Opening doors to foreign law firms: How will the move impact the Indian legal sector?

A segment of law firms and lawyers feel threatened by the entry of foreign lawyers and law firms who are expected to bring in modern ways of practising law.

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By – Satya Muley

Post Independence, the Indian legal sector has remained one of the most regulated fields. Foreign law degree holders and foreign law firms are still not allowed to practise in Indian courts. Advertisements and active solicitation of work by lawyers in India are strictly prohibited under Advocates Act 1961. Similarly, not many countries allow foreign law graduates to practise within their boundaries.

Practising law in a Court of Law is completely different from being a legal advisor or performing the role of a legal consultant in specific areas such as mergers and acquisitions, legal due diligence, or international commercial dispute resolution.

Indian law has its sources in traditions, customs, religion, and legal precedents apart from enactments. Thus, although foreign lawyers are prohibited from practising in Indian courts of law, it is also not practically feasible for them to adapt to the Indian legal landscape. This does not mean that such foreign lawyers or foreign law firms are completely inutile to the Indian legal landscape.

Changing status quo: The concerns

Every change comes with some concerns, and its own pros, and cons. Initially, the Bar Council of India itself was apprehensive about bringing such a change. However, in an affirmative-looking action, the BCI in March 2023 notified that the Foreign Origin law firms and foreign lawyers shall be allowed to practise law in India in a limited defined area of the legal sector.

Such a move was earlier seen to be a threat to the Indian legal workforce and expected to lead to a chaotic scenario in various fields of legal practise. There is also the apprehension about loss of opportunities for Indian law firms/lawyers.

Many Indian lawyers and law firms even in current times work in a very traditional manner sans use of much technology and are not equipped and prepared to accept modern processes, software, systems etc. Such orthodox is the mindset that a segment of Indian lawyers is also opposed to the homegrown virtual or e-courts processes.

This segment of law firms and lawyers feel threatened by the entry of foreign lawyers and law firms who are expected to bring in modern ways of practising law.

Benefits of Opening the Sector

The entry of foreign law firms and lawyers from a specific country is going to be based on the principle of reciprocity. This means Indian law firms and lawyers can also pitch themselves in the respective foreign countries and exploit the opportunities of practising law in a foreign land. Thus, the landscape available for Indian lawyers also enlarges by such an arrangement.

Indian law students and graduates will also be able to access the new opportunities offered by foreign firms in India or in their country of origin.

Many a time law firms having international presence also harbour a strong business and political network in diverse countries. This leads to an exchange of cross-border business and many international entities prefer the law firms of their choice and this shall increase work opportunities.

As per the new notification, foreign law firms and lawyers shall be allowed to practise in India only in the areas of international arbitration, Foreign Law, and Advisory on specific subjects. This shall lead to increased competition leading to improving the quality of work, talent, and systems employed – which means that the sector shall be an overall beneficiary.

The Global Scenario

Several countries such as UK, Hong Kong, Singapore have already established themselves as a hub of international law firms. Canada has been welcoming foreign law graduates for migration. England and Wales already recognise an Indian law degree.

Legal practise has been a closed domain area in most countries for their own citizens/residents. Although foreign law firms are found in places like UK, USA etc, they are not allowed to practise in Courts of Law. However, such law firms have collaborations and associations with local law firms and lawyers who deliver the requisite practice expertise and services to their clients on foreign land.

Mergers, Acquisitions, Tax, Arbitration, Investment, Migration are some of the most vibrant international law practise areas.

Indian Legal Landscape and the forthcoming change

Although the new notification is out, one may not see foreign law firms mushrooming quickly in India. India, a complex market with complex legal frameworks, may see foreign law firms coming in at a slow pace. However, with the implementation of virtual courts/e-courts projects in India, we may also end up seeing foreign law firms engaging in back-seat driving with some Indian law firms doing the front ending.

International associations between law firms are bound to increase. India has the potential to become a new hub of international arbitration and many international migrations-related foreign law firms may set up offices in India in the near future.

The Indian legal fraternity shall have to remain vigilant about the new opportunities coming across and tap them in time.

Checks and Balances

For a foreign lawyer to practise in India, he/she shall be required to be first eligible to practise in their own homeland, and also get registered with the BCI.
Immense opportunities in Mergers & Acquisitions, JV, IP, Arbitration, Contract drafting shall open up for Indian lawyers in foreign lands on the basis of reciprocity. They must look at such possibilities aggressively.

The BCI notification has put in a safeguard that states that a foreign Law firm may be denied registration in India if the number of Law firms/Lawyers from a specific country practising in India become disproportionate to the Indian Law firms/Lawyers practising in that specific country.

Broadly, the move appears to be opening up immense opportunities in non-litigation areas both in India and the reciprocal country. However, the notification needs to be further refined to put in more safeguards to ensure that foreign law firms do not operate via a surrogate or indirect practise model making use of Indian Law firms/Lawyers as a façade.

The author is an Advocate, Bombay High Court, and founder of law firm Satya Muley & Co.

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First published on: 20-03-2023 at 13:14 IST
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