1) When it comes to legal jurisdiction, Labuan is considered part of Sabah. Cases from Labuan fall under the jurisdiction of the High Court of Sabah. When it comes to tenancy agreement, I don't think it makes much of a difference. Look at which is more convenient. Perhaps a lawyer based in Labuan itself can offer lower disbursements as they would not need to travel further?

2) Can't advise much without further facts. There must be a reason for the delay. Can't just assume and blame the lawyer. Get an explanation in writing from the lawyer - probably a chronology of events for the past two years. Then you would be able to assess the situation more clearly.