CONSPECTUS OF COMMERCIAL PRACTICE IN THE 1990s

• Citation: (1990) 2 SAcLJ 232
• Author: SAT PAL KHATTAR
• Date: 01 December 1990
• Published date: 01 December 1990

What is quite clear is that Commercial Practice in the 1990s is likely to be different from that which we were used to in the 1980s although probably not in a fundamental sense. There will not be a dramatic change from the 80s to the 90s. Legal practice generally and commercial practice in particular will have to keep up with the changing economic conditions that Singapore is likely to be experiencing in the 1990s which in turn will depend on economic factors in the region and elsewhere.

Application of Information Technology to Law Practice

One of the biggest impacts on Commercial Practice in the 1990s will come from Information Technology (“IT”) as applied to practice. It will require that lawyers must adapt to and overcome their psychological fear of IT since its relevance to commercial practice and the pressures that flow from having sophisticated IT available to their clients and themselves is inevitable. Computer literacy may not be something without which they would not be able to practice law but it will be a strange office which successfully practices commercial Law which does not have lawyers and their senior staff skilled in the application of IT to various aspects of work that they do. In a Commercial practice, a lot of instructions will be received by fax or linked computers. Laws and precedents will be on data base. Time logging will be on computers. Files will be paperless ie in memories in data base. Transmission of documents will be by computers. Within the firm communication will also be computer linked as will be updates, reminders, telephone messages and inter office memorandum. Lawyers and clients will be discussing drafts looking at their screens. Even signing of commercial documents could be by contemporaneous faxes.

Multi-Disciplinarian Approach

What is also clear is the requirement that the lawyer will have to be a multi- disciplinarian. By this I do not mean the lawyer will himself have also to be or have the skills of an MBA, a Tax Expert and an Accountant all rolled into one. That is not within normal human capability. However in a successful practice, he or members of his team will have to possess basic skills in these areas. They will have to have specialists who will be able to address commercial legal problems at short notice including ramifications of tax and even other non legal business issues including the flow-through problems like say the accounting and tax consequences of the problems being advised on. The lawyer needs to clearly identify if not deal with these problems in depth in order to assist clients in formulating intelligent and legally correct responses and advice usually at short notice.

Take the following scenario which could well be common place — A Singapore Branch of a foreign bank wishes to make a loan to a multinational with operations in Batam and Johor with an OHQ in Singapore. The requirement could be for funding through local banks in Indonesia and Malaysia with guarantees from the Singapore branch. Securities being contemplated could be a guarantee by the parent in USA to the lender with a letter of awareness by the Singapore OHQ and legal charges in Malaysia and Indonesia held by lender banks as agents. There could be shipping mortgages and leveraged leases as part of the financing. The facilities itself could consist of direct lending, note issuance facilities, revolving underwriting facilities swaps and others sophisticated financial derivatives, some of which are not even known today. It would be inconceivable for a one or two man team to deal with the legal problems. There would have to be a team of three to five lawyers to take on the assignment. The lawyer in Singapore would have to have within his team persons who are familiar with the basic law of securities documentation in Indonesia, Malaysia and US and possibly elsewhere. A member of the team would be able to advise tax consequences of the lending in Malaysia and Indonesia by the Malaysian Banks who are guaranteed by the Singapore Bank but who hold securities as agents. The legal efficacy of the guarantee being given by the US parent of the borrower and the comfort letter by the Singapore OHQ would be areas he should be basically familiar with. He would probably have to have his draft transmitted by computer to the bank making...