Opening Address by Mr K Shanmugam, Minister for Home Affairs and Minister for Law, at the SMU Commencement Opening Ceremony 2017

11 JUL 2017

11 Jul 2017 Posted in Speeches

SMU COMMENCEMENT OPENING CEREMONY SPEECH

11 July 2017

Mr J Y Pillay, Chancellor, SMU
Mr Lim Chee Onn, Pro-Chancellor, SMU
Mr Ho Kwon Ping, Chairman, SMU Board of Trustees
Members of the Board of Trustees
Professor Arnoud De Meyer, President, SMU
Faculty, staff and students of SMU
Parents, guests

INTRODUCTION

It is a privilege to be here with everyone today. A joyous occasion, and the first time this ceremony is being held in the new School of Law building.
Heartiest congratulations to all of you. Graduands – this is the moment you have been working so very hard for. Though it is really a beginning! Parents – you must feel so proud.
On occasions like this, the speaker is expected to congratulate, offer some words of wisdom and be uplifting.
I have congratulated. And I must say, that in the short 10 years of this law school, SMU law school has really made tremendous strides, and stands toe to toe with NUS law school. SMU law students have the market reputation that law firms look for. That’s a tremendous achievement, within several graduating classes.
Wisdom – Without any false modesty, I don’t think I’m capable of offering words of wisdom.
What I will do, in my own way, is to share with you some fairly simple perspectives, on what worked for me, in my journey as a lawyer.
And then share with you some thoughts on the economy, the region, and our legal industry which might be useful as you make choices over the next few years on what you want to do in the law, or leave it, and do something else.
Some of you will go into practice. Others – in house. Some others – will do something else altogether.
For those trying something else: Legal training is valuable training. It trains your mind, helps you become more analytical. So it’s not a waste. And there are many paths to success.
For those who want to go into practice: A few simple thoughts - old fashioned, but I think still hold true. The path to success in the law: there are very few shortcuts. Do you want to succeed? Do you want to be a lawyers’ lawyer? Do you want to be world class?
Then, there is no escape from having a deep understanding of the law.
Application – if you write 10 pages of opinion which sets out only the law, without taking a view, and you give it a practical businessman, he will look for another lawyer. So you have got to take view. Short, clear, well supported.
Decisiveness : What is your view?
Practical. Quick. Flexible – Open to suggestions, always learning
Very few shortcuts.
If you want to make a million by the time you are in your 30s: try something else. Law is a long, straight road, with many temptations along the way. Business propositions will come, they often lead you astray.
In the 30 odd years since I graduated, I have seen many bright lawyers fall by the wayside. Getting rich quick in the law: is often a mirage. You will be comfortable, you will earn a good living. But if you think you can make use of the law, to make a lot of money, through a variety of ways – better to do something else.
There will be a lot of temptations to also take short cuts, in terms of compromising your honesty and integrity. Temptation to do something for a client.
Your reputation: you can lose only once. Clients come and go.
When you stand up, as an advocate, and tell the Judge: this is the law, or these are the facts - Does the Judge take you at your word? Ours is a small Bar, so everybody knows everybody else. If the Judge takes you at your word, then you are a Gentleman at the Bar.
And I think there is something to be said for being an honest lawyer, who can be very tough and very aggressive, but when you stand up and you say something, people know they can take you at your word, and seriously.
Sometimes, there is another temptation. Politics - as to which I won’t give you any advice. Follow your conscience. But it’s not often easy to combine politics and active practice.
The way to succeed, is really nose to the grind. I’ll give you an example – of a very bright lawyer. Top of his class, top in his profession. He came out, didn’t take the approach that he knew everything. Every single day, on top of a hard day’s work, he would take back the Companies Act, read it. Every single provision in the Act. Again, and again, and again – until he memorised it.
Whichever field you choose, that is the kind of application that is necessary. Day after day. Year after year. Learning, absorbing. Learning how to handle clients. Keeping yourself honest. And after 7-8 years, if you have learnt well, you will start being noticed.
In 10 years, if you are good, you can make your mark. And easily, for 20-30 years after that, if you are physically fit, energetic, and have a flexible mind, you can remain at the top. That is the path of someone who wants to practice, and stay at the top.
That is the sum of my personal perspectives – you may agree, disagree.
1. CURRENT ECONOMIC CONTEXT
Now let me turn to something else - you are starting on a career in a time which, as Kwon Ping said, is a time of great economic dislocation and change. So what are the economic fundamentals around us, and for lawyers?
I will touch a little bit on the economic context that you start in. And also, the legal context. But let me start with the economic context.
