Of Lawyers, (il)Legal Fees & Liberalisation

Do read the below statement by Bar Council President on Government’s recent decision to allow foreign legal firm to practice in Malaysia.

In summary, the Bar Council is unhappy with government’s move to allow foreign legal firms to enter Malaysian Market.

Ragunath says “The Bar Council’s position is that a managed system of liberalisation, in which foreign law firms are required to enter into joint ventures with Malaysian law firms, represents the best of both worlds as the Malaysian Bar has, amongst its members, sufficient practitioners with expertise in the area of Islamic Finance at an international level. Foreign law firms are able to tap into the Malaysian law firm’s knowledge of domestic laws, regulations and business environment, while Malaysian law firms are able to access knowledge of new legal/financial products. This reflects a “win-win” situation that would augur well for an orderly liberalisation of the domestic legal services market. The Bar Council has made known to the Government its preference for this method of liberalisation since November 2004, and has even prepared the relevant amendments and rules and regulations, and is therefore extremely disappointed that the views of BNM have prevailed”

Ragunath claims that Malaysian law firms have necessary expertise and want foreign firm to enter partnership with local firm. Why would any foreign firm want to do this as this would not give them a free hand to operate in Malaysia and what is the difference then as it is the same as the requirement to have 30% Bumiputra equity.

With the level of services that local law firms provide, who wants to partner them anyway!

Ragunath also claims that “Malaysian Bar has, amongst its members, sufficient practitioners with expertise in the area of Islamic Finance at an international level”. Then what is Bar Council afraid of then?

If foreign firm wants to tap into knowledge of domestic laws, regulations and business environment, they can just hire local lawyers with the right skills and expertise. They should be free and welcomed to do that and not forced into partnership with local firms. I think to Bar Council, liberalisation means open up a bit but they still wants control and monopoly.
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Actually my recent experience with one of the law firm prompted me to write this post and it was even more relevant when reading the statement by the newly minted Bar Council President.

I purchased an apartment way back in 2002 and paid hefty legal fees in RM thousands for the services of the legal firm appointed as panel lawyers for the property. When asked why the fees are high considering the work involved is just standard preparation of documents without any need for legal advise, counsel or even heroic argument in court, the answer from the learned lawyer was ' the fees are fixed and in accordance with the value of property'.

When highlighted that this is unfair as the work involved (some standard clerical document preparation work) has nothing to do with the value of the property, the lawyer then said that the fees are approved by the Bar Council and cannot be changed. When asked if he can reduce the fees upon request, the esteemed lawyer gave a straight faced answer, we don't do discounts as it is not allowed, again by the Bar Council.

Recently I was surprised to receive 2 notices from the same lawyer. One is for “Perfection Of Transfer ‘ and another for “Perfection of Charge’ which is basically for me to obtain release of Strata Title from the authorities. Being a gullible Malaysian, I was not aware of this requirement, the transfer of strata title. The lawyer who received thousands of Ringgit years ago failed to advise me on the impending transfer and not to mention, another huge legal fees.

As it was before I, was asked to pay few thousand Ringgits as legal fees, again for some standard piece of paper work.

The breakdown are as follows

Memorandum of Transfer RM 400
Service Tax RM 20
Strata Title Search RM 60
Application Fee & CTC Strata Title RM 100
CTC Blanket Consent RM 50
Adjudication FEE RM 10
Registration fee of MOT RM 120
Registration Fee – Consent RM 30
Transport Charges R M 120
Printing, Xerox, Telephone, Fax RM 75
MISC & Incidentals RM 50
Total RM 1035

Memorandum Of Charge RM 400
Consent to Charge RM 300
Master & Strata Title RM 60
Stamp Duty on MOC RM 40
Registration Fee MOC RM 120
Application Fee Consent to Charge RM 50
CTC Strata Title RM 50
Registration Consent to Charge RM 30
Purchase of Charge Doc RM 200
Transportation Charges RM 120
Printing, Xerox, Telephone, Fax RM 50
MISC & Incidentals RM 50
Total RM 1610

Grand Total RM 2645

When questioned on the charges, the clerk answered that the fees are determined based on the value of the property as approved by the BAR Council. If you notice, none of these documents involved any intervention from the lawyer except for maybe their signature. And the lawyer was nowhere to be seen.

How is this fair that fees for a simple piece of clerical work is charged based on the value of the property? What property value got to do with the simple administrative work?

They just use standard documents (they even charge us for the documents) and they do not for example, hold copyrights for authoring the documents. This is a simple piece of clerical work but the charges are anything but fair or reasonable.

Any technology involved? hmm.. just Microsoft word and mail merge function will do the job. What about Human Capital, a PMR/SRP qualified clerk can do the job.

They even charge RM 50, 00 for transportation when as the property/bank panel lawyer, they would have been using a messenger to do the same for more than one client. Just imagine if the lawyer acts for 500 owners in the same apartment project. He would made RM 25,000 for just adding RM 50.00 for transportation on top of his other (il)legal fees and another RM 25,000 for MISC and Incidental charges, which is never explained even if you insist.

By Charging, say RM 2000, this particular lawyer would have made at least a Million Ringgit for rendering these so called professional clerical services if he does the same work for 500 apartment owners in the same project since he is the panel lawyer.

This particular lawyer just sent us the notice by normal post and when we called them, they mentioned that the documents were not ready therefore, asked us to wait for their call. The call never came, and we had to make a total of 5 calls to chase them as we did not want to miss the deadline and end up paying penalty. We had to go their office to sign the documents and yet we are charged for telephone calls and transportation.

This is not the case of this particular lawyer only. The same happened with two other transactions with 2 different law firms. In terms of service, it always us, the clients, who chase the lawyers for follow ups when it should be the other way around. And they claim that they are professionals!

What a way to make money. If this is not daylight robbery, I don't know what is and how are they different from KL taxi drivers who overcharge. At least I know now that I chose the wrong profession.

Legal fees should take consideration of risk involved vs rewards eg how many of such S & P or property related transactions have ended up as dispute in court and how many lawyer were fined or even jailed etc due to errors etc.

And I was reliably informed that lawyers are not allowed to give discounts on fees. This is certainly to prevent competition and all lawyers can safely charge exorbitant fee approved by Bar Council.

Why is Bar Council afraid of competition? If you can’t even allow competition domestically, don’t talk about liberalization or competing at global stage.

When Bar Council espouses protectionism and disallows competition, stop talking about NEP, Quotas, level playing field, WTO and Free Trade!

When their fees and charges are anything but fair and just, don’t talk about justice, judiciary etc

When your own clients are not treated fairly, don’t preach about fairness.

When your services are anything but professional or world class, don’t complain when foreign firm are allowed to practice in Malaysia.

At the end of the statement, Ragunath says “The Government must address domestic market issues and ensure that such policies are also abolished if there is to be true liberalisation of the legal services market in Malaysia. There is no point making Malaysia welcoming to foreigners if we have not yet put our own house in order.

Can Bar council do exactly the same, solve this unjust overcharging, poor level of service and put your house in order or if not, just allow foreigners to come in. I certainly think that opening will the legal services market will only do good for long suffering Malaysians.