Local Legalese: Foreign Law Firms in India
The topic of liberalization of the Indian legal profession has once again gained steam to become a hot point of conversation, both in India and globally. The new Indian government has pro-liberalization lawyers at the helm of the ministries of Law and of Finance. With the new government having a clear reformist approach across industry sectors, there has been a substantial and meaningful movement towards clarity in the legal sector as well.
Over the past decade, Indian firms have grown in both, financial and manpower numbers. The frequent ups and downs of the market, international expansion of Indian corporations, introduction of new practice areas such as competition law, cyber law, as well as consolidation of law firms have all helped the Indian legal profession to grow in strength and learn from its experiences.
Over a hundred international firms have increased their focus on India in the recent past. Evidently, even without liberalization there are opportunities well within the legal framework that these foreign law firms find profitable. These firms stand to gain immensely with the opening of the legal industry to foreign law firms.
Like most liberalized sectors, the legal industry is likely to see an increase in competency, professionalism, and expertise among Indian lawyers and firms with the entry of the foreign law firms. An increase in employment avenues, and pay scales for Indian lawyers and students along with better work conditions can also be banked upon.
Thus, the question arises – why is the home industry and Society of Indian Law Firms (SILF) vehemently opposing the entry of foreign law firms? Simply due the lack of belief in their ability to effectively compete against the foreign firms and the fact that only a few firms have expertise to handle commercial work for multinational companies (MNCs). Further, Indian legal education needs to develop to acquire interdisciplinary legal areas such as comparative law, intellectual property, human rights, and international trade. The absence of these areas of practice will lead to MNCs opting for foreign firms over their currently preferred home-based firms.
As a professional restriction to foreign firms, to be eligible to practice in India a person needs to be an advocate as defined under the Advocates Act, 1961. An advocate is defined as a person whose name is in the rolls of a State Bar Council. To enroll with the Bar, a person must be a citizen of India, at least 21 years of age and having obtained a degree in law from any University in India recognized by the BCI or such other foreign qualifications in law as is recognized by the BCI.
It must also be noted that India follows a principle of reciprocity in the legal sector. This means subject to the provisions of the Act, a national of any other country may be enrolled as an advocate with the State Bar Council, if duly qualified Indian citizens are permitted to practice law in that other country. Since Indian advocates in countries like USA, UK and Australia have to go through an extensive procedure of qualifying tests, work experience and work permit, the Supreme Court has held that there is no reciprocity with such nations.
Legal Process Outsourcing (LPO) is a common tool to bypass these strict regulations of Advocates Act for non-litigatious work. In general parlance, it refers to the practice of a law firm or any company/body obtaining legal support services from an outside law firm or legal support services company. This practice entails, outsourcing any activity except where face to face conversation or personal appearance is required and necessary. India is emerging as a most favored destination for Legal Outsourcing. The Indian LPO market comprised of more than 100 LPOs in 2010. These LPO s exported legal services worth $640 million in 2010 employing more than one million lawyers. India s LPO market is expected to grow to approximately $ 30 billion in 2022.
While the legal position is such, under the guise of LPO and conducting seminars and arbitration, the foreign lawyers are visiting India under Visitors Visa and are earning money from their clients in India. By doing so, they violate the provisions of Income Tax Laws and Immigration Laws, and cause loss of revenue to our country’s Exchequer. They have also opened up their offices in India and are actively doing legal practice in the fields of Mergers, Take-overs, Acquisitions, Amalgamations, etc.
Interestingly, foreign law firms are not new to doing business in India. In the 1990s, a couple of foreign firms (Ashurst, Chadbourne & Parke and White & Case) were operating through liaison offices in India. To the relief of the hefty opposition, the Bombay High Court in its decision in Lawyers Collective v. BCI forced them to shut shop . Ruthless circumvention attempts saw foreign firms setting up Indian desks in other places such as London or Singapore.
Recently, a bench comprising of Hon’ble J. Goel and J. UU Lalit have in the latest Judgment of A.K. Balaji and clubbed cases of Global Indian Lawyers and Association of Indian Lawyers have upheld the previous decision of the Madras High Court and Bombay High Court that said that entry of foreign law firms in India is not allowed. The decision not only upholds the law in true spirit and intent but also guarantees that foreign lawyers or foreign law firms will be subject to the regulatory mechanism of the BCI.
Legal Process Outsourcing (LPO) is a common tool to bypass the strict regulations of Advocates Act for non-litigatious work. It refers to the practice of a law firm or any company/body obtaining legal support services from an outside law firm or legal support services company. This practice entails outsourcing any activity except where face to face conversation or personal appearance is required and necessary. India is emerging as a most favored destination for Legal Outsourcing. The Indian LPO market comprised of more than 100 LPOs in 2010. These LPOs exported legal services worth $640 million in 2010 employing more than one million lawyers. India’s LPO market is expected to grow to approximately $30 billion in 2022.
Since India is a member of GATS (General Agreement on Trade and Services) under the WTO, it is only a matter of time till services in the Legal Sector are liberalized. Further, former CJI Khehar along with Senior Advocates Harish Salve and others have opined that the benefits of allowing foreign lawyers in India far outweigh the negatives on any given day and that entering into MOU’s with other countries and working towards reciprocity is the path ahead. The BCI has recently accepted that it was willing to frame rules to allow foreign firms on the basis of reciprocity, but did not want to give foreign arbitrators a free run in the country, this can only make me hope that as an aspirant to work for the magic circle firms, the time is not too far when Foreign Firms with huge resources come to India.
The Author is a student of National Law University, Jodhpur, India.