If you look at Singapore, in terms of population, we are the second smallest in ASEAN. The economy is the fourth largest. Much out of proportion to our population size.
Our GDP is effectively the same as Malaysia. They have 330,000 sq km of land, we have 719 sq km. We have 3.8 million citizens and PRs, they have 31 million in total population size. And in terms of resources, there is no comparison.
So we have outperformed, quite incredibly.
But it also means that today, our rate of growth will be slower. Because we are at US$55,000 to US$60,000 GDP per capita. So 2% growth is already good, compared with an ASEAN average of 4.7%.
You must also assume that others are not going to stay still, and that eventually, the factors of resources, population, land, will tell. So Malaysia, Philippines, Vietnam, others - bigger population, more land, more resources – will not only overtake us in absolute GDP, they will also want to do the things we are doing. And their rates of growth will be higher.
So while we have outperformed, the real lesson here is that others will catch up, they will try and overtake, and therefore you are presented with huge challenges. But also, there are some opportunities.
Another way of looking at it – look at Singapore and South Korea.
South Korea is one of the G20 countries, it’s got a serious industrial base. Its industry is successful in every field, they are world class. They have only 6 law firms with more than 250 lawyers each.
We, in Singapore, have 4 law firms with more than 250 lawyers each. And, for a resident population of 3.8 million, we have 874 Singapore law practices, over 5,000 lawyers with practicing certificates. Therefore, about 1 lawyer for about every 870 Singaporeans.
South Korea - for a population of around 50 million: they have about 1 lawyer for every 2,200 South Koreans.
Our economy has been able to sustain this number of lawyers despite a much smaller base, compared to South Korea, for a number of reasons, one or two of which I will touch on later. But again, my point to you is: given how much we have outperformed, you must expect some reversion to normalcy. Unless we keep continuing to run faster and faster.
The conclusions I will say, therefore, are:
1. Our economy, legal services – are in an unusual place.
2. We have substantially out performed others. This is not the natural order of things.
3. Others can catch up, overtake.
4. But we will do well – if we continue to out perform, which I think we are capable of.
Whether we can do so depends on the very same factors that made us successful in the first place.
And you also have to also understand – the law is an ancillary service. You only get legal work if the underlying economy is doing well. If trade, services, industry are doing well, lawyers do well. If the economy slows down, lawyers will find their work slowing.
So what is the larger economic context? Look at the factors for economic growth.
Land – we don’t have more land.
Population – We are not replacing ourselves. And that’s all across East Asia.
Demographics is a big issue. In 2015, we have about 5 working persons supporting each elderly, above 65. By 2030, when most of you will be at your prime working age – we will only have 2 persons under 65 for every one person above 65.
What is the solution? Immigration is not a complete solution. There is a limit to how much land we have, to put people in. And politically, of course, it is difficult. Not just in Singapore, but all over the world.
Some say – you can have a good economy without growth. Productivity alone driving economic growth is not easy. And size, population and resources, do matter.
1. EXTERNAL COMPETITION
Competition is heating up.
Take for example, our status as an air hub – it’s a key enabler of our growth. It connects people, businesses in Singapore to rest of the world. Contributes 6% of our GDP, employs more than 160,000 people.
Changi Airport, and our airlines, are facing competition. Long haul carriers supported by the Gulf region, bypassing Singapore. China and India will develop their own airhubs as well.
I’m telling you all of this not to frighten you, but to be frank, open, clear – so that you understand. As young people, you need to be keenly aware of the world, what is happening around us.
Another example – our status as a shipping hub. You now have Malacca, billions of dollars being poured in; you have Port Klang, which can handle the same tonnage as Singapore, also being redeveloped. Indonesia also wants to develop its ports.
For those of you with some knowledge of history, you will know what happened to Venice, when it didn’t change according to the changing circumstances.
Specific to the legal industry – it faces pressures as well. Kwon Ping talked about Artificial Intelligence (AI). But even before AI, you have lawyers in Bangalore – they can access online every case in Singapore, they are common law trained, and their fees can be as low as US$25 per hour. They understand our jurisprudence, can work fast – you send it to them, the next day, the opinion can be back on your table.
Our first year lawyers – get paid about S$4,000 to S$5,000 a month. By the time you add in costs of ancillary staff, over heads, rental – the average cost to a law firm of a first year lawyer would be somewhere in the region of about S$10,000. And their charge out rates could be somewhere between the region of US$100 to US$150.
