Entry of foreign law firms into India: a move that may change the landscape

In a landmark move, reminiscent of the 1991 reforms, the Bar Association of India (BCI) on March 10 issued a notice opening the doors for foreign law firms and lawyers in India to open offices and practice with restrictions, in non-litigious matters. matters and international arbitration, on the principle of reciprocity.

In India, the legal profession is regulated by the Lawyers Act, 1961, which prohibits foreign law firms from practicing law or establishing offices here. Article 47 of the Law mentions reciprocity to allow the same. This legislation, following the pattern of most other countries, was enacted to protect the domestic legal industry and ensure that only Indian lawyers could practice law in the country. BCI acts as regulator.

This is a welcome step with several implications. The March 10 notification (https://bit.ly/3lMz2Qe) clarifies the conditions and detailed background, building on the Supreme Court’s decision in Bar Council of India v. AK Balaji, (2018) 5 SCC 379. This notice explains in detail foreign lawyer/company registration, regulations, eligibility, removal, disciplinary action, etc.

To remove any ambiguity, BCI issued clarifications (https://bit.ly/3K52ryB). Taken together, both cover various aspects, (i) foreign lawyers and law firms to advise their clients only on foreign law and international law, (ii) provide advisory work on those laws only to their foreign clients, (iii) function in non-litigation areas only, (iv) not appear in any Court, Tribunal, Board, Statutory or Regulatory Authority, (v) entry of foreign lawyers only on a reciprocal basis, (vi) foreign lawyers authorized to appear for clients in International Commercial Arbitration .

So what are the implications? India is the fifth largest economy in the world, the fastest growing globally and is fast moving to rank third behind the US and China. The liberalization of this BCI would help facilitate new inflows of FDI and technology. It would help investors to have greater comfort in having legal advice from their own lawyers, although for appearances in courts and tribunals, they would have to hire local lawyers. Second, foreign law firms would be able to work on arbitration matters, which would facilitate the emergence of India as a major international center for arbitration like London and Singapore, and would also allow Indian lawyers to work in this sphere there, providing immense opportunities for Indian lawyers. With their new offices in India, there would be a need for local expertise in matters related to transactional and corporate work such as joint ventures, M&A, intellectual property, contract drafting, etc. This will open new opportunities for the young and bright Indians. lawyers, and the reciprocity will also give them experience on a global level. With the new caseload, there would also be requirements for legal compliance, monitoring, economic analysis, consulting for former regulators, policy advice, etc. The infusion of new technologies like AI, ChatGPT, etc. it will also speed up and modernize. carried everywhere. Legal fees and remuneration may increase, and increased competition and brighter young lawyers may be in high demand. There may also be trends of consolidation of boutique law firms, etc.

If we look at the experience of other countries where it has been opened, there are several cases. In China, Korea, Japan and elsewhere, the opening of legal services has benefited inward FDI and the local legal industry as well. In Hong Kong, the local alliance is more liberal. It has become a major legal marketplace for finance, shipping, insurance, real estate, and dispute resolution. Also in Singapore, now a major global hub for arbitration, firms have several options for accessing local legal practice, including Qualified Foreign Law Practices (QFLPs). The UK has already opened up to Indian lawyers and is part of the FTA that is being finalized. It is also expected that there will be visa liberalization as well.

The size of the global legal services market was valued at around $1 trillion in 2021 and is expected to grow at a CAGR of 5.3 percent (https://bit.ly/3z1BzcD). In India it is also estimated to be a multi-billion dollar industry, with over a million lawyers. Thousands come each year from nearly two dozen National Law Universities (NLUs) and various centers of excellence, several reminiscent of Portia in Shakespeare’s famous “Merchant of Venice” during campus recruiting interviews, and now, foreign law firms will also participate. also.

We have seen in many cases that Indian companies have hired foreign law firms for their affairs. Firms like Allen & Overy, Clifford Chance, Linklaters routinely advise their global clients on mergers and acquisitions (M&A) involving Indian parties. Many global law firms like Wilson Sonsini, SYDLEY Austin USA, as well as Cleary Gottlieb UK USA, and others collaborate with Indian law firms and former regulators as consultants. Even in CCI’s early years, when law enforcement began in 2009 and I was the first president, I could see various legal hawks advising local law firms from behind.

While there have been some reservations in some quarters like the Society of Indian Law Firms (SILF) (https://bit.ly/3zuhBXW), the matter is expected to be resolved soon. Everyone realizes that competition is good for all sectors, and in legal services too we can expect this to benefit everyone. On a lighter note, there is a story in American legal folklore that in a town, if there is a lawyer, he starves. A second lawyer arrives and they start making some money and when the third lawyer comes to town they all get rich. The idea here is not to hit the livelihood of Indian lawyers but, based on the experience of other countries that have opened it up, to provide new avenues for young lawyers, help in the globalization of the legal services industry and make it easier for investment foreigner travels on her wings.

Dhanendra Kumar was Executive Director for India at the World Bank and Chairman of the Competition Commission of India, with input from Research Associate Aditya Trivedi and Intern Soujanya Boxy