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Entry of Foreign Law firms in India: Boon or Bane

Evolution of practice of legal practices and law firms in India

In the ancient era, people used to reside in the formation of small groups. Usually, when there were disputes and quarrels the people went to the King to seek justice and remedy for their grievances as there existed no specialists to deal with such instances only the Kings of the respective kingdoms addressed such issues and delivered justice to their subjects based on the advice of the council of ministers. Further, the King's court investigated the matter and delivered justice that they deemed fit.

The Mughals governed Medieval India for a brief while, and despite new innovations, the legal profession was not visible throughout this period. However, both sides were permitted to appoint their vakils. The body decides the matter, and they are given a share of the settlement. They work as principals' agents rather than as lawyers.

The Model Legal System was formed in India during the British Raj. The English law was described in the charter of 1661. The East India Company, not the British crown, exercised jurisdiction over the courts prior to 1726.

In the Post-Independence period, Committees and Acts were formed by the Indian Government to regulate legal profession in the country.

Mentioned below are the governing bodies of lawyers and law firms in India:

  1. All India Bar Committee, 1951

    Under the chairmanship of Justice S.R. Das, the All India Bar Committee was established in 1951. The committee proposed that an All India Bar Council and State Bar Councils be established in its report. It was suggested that advocates' common role be preserved, and that they be allowed to practise in all courts across the country. It was also advised that there be no more non-graduated pleaders or mukhtars recruited.
  2. Advocate Act 1961

    As a result of the report of the "All India Bar Committee Act, 1961". The Central Government enacted the Advocate Act 1961. This Act has been in force in entire India. It brought Revolutionary changes in the legal profession in India.

The requirements for registering as a lawyer under the Indian Bar:

  • The person should be a Law Graduate and ought to be an Indian Citizen
  • The person should be of minimum of 21 years old.
  • The person should have a degree in Law from a law school which is recognized by the Bar Council of India or
  • Secured a foreign qualification in law which is duly acknowledged by the Bar Council of India in order to be accepted as a 'lawyer' under the India bar.
  • In India, practicing as an attorney with a foreign degree in Law does calls for rounds of speculation for guaranteeing its legitimacy and lawfulness.

What is Corporate Law?

Corporate law deals with the formation of companies and their relationships with each other, with other companies/businesses.

What is Litigation?
It is the practice of taking a case to the court to resolve a dispute or charge someone with a crime.

Pros of going Corporate:

  1. Higher salary- Corporate sector has a better salary structure
  2. Additional Perks- Companies give home, laptops, car for transportation to their employees.
  3. More Specialised- The work area is more specified and specialised.

Cons of going Corporate

  1. Long working hours- Have to complete the task within the deadline.
  2. Working in isolation- Have to work in the office cubicle, and court visits are not often.
  3. Not as many job- Limited number of jobs opportunities because as of now there are less corporate law firms in India.

Global Position

Entry of foreign law firms in USA

It can sometimes be difficult to practice law in the U.S. as a foreign-trained lawyer, but it's not impossible. The New York Board of Law Examiners administers the New York bar exam and has dedicated requirements just for foreign-trained lawyers who want to practice there. Like in New York, the California State Bar has relatively liberal admission standards for foreign lawyers. In fact, it might be even easier to sit for the bar exam here than it is in New York. Eligible to take the bar exam in California without completing any additional requirements.

Entry of foreign law firms in Singapore

In Singapore, foreign lawyers can apply for full registration or restricted registration under the Legal Profession Act. Prior to 2004, the Legal Profession Act permitted foreign lawyers to appear in arbitrations only if they were accompanied by a Singapore lawyer where cases involved Singaporean substantive law. An amendment to that Act in 2004 removed this requirement. Currently, there is no restriction.

Entry of foreign law firms in Hong Kong

It has not yet entirely liberalized its legal services market. Foreign lawyers can practice in Hong Kong as barristers, solicitors or through law firms i.e. the court can grant temporary admission to a foreign lawyer to act as a barrister in Hong Kong on an ad hoc basis. Foreign lawyers are subject to certain requirements, such as a minimum number of years' post-qualification experience in the law of his or her jurisdiction. Foreign lawyers and law firms, unless specifically permitted, cannot practice Hong Kong law.

Entry of foreign law firms in Canada

The National Committee on Accreditation has created a re-certification process that evaluates law credentials obtained from outside of Canada and gives international lawyers an opportunity to speed up their preparation for the Canadian Bar exam. Once an international lawyer meets all of the NCA requirements, they may request a Certificate of Qualification.

Indian Position

What does the Law say about Entry of Foreign Law Firms?

Section 7(1) of the Advocates Act, 1961 lays down the principle of reciprocity, which means that a national of another country may be admitted as an advocate in India if Indians nationals are allowed in the other country. However, the Act prohibits foreign nationals from practicing the legal profession in India.