Client will ask: Why do I need to pay you US$100, or US$150 per hour? When I can get US$25 per hour charge out from Bangalore? Why don’t you not employ so many lawyers, give me one partner who can analyse, one associate, and the rest can be done in Bangalore? And then you just check that work, rather than have a team of 5 Singapore lawyers who are going to charge me US$150 each?
Or to give another example: If you go across to KL, a first year lawyer may earn about S$1500, or thereabouts. That’s the cost comparison. And their lawyers are not inferior to ours. And if we start believing that we are somehow superior to everyone around us, that is disastrous.
So you have to work out why it is, that others are not getting the work, and we are. The question that you have to keep in mind: “What can you provide, that a client can’t get from: an outsourced vendor; or a machine?”
This really calls for us to be on toes. For Government, industry to work together. To identify, and grab the opportunities – and I will give you some examples.
Our strengths are obvious, everybody knows -
1. A clean, efficient system.
2. A government that can look at challenges and plan, implement, without constantly have to worry about winning the next elections.
3. Resourceful, hardworking people, and clever businessmen.
So look at these challenges – if we stay still, we will be left wondering: “who moved my cheese?” We’ve got to adapt.
Take conveyancing – as an example. Scale fees have been completely abolished. Now – the ownership details, encumbrances over the property, are all contained in a single title document, readily accessible online. Moving forward, banks are piloting schemes where cashier’s orders and documents don’t even need to be exchanged physically.
So it’s changed. And those who change along with it, and look for new areas, will survive.
Who will survive? In the end, if there is a very substantial transaction, hundreds of millions at stake, the client comes to you, he’s not going to go to a machine. He is going to go to a lawyer with a team who is going to take him by the hand, understands deeply the law in the field, understands how it is applied to the practical complications, and negotiates that minefield for him. No client is going to go to a machine, or outsource that work. That is the work that you need to focus on.
What are those fields? Let me just give you some examples, and some ideas of the opportunities.
What are the opportunities?
Start with ASEAN. 600m people, GDP of 2.47 trillion. One of the top ten economies in the world now. And within a few years, it will hit 4 trillion dollars. That – growing at almost 5% - offers tremendous opportunities for those who are willing to look beyond Singapore, and look at how we can get work from the region. And the Government is looking at a variety of structures as well.
Our close partnership with Australia.
Our network of FTAs, and linkage to the world.
China and India - as they grow, there will also be opportunities.
So we are in the middle of a region, with some of the biggest economies in the world. China, India, Australia, ASEAN. In the midst of all of this money and huge economic entities, you have a small, well-run stable place – if you can’t find opportunities, something is wrong.
As industry in the region grows, as wealth grows, there will be a need for a place:
1. Where money can be safe and managed well
2. Where there is Rule of law
3. Stable
4. Clean
5. Good lawyers, good accountants
6. And safe: physical safety.
So what have we been doing, to try and identify these opportunities? I’ll just share with you a couple of examples, so it gives you an idea, what kind of areas to look for. I won’t say all of you should go and do this, but it gives you an idea of the kind of things that you can specialise in, look to, so that you don’t become irrelevant.
1. EFFORTS TO BOOST LEGAL SECTOR
Will speak about four areas.
1. Setting up Centres of Excellence
We have tried to develop Singapore as a thought leader, as a place that understands ASEAN.
SMU Law School has a Centre for cross-border commercial law in Asia. And you also have an applied research centre for intellectual assets and the law in Asia. IP work is going to grow, this is going to become important. You can’t outsource it to a machine.
NUS has an EW Barker Centre for Law and Business, and a Centre for Banking and Finance Law. These centres commission research, produce papers, on commercial law-related topics around the region.
We need to go into these things. We have to develop a deeper understanding of laws, and legal systems of the countries in our region.
1. Dispute Resolution Hub
Second, developing ourselves as a dispute resolution hub, as a world class centre, so that we won’t be restricted to work from within Singapore, and work from all over the world comes into Singapore. To really get out of our physical limitations.
So we identified arbitration, and a few other areas.
1. Arbitration
We were not a world-ranked centre some years ago. But we decided to focus on this.
By 2015, we became a world class centre: Singapore was ranked 4^th most preferred seat of arbitration, after London, Paris and Hong Kong.
As of last year, our cases have grown. By last year, Singapore International Arbitration Centre (SIAC) had more new cases registered than LCIA. That is growth. We had a record 343 new cases. $17 billion case value.
How did we manage it?
1. Legal framework – we made sure we changed the laws quickly, when needed
2. SIAC – we put money into our international arbitration centre, and make it a world-class institution.
