The common refrain is that the actual implications of the BCI’s announcement will become apparent only once the rules have been framed and that the devil will lie in the detail. (Representational image)
The limitations placed on foreign law firms seem designed to provide Indian lawyers with an opportunity to establish offices overseas and follow their clients as Indian conglomerates grow in size and international footprint.
For those of us who entered the legal profession in the 1990s – the opening of the Indian market for legal services has been a long time coming. While the winds of liberalisation swept through the Indian economy, it seemed inevitable that the profession would open to the world. However, what followed were decades of uncertainty on the implications of opening up due to the absence of a level playing field for Indian lawyers who were amongst other things unable to advertise, own websites or offer alternative fee arrangements like their international counterparts. An abiding mistrust of what opening up the profession would entail and various other issues resulted in stiff resistance to the liberalisation of legal services. Until now.
On all counts, the Bar Council of India’s (BCI) recent announcement that foreign law firms would be permitted to establish offices in India is a watershed moment. Overnight, the BCI in its Rules for the Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022 (Rules) has called out some of the fault lines in the debate surrounding liberalisation which had resulted in status quo, and suggests that finally “the time has come” to take a call on the opening up of the legal profession.
Curious Timing
Some commentators have linked the timing of the BCI’s announcement to the recent visit of the President of the Law Society of England and Wales, the ongoing UK-India FTA negotiations, the recent international arbitration week in New Delhi, etc. While the reasons for the timing are unclear from the BCI’s own announcement, the profession has generally reacted positively to this development, with the common refrain being that the actual implications of the BCI’s announcement will become apparent only once the Rules have been framed and that the devil will lie in the detail.
Nevertheless, driven by apprehensions of certain sections of the bar, the BCI was compelled to issue a clarification a few days later, reiterating that foreign law firms would not under any circumstance be permitted to advise on Indian law and that practising lawyers had nothing to be concerned about.
So, what exactly do the BCI Rules permit foreign law firms to do in India? The BCI has set out a few broad prerequisites for international law firms to establish offices in India: the first being that reciprocity is a precondition to permitting international lawyers and law firms to open offices in India, and they will only be allowed to do so if their own home jurisdiction allows Indian lawyers a corresponding right. The second is that foreign law firms will be allowed to advise only on foreign law and are precluded from advising on Indian law altogether. The third is that foreign law firms will not engage in any form of litigation before Indian courts, tribunals or regulators, although they may advise on international arbitration.
The BCI has introduced a registration mechanism for foreign law firms to set up offices in India and requires that Indian lawyers engaged by such foreign law firms, forgo their rights as an “Advocate” under the Advocates Act, including the right to assert advocate-client privilege.
Opportunities And Limitations
These limitations placed on foreign law firms seem designed to provide Indian lawyers with an opportunity to establish offices overseas and follow their clients as Indian conglomerates grow in size and international footprint. Foreign law firms established in India would likely do the same and advise their international clientele on corporate and M&A transactions, where the choice of law would be less relevant. Such delineation is not unknown in other jurisdictions which have opened up gradually to foreign law firms – both Singapore and China for instance, allow international law firms to set up local offices, but do not permit them to appear before courts or advise them on national law.
However, it has been pointed out that the delineation between practising national and international law on transactions could be hard to monitor and even harder to implement and that the BCI will need to enhance its supervisory role to ensure that foreign law firms adhere to the Rules. It has also been pointed out that antiquated rules that apply to Indian lawyers – such as limitations on advertising, require immediate reconsideration or else it will place them at a competitive disadvantage.
Questions have also been raised on why foreign law firms should not be subject to the same ethical rules for misconduct as their Indian counterparts if they are operating in India. A recent meeting of the Society for Indian Law Firms (SILF) laid bare these misgivings and it seems likely, and rightfully so, that the BCI will conduct more widespread consultations before giving shape to the implementing regulations.
Opening up the Indian market for legal services will result in greater competition for well-established Indian law firms, create more opportunities for Indian lawyers and introduce much-needed technology and infrastructure to the practice of law. Indian law firms that are focused on providing contentious advice in niche practice areas,
representation and litigation before courts and regulators will be particularly sought out for their expertise since these are areas where foreign law firms will not be permitted to advise their clients.
Equally, we are likely to see informal alliances between established large corporate law practices – or “best friends” relationships flourish, as the practice of law in India moves the country closer towards its ambitions of becoming a $10 trillion economy.
Samir R Gandhi is a co-founder of Axiom5 Law Chambers, a boutique competition law practice, and visiting faculty at the National Law School of India University, Bangalore. Views are personal, and do not represent the stand of this publication.
SAMIR R GANDHI is a co-founder of Axiom5 Law Chambers, a boutique competition law practice, and visiting faculty at the National Law School of India University, Bangalore.
(moneycontrol.com)