Section 24 of the Advocates' Act also provides the conditions required to be fulfilled for enrolment of advocates in State Bar Councils. The provision also allows enrolment of foreign nationals on the reciprocity principle. Section 47(1) states that a foreign national cannot practice law in India if there is no reciprocal arrangement in the foreign national's country.
Section 49 gives the power to BCI to make appropriate rules with regards to enrolment of non-Indian citizens who hold a foreign degree in law. In 2016, the BCI laid down draft rules relating to registration and regulation of foreign lawyers in India.

Influx of Foreign Law Firms

The Indian Legal Profession, being one of the largest and oldest occupations in the world, hasbeen enrolled across the country with more than 1.4 million advocates.
Under the Advocates Act 1961, a foreigner/foreign law firm is not entitled to practice law in view of the restrictions contained under Section 24 (i)(a) of the Act provides that a person shall be qualified to be admitted as an Advocate on the State Roll only if he is a citizen of India.

The fact remains that India is globalizing its economy is still in process. Admitting that joining foreign firms in India is only a matter of time is more sensible. This should not, however, mean that their activities should not be controlled/regulated, as otherwise they could simply push the Indian firms out.

Foreign countries permit Indian lawyers to work there, so why shouldn't we reciprocate the favour after some small requirements are met? India is a founding member of the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO). The agreement's main objective is to promote the free flow of goods worldwide.

India, a signatory of the General Agreement on Trade in Services (GATS), a World Trade Organization (WTO) body, is obliged to open up the service sector to member nations.

Legal profession is also taken to be one of the services which is included in GATS. The business transactions of foreign law firms in India are obviously governed by the Indian law and the foreign law firms (FLF's) and foreign legal consultants (FLC's).

Lalit Bhasin, The President of Society of Indian Law Firms (SILF) while speaking to media stated that they are willing to allow the Foreign Law Firms in the Indian market, but it should take place in a phased manner. Out of the four phases, during the first phase the Indian firms should be allowed to own websites as well as brochures. In second phase, foreign firms should be allowed to give advice to their Indian Clients on the Foreign Laws. In the third phase, they should be allowed to have collaborative advice. During the fourth and last phase, they should be allowed to practise domestic laws with certain exceptions.

However, Bhasin emphasised on the fact that the foreign law firms should be excluded from key sectors such as Defence stating the example of Singapore. The foreign law firms have already started hiring fresh law graduates from law colleges from the country. They offer them monetary benefits that are much higher than the average offered by Indian law firms. Their message is clear, if you don't let us work in your country then we're going to take your brightest law graduates and camp them in our country and pay you in pound sterling or dollars or anything.

The in turn would affect the Indian law market will surely be affected in this move but in a positive note, if the law firms enter India so they will bring more professionalism and western work culture and also help the freshers to get an international exposure. Most of the Indian law firms will have the likely option to go for collaborations with the foreign firms or might eventually merge with Indian divisions of foreign law firms. They would not be able to continue independently. It would also bring reforms in the legal and judicial system.

After so many years of opposing allowing foreign law firms to open their offices in India, the government appears to have weakened somewhat. As 20 percent of the world's lawyers are Indians, the nation is emerging as a booming market in this region and has rich potential to host future lawyers.

Registration and Regulation of Foreign Lawyers in India Rules, 2016

The draft rules relating to registration and management of foreign lawyers in India.

The draft rules include the following provisions

  • Foreign law firms and lawyers are allowed to set up an office in India, on a condition that they register with BCI for an initial period of 5 years and practice only non-Indian law.
  • Foreign lawyers would be considered as Indian lawyers under Section 29, 30, and 33 of the Advocates Act.
  • Foreign lawyers are barred from appearing before Indian courts and tribunals, and cannot provide legal advice relating to any case filed before them.
  • Foreign lawyers are allowed to hire Indian lawyers or form a partnership with them.
  • A registration fee of $25,000 for individuals and $50,000 for partnership firms are required to be paid
  • Individuals are required to pay a renewal fee of $10,000 and partnership firms have to pay $20,000.
  • Foreign lawyers are allowed to participate in international arbitration in India.
  • Foreign lawyers are required to pay a security deposit to practice in India. This amount is refundable
  • Foreign lawyers are only registered on a reciprocal basis.
  • The ethics and code of conduct applicable to Indian lawyers are also applicable to foreign lawyers.
  • Some cases related to the influx of foreign law firms in India.

The Bombay High Court Judgement (Lawyers Collective V Bci, 1995)

The main issue in the Bombay HC Judgment was whether foreign law firms could open liaison offices in India in non-litigious matters without being registered as lawyers under the Act.
The Bombay High Court held that the term "to practice profession of law" used in Section 29 of the Act is sufficiently broad to include both litigious and non-litigious practice. As a result, international lawyers and law firms are obliged to comply with the law. India's Reserve Bank was not justified in granting permission to open liaison offices in India to foreign law firms.