3. Maxwell Chambers – physically, we took Maxwell Chambers, made it the best of its class, the best place to do arbitration, anywhere in the world.
4. Rules on opening up – previously the rules were more restrictive. We opened it up, and Singapore lawyers benefited in the end. We brought into the panel, the best arbitrators in the world, and the results are that today our top law firms have more arbitration work. They are doing work from around the world; not based on a Singapore hinterland.
5. Reputation of our Courts
It is an area that offers exciting opportunities. But you must be a thorough professional, and able to compete with the best in the world.
Now of course, when others see it – they also want to compete for this work. This is a fact of life, and we will compete with them.
1. Singapore International Commercial Court (SICC)
We then decided: let’s do the whole suite of dispute resolution. Mediation, arbitration, litigation. Our courts are world class. Their independence is unquestioned.
And there are a fair number of people who don’t want to do arbitration, who prefer that judges be appointed by an independent party, rather than selected by the parties to the dispute. So we have offered SICC. I understand SMU has a module that deals with SICC, that is good.
Again, international lawyers are allowed to practice at SICC. They are most likely to take a Singapore lawyer along, often even strongly advised by Singapore lawyers. And we have the best judges in the world, sitting there.
Likewise, mediation, we will use the same approach. To make ourselves an international mediation centre.
So the whole suite of services.
1. International centre for debt restructuring
The other area that we have recently focussed on, which I don’t think a machine or an outsourced person can replace, is debt restructuring.
As business in the region grows, there will be ups and downs. Restructuring work is a complex area, it requires deep expertise.
We have changed the law, put in elements of US Chapter 11 proceedings, taken the best practices from around the world, and put it into our legal system, to really position ourselves as a centre for debt restructuring.
Now, we have one of the most flexible and forward-looking regimes in Asia.
These efforts have been noticed internationally. Just a few weeks ago, Singapore won the “most improved jurisdiction” award from the Global Restructuring Review awards.
This can be a very good area.
These are just two examples – by no means, please don’t take it as me asking all of you to go exclusively into these two areas. You have to decide; these are just illustrations of some of the areas which are unlikely to be easily replaceable because the quality of the analysis is critical.
1. CONCLUDING REMARKS
I spoke about challenges not to faze you, but to give you the reality.
But right from 1965, we have always been faced with challenges, and we have overcome them. So you need to have confidence that if you keep true to some basics, and fundamentals, and the country stays stable, we will overcome the challenges. And we can soar even higher.
And whatever you do, try to enjoy it. If you wake up everyday and ask yourself – why am I doing this? Then it’s not for you. You have to wake up and say: I want to go in to work. If you don’t get that feeling, don’t be afraid to change. Life offers unlimited possibilities and unexpected turns. Embrace them.
Let me end with a few personal anecdotes.
I call myself an “accidental” lawyer, I have spoken about it elsewhere. I was a Science student, was supposed to go into Science in University. I went, and attended classes for the first few days. And I looked at the timetable – every day, we started at 8 in the morning, lectures ended at 12, and in the afternoons, 2 to 5.30 pm were practicals, then on Saturday mornings we had to go into SGH for more practicals. I scratched my head: I didn’t come to University to work so hard! And coincidentally, a good friend of mine was going to law, and had 14 hours of lectures in a week. I said: this sounds more like it. And so I applied to transfer, in the first or second week, was lucky enough to be given an interview, and that changed my life.
However, the syllabus was deceptive, because while there were only 14 hours of lectures, I don’t think I worked harder in my life, in terms of what I had to do outside of lecture hours.
Second major change, which I embraced: I’d never thought of myself as a litigator, or someone who will go to court to argue. I saw myself dealing with corporate law, the kinds of subjects I liked – trust, company law. Studying, analysing documents. But when I went in to pupillage, I thought that since I am going to spend my life in corporate law, let me do pupillage in the first 3 months with the top litigator – at that time, Mr Joseph Grimberg SC. I spent 3 months, but found that I enjoyed it, and decided to change my plans, and do litigation, in the long term. And that’s how my career in litigation started.
This is by no means an advertisement for people to not think through what they want to do. But it is to say don’t be afraid, take life as it comes, and enjoy it and do it to the best of your ability.
Keep true to some basic fundamentals, and you won’t go wrong. Stay true to yourself, true to your passions, to your convictions, and remember that your integrity is one thing that no one, and no challenge, can ever take away from you, without your consent.
Congratulations to every one of you, once again. Thank you!

Last updated on 11 Jul 2017