You just cannot stop the entry of foreign law firms

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: That law firms in India are totally against entry of foreign law firms, is understandable but not justifiable. However, why individual lawyers in India are against entry of foreign law firm is neither understandable nor justifiable. The bottom line is, not many amongst my fellow professional really gave a serious thought on this issue all these years. In most developed countries not more than 20% of the lawyers of that country work in court or litigation matter while in India it is the reverse situation. In fact, 90% of our lawyers in India are litigation lawyers.

With globalisation and development of new laws and statutes and with complex business structures, the importance of corporate law advice from lawyers have evolved into a much bigger practice than litigation practice and consequently the development of law firms. It is only in the last 15 years that one has seen the metamorphosis of large law firms in the developed countries.

It is, therefore, not very surprising why some law firms and lawyers here are so much against entry of foreign law firm. Opening the entry of foreign law firm in India will, no doubt, bring in competition and raise the standards of service in the legal sector, which most Indian law firms and lawyers are neither ready to face nor let go their monopoly. At the same breadth, they also profess for other clients to the government that monopoly in other sectors is not good for the economy.

In August 2005, Society of India Law Firm, organised a meeting of top law firms with the Prime Minister. During the meeting, it was conveyed to the Premier that foreign law firms should not be allowed to come because of the great disadvantage Indian law firms have, including having no rights to advertise, limit of 20 partners, financial strength, etc. It was further conveyed that under the commerce minister, a committee has been formed to consider the fall-out of opening of the service sector under India’s commitment to the WTO. The Prime Minister asked the delegates as to the competence of Indian lawyers and immediately he was told that Indian lawyers are very competent and are doing deals in various countries such as China and many African nations. The Prime Minister immediately retorted back saying that if the Indian lawyers are so competent, then why they are scared of competition.

Ask any foreign law firm, which is keen to come to India, if it is interested in practicing law in an Indian court. It will not agree even if you insist. Accountability of our profession is held in a much higher esteem in their country than in ours. According to statistics, very few countries allow foreign lawyers to practice domestic law in their country.

On or about 1991, when India started to liberalise its economy, law firms like Ashurst Morris Crisp (now Ashurst), White and Case and Chadbourne Parke set up liaison offices by taking permission from the Reserve Bank of India. Some foreign law firms set up temporary liaison offices in the country to provide service to their clients and hired some Indian lawyers to assist in drafting the contracts and advising their clients on Indian law.

In 1996, a group of Indian lawyers filed a petition in the Bombay High Court against these firms, especially when the Advocates Act clearly does not allow it. The court passed interim orders, staying the permission of the foreign law firm operating through liaison offices. As a result, most of the firms that opened offices departed.

The foreign law firms, thereafter, started lobbying hard for a legal presence in India. Some of the Indian law firms who had considerable work, started getting worried about competition if the foreign law firms are allowed in the country. They had two alternatives, either to compete or tie up with some foreign firms. While some are certain that they cannot compete, the others were not confident that any good foreign law firms would tie up with them.

If we do not take steps to ensure the entry of foreign law firms, we will have no one, but ourselves, to blame, since some foreign law firms will still find loopholes to enter this lucrative Indian market and they would do so “unregulated”. There are few foreign law firms who have already made strategic tie-ups with Indian firms, and even claim outside India that they have Indian affiliates.

The other question that bogs Indian Bar leaders is the question of Indian lawyers practicing in other countries. There is a misconception amongst the Indian Bar leaders who run the

Bar Council of India (BCI) that Indian lawyers have no reciprocal arrangement in other countries. That is not true. Many countries around the world allow foreign law firms and that includes Indian firms as well, to open offices. Even an individual Indian lawyer can open an office and practice Indian law in many countries. In countries like the US, UK, Singapore and Dubai, Indian law firms or individual Indian lawyers can set up offices without any problem and some Indian law firms have already done so.

I strongly believe that entry of foreign firms in India would not only be good for the image of the country but will usher in a fresh breath of life to our profession. This would also benefit a whole lot of Indian companies which are now investing in several countries worldwide. If the foreign law firm is present in India, they can guide the Indian companies better and quicker, in relation to their investments outside India.

Going forward, it is recommended we do the following:

A. The law ministry, the Attorney General's office, the BCI and some leading Indian law firms and lawyers ought to form a committee and set up the rules for foreign lawyers practicing in India.

B. The guidelines for advertising in law directories, maintaining websites, publishing of firms brochure, etc, ought to be streamlined

C. The law prescribing a limit of 20 partners should be reviewed and the concept of limited liability partnership adopted.

D. Professional negligence insurance should be made compulsory for all lawyers.