How the UK has helped to liberalise the Malaysian Legal Services Sector for foreign firms

In early 2012, the Malaysian Government, with the local professional body for legal sector, the Malaysian Bar Council (MBC) announced plans to liberalise laws governing the legal sector.  This was greeted positively by foreign firms who had previously been prohibited from entering the Malaysian market and provided an opportunity to feed into the development progress.

After a successful prosperity fund bid in 2013 and 2014, The Law Society of England and Wales set up a formal engagement with Malaysian Bar Council on the liberalisation agenda.  The joint goal was simple; to ensure that the liberalisation framework for legal services sector in Malaysia is clear, transparent and sustainable over the long term.

Showcasing a Liberalised Legal Services Sector

Working with the Malaysian Bar Council and Malaysian legal firms, the Law Society set up events both in Malaysia and the UK to provide guidance in the process of market liberalisation and raise awareness about the benefits of a liberalised legal market based on the experience in the UK.

In Malaysia, a series of discussions were held with a diverse group of stakeholders under this project to highlight the impact of this reform on the broader business environment and its importance to the wider Malaysian economy. The project also reached out to 100 Malaysian lawyers to participate in an open dialogue with UK legal firms interested in entering the Malaysian legal services market to discuss the perception of legal services liberalisation as well as sharing the UK best practices through a joint forum held. These initiatives were delivered during the first year of funding.

During the second year of funding, the inward mission to the UK created a platform for Malaysia to showcase its liberalised legal services sector to UK-based international legal firms for them to capture those outbound opportunities. It brought together a large number of UK and Malaysia legal services providers to build the foundation for both parties to work together on the liberalisation agenda in Malaysia, as well as to support Malaysian legal firms to internationalise and expand in the UK and beyond.

First UK Legal Firm Started its Footprint in Malaysia

So did the prosperity fund project help? Well, in June 2014, the liberalisation of legal services in Malaysia came in force. The legislation now allows;

1. Foreign law firms and lawyers to form international partnership with Malaysian legal firms and practise in Peninsular Malaysia, owning up to 40% foreign equity in the international partnership,
2. Foreign lawyers to work in a Malaysian firm,
3. Foreign law firms to establish in Malaysia without a Malaysian partner through the license as Qualified Foreign Law Firm (QFLF) and
4. Foreign lawyers advising on non-Malaysian law to be able to come to Malaysia and work on a project for up to 60 days in a calendar year on “fly-in fly out” basis.

This is a significant milestone in the legal market’s liberation.

In April this year, Trowers and Hamlins, a UK legal firm, became the first foreign law firm to be granted a QFLF license in Malaysia, approved by the Malaysian Bar Council. The firm is also the only UK firm to establish a regional office in the country. The firm’s partner, Nick White noted that “from Kuala Lumpur we have access to the entire ASEAN region, and now, with a QFLF license, we will be able to grow additional capacity to further advance our reach and capabilities here.”

The Law Society continues to maintain links with the Malaysian Bar Council and will continue to represent the English and Welsh legal profession as it relates to its activity in foreign jurisdictions. To further assist firms looking for opportunities in the newly liberalised Malaysian market, they have also launched the Doing Legal Business in Malaysia guide in 2014 for this purpose.

The benefits of a prosperity partnership

This liberalisation initiative supported by the Prosperity Fund has opened up opportunities for UK legal firms not only in Malaysia but in the region as well.   Whilst the one of longer term impacts of the project is the removal of barriers to exporting UK legal services to Malaysia, the strengthening of UK and Malaysia dialogue in the sector has not only helped contribute to improving Malaysia’s professional services sector, boosting trade and investment links, but Malaysia’s aspirations of becoming a high income nation by 2020.

For the Malaysian law firms this is an opportunity to build expertise and raise standards to increase their competitive offer with foreign counterparts on a level playing field. The added benefits of foreign expertise entering the market gives the domestic market an opportunity to up-skill themselves on the international market, which in turn will give Malaysia firms an opportunity to export legal services abroad. In the longer term this will have a positive affect for Malaysian clients with a more competitive choice in legal services.

The specific project in liberalisation has proven to be one of the effective technical cooperation partnerships between UK and Malaysian stakeholders, working towards a win-win outcome. While the emerging high-growth markets like Malaysia are persisting to work on their economic liberalisation agenda, UK expertise and the UK experience can continue to play a role in supporting the country on shaping the map of liberalisation for its legal services and beyond.

Winnie Seow, Economic & Trade Policy Officer,
British High Commission Kuala Lumpur