International firms welcome unexpected development as Malaysia eases requirements for market entrants

International law firms doing business in Malaysia will be able to advise clients without having to set up an office in the country, as details emerge of new legislation set to open up the country's legal market this summer.

Malaysian authorities had been expected to restrict firms from doing business in the country on a 'fly-in, fly-out' basis, preventing firms from advising clients on the ground without an office in the country. 

However, revised regulations, which will be debated by parliament next month, say law firms without Malaysian offices will still be able to advise clients in the country, provided their stay does not exceed 60 days per lawyer, per year.

The news comes after a first set of amendments to the Legal Profession Act were passed by the former parliament in July last year, setting out new rules for allowing foreign law firms to open a local base in the country.

When in force, they will permit five firms to launch a Malaysian office as Qualified Foreign Law Firms (QFLF), and others through joint law ventures with local outfits.

"We sat down with the Attorney General's chambers a few months ago and we both agreed to [further] amend the Legal Profession Act to provide for fly-in, fly-out [work]," said the Malaysian Bar Council's new president, Christopher Leong. 

Leong expects the amendments to come into force by the end of July, after the first session of parliament. 

The authorities have also clarified the rules on foreign lawyers entering the country for arbitrations.

According to the latest bill, foreign lawyers seeking to appear as counsel in international and domestic arbitrations taking place in Malaysia will be permitted to enter the country at any time and with no limit on the duration of their stay.

However, the criteria for those who wish to enter the country as QFLFs is understood to remain the same, with firms required to have a strong Islamic finance practice, Leong said.

The liberalisation of Malaysia's legal market follows similar moves by authorities in Singapore and Korea in recent years, with Singapore handing out four additional licences for foreign firms to practise local law in February.

The decision not to ban 'fly-in, fly-out' will be welcomed by international law firms, many of which are currently servicing the market from Singapore.

Those outfits that have so far expressed an interest in Malaysia include Allen & Overy, Norton Rose Fulbright, Herbert Smith Freehills and Trowers & Hamlins.

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 were yet to confirm any concrete plans.

Norton Rose Fulbright Southeast Asia head Jeff Smith said the firm was still considering its options. "We are looking quite carefully at whether to open an office. We've got a good business there, and clients we have worked with for decades, so it would be good to be closer to those clients," he said.

"Certainly the ability to fly in and fly out is helpful generally. It's important that Malaysian corporates have access to their chosen law firm, so the additional choice and competition afforded by allowing lawyers to fly in and out must be in their interests."