Circular No 252/2021
Dated 25 June 2021

To Members of the Malaysian Bar

Legal Profession Conditional Fee (Personal Injury) Rules:
Background and Current Development

This circular seeks to inform Members about the Conditional Fee (Personal Injury) Rules as well as the current development about it.

(1) History

The idea of legalising contingency fees in accident cases was mooted at the Annual General Meeting (“AGM”) of the Malaysian Bar back in the 1980s.  Following that, the Bar Council (“BC”) set up a Contingency Fee Rules Committee to study the proposal and to submit its recommendations.  After due deliberation, the Contingency Fee Rules Committee came up with the draft Contingency Fee Rules.

(2) Feedback from Members of the Bar

Circular No 184/2010 entitled “Proposed Rules on Contingency Fees” dated 1 July 2010 was issued, requesting Members to provide feedback on the proposed contingency fee rules.

(3) Contingency Fee Rules to Conditional Fee Rules

The CFRPI Committee, at its meeting held on 29 Oct 2010, revised the Contingency Fee Rules and decided to rename them as “Conditional Fee Rules”, which was adopted by the Bar Council. 

The Contingency Fee Rules Committee, which was renamed “Ad Hoc Committee on Conditional Fee Rules” (“CFRPI Committee”) after considering the input and feedback from Members, recommended the introduction of the “Legal Profession Conditional Fee (Personal Injury) Rules” (“CFRPI”), which allows for the use of conditional fees in personal injury claims.  The rationale for the whole scheme is to allow impecunious persons to have access to justice. 

(4) What is Legal Profession Conditional Fee (Personal Injury) Rules?

The Legal Profession Conditional Fee (Personal Injury) Rules (“CFRPI”) allows a client to enter into a conditional fee agreement with an advocate and solicitor for professional services rendered in making a claim for compensation arising out of a road accident or industrial accident, which results in death, personal injury, property damage or any other losses.

(5) Is CFRPI Mandatory?

CFRPI is not mandatory.  The client has the option of entering into a conditional fee agreement under the CFRPI or to engage an advocate and solicitor and paying for professional services rendered on a non-conditional basis.

(6) Important Features of CFRPI

 The important features of CFRPI are as follows:

(a) This is a legal-funding arrangement, whereby the client pays the advocate and solicitor for professional services rendered only if the claim is successful and compensation is recovered.

(b) An advocate and solicitor entering into a conditional fee agreement shall be entitled to the following payments:

• a sum on RM500 as the retainer, payable upon the execution of the conditional fee agreement;
• solicitor-and-client costs for professional services rendered by the advocate and solicitor to his/her client, which shall not exceed 20% of the compensation recovered by the advocate and solicitor on behalf of his/her client;
• party and party costs agreed or awarded by the court; and
• any disbursements not included in the party and party cost.

(7) Engagements and Discussions

The first draft of the CFRPI was submitted to the Attorney General’s Chambers (“AGC”) on 8 Mar 2011.  Subsequent to that, the CFRPI Committee had numerous meetings with the AGC to discuss the draft CFRPI.  On 21 June 2012, AGC informed BC that they had received feedback on the proposed Rules from Bank Negara Malaysia (“BNM”), General Insurance Association of Malaysia (Persatuan Insurans Am Malaysia, “PIAM”), Federation of Malaysian Consumers Associations (“FOMCA”), and Takaful Ikhlas on the CFRPI (collectively referred as “stakeholders”).

On 30 Jan 2015, a stakeholders’ meeting was held at the AGC and pursuant to the comments and feedback obtained from the stakeholders, the CFRPI Committee tweaked and amended the draft CFRPI further.  A series of meetings between the CFRPI Committee and the AGC were held over the last few years to fine-tune the draft CFRPI.  On 26 Dec 2019, BC submitted the revised CFRPI to the AGC, incorporating all the changes and amendments proposed by the AGC.

(8) Combined Rules

In mid-May 2020, the AGC sent to BC an entirely new set of draft rules known as “Fees for Conditional Fee Agreement” — merging and combining the CFRPI with another set of rules submitted by BC in respect of non-personal injury claims.  On 30 June 2020, BC wrote to the AGC expressing its disagreement to the draft rules sent by the AGC, and BC’s preference to keep the two sets of rules separately.  

(9) Section 77 of the Legal Profession Act 1976

On 26 Jan 2021, a virtual meeting was held between the AGC and the CFRPI Committee.  At the meeting, the AGC informed us that they have no objection in principle to the CFRPI but stated their concern that section 77(1) of the Legal Profession Act 1976 (“LPA”) may not give BC the power to make rules concerning “fees”.  The AGC thus proposed that section 77(1) be amended first to give such powers to BC.  While waiting for section 77(1) to be amended, the AGC will continue to engage with the CFRPI Committee as well as the Ad Hoc Committee on Conditional Fee Rules (Non-Personal Injury) separately to discuss the draft rules.  BC is presently liaising with the AGC on the proposed amendments to the LPA, including section 77 of the LPA.

Members will be notified of developments in due course.

Thank you.

S Gunasegaran
Chairperson
Ad Hoc Committee on Conditional Fee Rules (Re Personal Injuries)

To view the full circular, please click here to log into the Malaysian Bar website, then return to this circular and click here.