010”) came into force.
The Malaysian Bar’s engagement with MyCC in 2015 (as alluded by the Chairman of MyCC) established the position that the Malaysian Bar is well within its legitimate rights as the regulatory body of practising lawyers in Malaysia to recommend what is best for the legal profession.
In the best tradition of the Malaysian Bar, we would not forsake the interest of Malaysians and we have not done so with respect to the SRO.
Whilst the CA 2010 is a consumer piece of legislation, the Malaysian Bar highlights that the legislation has seen it fit under Schedule 2 of the Act to state that Chapters 1 and 2 of Part II of the Act shall not apply to an agreement or conduct which it is engaged in an order to comply with a legislative requirement. This goes to show that CA 2010, and so must MyCC, recognise that other laws including the LPA and the SRO, for the legal profession, are applicable as an exemption.
There is therefore a reason why the Malaysian Bar, as the regulatory authority for the legal profession, has the purview to recommend regulating such practices. This is because the Malaysian Bar is fully aware of the current trends and practices of the legal profession. The Malaysian Bar looks into complaints of unsavoury practices by other sectors or industries interconnected with transactional matters that try to exploit the position of lawyers at the expense of the quality of professional services. Sometimes, such pressure come from developers, real estate agents and banks pressing legal fees down, knowing that lawyers are competing with themselves, or even asking for “referral fees”. The dominant position is not held by lawyers here, but by other industry players. The pressing down of legal fees or referral fees by such industry players are highly myopic as it does not guarantee the quality of services given by lawyers. The Malaysian Bar must ensure that the integrity of lawyers and the ecosystem for lawyers in such non-contentious transactional matters are insulated and protected so that consumers are never short-changed by the professional advice they receive.
There is no such thing as a “standard transaction”, nor is there such a thing as a “cut and paste” job in preparing an agreement under the SRO. Every seasoned conveyancing practitioner will know that! Respect and recognition must be given to transactional lawyers handling such matters as there are many nuances involved including the legal effect of imposing terms and conditions unfavourable to clients under the Contracts Act 1950, stamp duty repercussions under the Stamp Act 1949, real property gains tax issues under the Real Property Gains Tax Act 1976, caveats under the National Land Code 1965, corporate-related matters under the Companies Act 2016, as well as Listing Requirements for public-listed companies. Are they foreigners, or maybe even minors? Is it a joint venture? Is it an individual or a company? What about sole proprietors or partnerships? What if it is pursuant to a death or a divorce? The legal repercussions are endless.
That is why regulatory bodies for professionals are entrusted to look into such matters to ensure that the quality of lawyers remains at its highest level and consumers are not short-changed for the sake of “cheap fees”. Likewise, lawyers are prohibited from overcharging, and that is the public interest aspect to the scale fee structure, which acts to protect against overcharging.
The calls for abolition of scale fees are not new at all. Those who have been long enough in legal practice will know that this is an issue that has been debated and decided on several times over the years by the general body of the Malaysian Bar, and the Bar Council will uphold these decisions.
To say that the Malaysian Bar should set an example for other professional bodies to follow by abolishing scale fees is totally unfair and discriminatory. Where competition conflicts with public interest, surely the latter must prevail. We must learn from the Hong Kong experience.5
The Malaysian Bar will continue to defend public interest by providing quality legal advice to consumers and push back against having to succumb to pressure of those who prioritise maximising profits at the expense of consumers and lawyers.
Karen Cheah Yee Lynn
President
Malaysian Bar
24 July 2023
1 “MyCC raises concern over rise in conveyancing fees”, Free Malaysia Today, 17 July 2023.
2 “Rise in conveyancing legal fees will mean increased cost of purchasing a home, says Rehda”, EdgeProp, 21 July 2023.
3 “Fee hike for conveyancing work not justified, says retired judge”, Free Malaysia Today, 24 July 2023.
4 “Increase in legal fees will, however, be set off by (legal) discounts”, EdgeProp, 21 July 2023.
5 “President’s Message — Conveyancing Fees and Other Issues”, Hong Kong Lawyer, January 2022.