Entry of Foreign Law Firms in India: Positive Aspects and Concerns

By Saif Rasul Khan, Government Law College, Mumbai.

The Bar Council of India (B.C.I.) and Society of Indian Law Firms (S.I.L.F.) in a recent move, have agreed “in principle” with the Government’s proposal to gradually open up the legal sector to foreign players, on a reciprocal basis. S.I.L.F. is an organization with a voluntary membership of more than 100 law firms. It is a powerful group of lawyers, with office-bearers including senior Partners’ from the leading Indian law firms. The opinion of the top lawyers and lawyers’ bodies is that in the era of globalization, legal services should not remain in a cocoon and clogged for foreign lawyers.

The Government of India has started consultations with the necessary parties to work on this line of action. It has exclusively excluded litigation from this process and thus, litigation would remain within the domain of the Indian lawyers.  This liberalization process has been a major area of concern for Indian lawyers with the B.C.I. consistently supporting the apprehensions of the lawyers. “We are ready for it but foreign countries should also allow us to practice there,” ex-chairman and present member of B.C.I., Biri Singh Sinsinwar said, reiterating the reciprocal privilege clause. Senior advocates and known constitutional experts have welcomed the Centre’s initiative, considering the same as being in the national interest. They believe that this move would bring healthy competition and greater professionalism to the legal sector. A dissenting voice came from Mr. P P Rao, who cautioned that this liberalization would expose the vulnerability of the B.C.I. and its lack of training. “There is nothing wrong in allowing foreign lawyers and law firms to come to India and provide their services. But interest of Indian Bars has to be safeguarded. Indian lawyers are not as well equipped as lawyers from US and UK,” he said.

Case 1

On February 21, 2012, the Madras High Court in the case of A.K.Balaji vs. Government of India and Ors., held that there is no bar under the Advocates Act, 1961 or the B.C.I. Rules for foreign lawyers or law firms to visit India for temporary periods on a “fly in and fly out” basis to advise their clients on foreign law and diverse international legal issues. However, they are not permitted to practice Indian law, either in relation to litigation or advisory matters, unless they qualify and enroll as advocates and fulfill the requirements of the Act and Rules. The judgment further clarified that activities performed by BPOs and LPOs do not constitute practice of law and hence are not in conflict with the Act.

Qualifications for practice of law in India

Section 29 of the Advocates Act clearly specifies that only ‘advocates’ as defined under the Act are entitled to practice the profession of law in India. An advocate is defined as, ‘an advocate entered in any roll under the provisions of the Act’. A person may enroll with a State Bar Council if:

1. He/she is a citizen of India.
2. He/she has completed 21 years of age.
3. He/she has obtained a degree in law from any University in India recognized for the purposes of the Act by the B.C.I. or has obtained such other foreign qualification in law as is recognized by the B.C.I. for the purpose of admission as an advocate.

However, Section 24(1)(c)(iv) lays down that subject to other provisions of the Act, a national of any other country may be admitted as an advocate on the rolls of the State Bar Council, if Indian citizens who are duly qualified are permitted to practice law in that other country. Further, provisions pertaining to reciprocity as provided under Section 47 of the Act stipulate that where any country prevents Indian citizens from practicing the profession of law or subjects them to unfair discrimination in that country, then no subject of that country should be entitled to practice law in India.

Case 2

In another case in 2010, the Bombay High Court in Lawyers’ Collective v. Bar Council of India & Ors held that the ‘practice of law’ would cover both litigious and non-litigious (advisory) practice. On this basis, it was held that foreign lawyers not enrolled, as advocates under the provisions of the Act would not be entitled to practice law in India. The Bombay High Court, however, did not address the issue regarding whether foreign lawyers can practice foreign law in India.

The prime reason for the existence of restrictions is the perceived impression that the domestic law firms are incapable and inept as compared to foreign law firms. Further, the consensus among those who are anxious and concerned is that the foreign law firms would engulf the best talent in India and this would result in an uneven playing field and loss for the local firms.  Some of the restrictions that limit the local firms from competing include:

• Indian law firms cannot have more than 20 partners;

• Indian law firms are also prohibited from engaging in any form of advertising whatsoever (this includes a ban on websites, brochures, television, radio etc); and
• Indian law firms are not allowed to obtain any form of financial assistance by way of bank loans.

The experts who are in favour of liberalization of the legal market believe that this move will result in an increase in possible employment opportunities and also lead to strategic alliances with international law firms. These would benefit the development and growth of the legal market and help it mature. The most significant benefit of opening up the Indian legal services sector would be to imbibe and adopt international best practices with regard to the legal profession. Professionalism and better client-lawyer relations are the need of the hour.

India should be ready to welcome foreign law firms and lawyers into its domain, however, the change should not be sudden. It must be properly phased out, over a period, to ensure that the foreign firms do not threaten the local law firms. Among various suggestions, it has been proposed that foreign firms, when allowed to enter India, could follow the Singapore model, which entails, compulsory foreign-Indian law firm partnerships, i.e., no foreign firm should be allowed to enter India and run its operations single-handedly.

In conclusion, it can be said that there is a need to open up the legal market and the same should be done in a proper manner. This liberalization process will not only help in the expansion and advancement of the present legal fraternity but more importantly, will  serve  the needs of the citizens of the country. At the end of the day, the legal profession is here to alleviate misery, settle disputes and enforce rights.  All this needs to be done with the highest regard to justice, nobleness and a legitimate aspiration to serve people. These principles are of utmost importance and must not be lost in the attempt to open up the legal sector of India.