Why foreign legal firms should set up shop in India

Written by Indu Bhan | Indu Bhan | Updated: Jul 28 2010, 01:58am hrs
The never-ending debate about the entry of foreign law firms into India is again in the news. The buzz is that British PM David Cameron is visiting India this week with an agenda to explore the possibilities of partnering deals, including opening up the legal sector. Of late, there seems to be tremendous pressure from foreign countries, especially the UK, but the Indian legal fraternity is up in arms. Slamming the governments revival of interest on the issue, the Society of Indian Law Firms (SILF) president Lalit Bhasin feels that the negative growth in the UK has led the British government and law firms to lobby hard with the Indian government for opening up the legal services market. It is not just a question of opening up legal services but a matter of opening our system of administration of justice. The legal profession in India is an integral part of our justice delivery system. Tampering with the same may lead to serious consequences, Bhasin warned.

Even law minister Veerappa Moily has ruled out any early decision on the UKs long-standing demand for access to Indias legal market, saying that it could not bulldoze the countrys more than two million lawyers into accepting foreign competition overnight. Clarifying the governments stand, he told FE, there is no question of allowing them. We will have to take the Bar Council of India (BCI) and the lawyer fraternity into confidence. The process of consultation is going on. It should be in the best interests of our country. Initially, the UK and China had opposed the entry of lawyers from the US, but ultimately they allowed them. Some fear factor will be there. We dont want anyone to bulldoze us, he added. But Moily is hopeful that this controversy will settle soon after the government puts things in place, including initiating proper legal reforms and upgrading the whole sector.

However, some section of lawyers feel that the sector should be opened soon as foreign firms can generate employment opportunities, where by upcoming freshers and trained lawyers can find a long-lasting career with better earning prospects. Speaking at various forums, Som Mandal of FoxMandal Little, too, has been quite optimistic about allowing foreign firms. He had in an earlier seminar said that we believe that in an upcoming economy like India, there can be plenty of work for everyone. Hence, the choice will depend on the tremendous need of foreign law firms with the size of the average Indian foreign acquisition rising ten-fold to $315 million in recent years. He also stated that the availability of foreign lawyers would greatly minimise costs to the Indian business enterprises, since as of date, to avail the services of a foreign lawyer, an enterprise would have to approach lawyers located in that jurisdiction, which obviously entails more expenses.

However, the Indian legal fraternity led by the BCI has been also opposing the globalisation of the Rs 600-crore legal services industry, fearing that they would not be able to compete with their foreign counterparts. The ammunition used for such opposition is the provisions of the Advocates Act, which provides that only advocates enrolled in India are entitled to practice law in India. The government will have to first amend the Act before allowing foreign firms to set up shop in India. The law minister also feels that it is high time to amend the Act as it has become archaic.

Though the solicitor general and newly-appointed BCI chairman has confirmed that the issue is being discussed among the council, he feels our first duty is towards the profession. We need to take two million legal professionals into confidence and look at the overall developments including connectivity, knowledge, management etc. We have already initiated the process but it will take sometime. But the law minister wants to ensure that all the stakeholders are consulted and wants the Supreme Courts views for broader perspective on the issue. Moily also feels that there is need to give importance to spreading better legal education. We need to build capacity and set up quality law education in the country. This will be most competitive. Foreign law firms entry will not be an issue, once we produce quality lawyers in India. He added, They can capture the global legal market. Issues such as entry of foreign lawyers into India will then become irrelevant. With qualified legal professionals, India will become the resource reservoir of the global legal fraternity.

Former Supreme Court Bar Association president MN Krishnamani says that if the liberalisation of the legal service sector is unavoidable, it should be done in a gradual and phased manner. We cant open the sector blindly. Before allowing foreign lawyers, one has to have proper regulations in place, keeping in view the nature of our economy and our countrys requirements. Allowing them without proper regulatory framework will be a disaster, says Ranji Dua, founder and managing partner of corporate law firm Dua Associates. He says that Korea took around 30 years to open the market and that too after having proper regulations in place. He also feels that the push is mainly from the UK as they have a small domestic legal market, unlike India and the US. They want to enter India for their own economic interests, Dua adds.

Daljeet Titus of Titus & Co also echoes Duas view. He said, the whole debate is in a limbo. Both the SILF and BCI are of the view that no such concession can be given now. According to him, we cant have it one way. We will have to amend the Act and need bar regulations to provide for some qualification for registered practitioners. Besides, the BCI needs to look into the area where foreign lawyers could be allowed. We can start with allowing them transactional advice with no right to address the court. At the same time, Titus says, that British firms have a better chance of being able to lobby as we have a common legal system and mutual heritage. He suggests, What is required to is to have a bar exam, which can give basic rudimentary and elementary education of our system, then only they should be allowed to do corporate work.