The Madras High Court Judgement (Ak Balaji V Goi, 2012)

  • The main issue posed in the Madras HC Judgment was whether foreign lawyers and law firms were able to practice law in India in the case of litigation and trade.
  • The writ petition was filed by Mr AK Balaji, Advocate, seeking directions restricting the entry of foreign lawyers and law firms in India.
    The Madras High Court held that:
    • There was no bar on foreign lawyers and law firms to participate in international commercial arbitration in India. It was observed that foreign contracting parties are entitled to lawyers from their own country. Foreign lawyers and law firms can fly in and fly out of India for advising their clients in India on foreign law and there is no bar on the same.

The Supreme Court Judgement (Ak Balaji V Goi, 2018)

The Hon'ble Supreme Court held that the phrase "practice of profession" includes both litigation practice and non-litigation practice. The understanding of "practice of profession" has thus been given a wider meaning to include provision of advisory services, legal opinions etc.

On the issue whether there is a bar on foreign lawyers and law firms to visit India on a fly in and fly out basis for giving legal advice regarding foreign law, the Hon'ble Supreme Court held a casual or temporary visit for giving advice will not be covered under practice and the same is permissible.

The Hon'ble Supreme Court has clearly held that foreign law firms/lawyers cannot practice profession of law in India either in the litigation or non-litigation side, without compliance of relevant provisions of the Act and concerned Rules and Regulations. This implies that the foreign law firms/lawyers cannot be allowed to set up permanent set ups or liaison offices in India and can only visit India on temporary or casual visits which have been held to be not amounting to practice.

Major Issues

What Foreign Lawyers Want?

  • Foreign firms do not want to reach those parts of the Indian market that local Indian lawyers have traditionally served. They have no interest in this field, but would like to concentrate on advising international business community inward and outward investors.
  • The English lawyers are allowed to offer advisory services in English law.
  • The English lawyers are allowed to enter into partnerships with Indian lawyers in Ind ia and hire them.

Major challenges of foreign law firms if established in India:

  • threat of lawsuits and other regulatory barriers, such as taxation;
  • stringent competition from local firms;
  • competition from other foreign firms already in the market;
  • continued global buy-in from partnership; and
  • maintaining global quality standards.

Effects on Indian law firms due to influx of foreign law firms

If 20 global law firms hire 2,000 youngsters from India, whose future are we stealing? - Harish Salve

The primary argument against the entry of foreign law firms in India is that it may take away business opportunities from the local law firms and lawyers. Another argument against permitting law firms in India is the difference in legal training and education between India and other countries. This difference can affect the employment opportunities for law graduates and lawyer who've just begun their practice.

Sr. Advocate, Mr. Gopal Jain believed that:
When foreign players can come and play cricket in India, why can't foreign lawyers come and practice here?

Features of Foreign law firms in India

The benefits of allowing foreign lawyers in India far outweigh the negatives on any given day. Transfer of Knowledge, Global Opportunities for Indian Lawyers, Job Creation, Improved Quality of Service, brings specialization in international corporate law, it provided domestic lawyers with access to international law firms' multi jurisdictional knowhow and technical expertise, a high level of foreign direct investment in the country, and facilitated investment by local firms overseas. The Indian legal fraternity stands to gain from this move and not lose out. Graduates fresh out of law school will be able to find lucrative opportunities in their home country, but with international exposure.

The Road Ahead
As the Former Chief Justice of India J S Khehar suggested, reciprocity is the solution to this problem. The Advocates Act, 1961 also provides for the same.

Entry in India of foreign firms and foreign lawyers would lead to increased competition. In addition, Indian companies must strive to deliver the best price and provide the best service. Drawing an analogy from the software sector, India is the primus inter pares amongst the developing countries of the world and thus the best choice of market for the investment of foreign capital.

In my opinion, it is extremely positive that the arrival of foreign law firms in our country will not only contribute to our foreign reserves and, in due course, to GDP, but also, the consequence is a boom in jobs for law graduates who are legal profession debutants (both litigation and corporate), in terms of better coverage and a high pay package; will also be of value to law students in terms of easy access to internship programs.

I also strongly believe that, before foreign law firms are given the green signal to build their base in our country, it is of the utmost importance that the government revamp the state of affairs in the legal sector in order to eliminate the unfair constraints (discussed above), which undoubtedly place fetters on the healthy development of our nation. The explanation is that without eradicating the unnecessary restrictions (included in our anachronistic laws), which tend to hamper our domestic law firms ' growth rate; domestic firms will not be able to meet the challenge efficiently and productively which will be posed by their foreign legal counterparts.

In addition, on the same basis, I would also like to recommend that the entry of foreign law firms into our country should be coupled with the introduction of an impressive legal framework and also with the establishment of an effective regulatory mechanism to ensure that the arrival of foreign law firms would result only in healthy competition on the domestic legal market and not in annihilation.

It is interesting to note here that the 15th Law Commission in its Working Paper has itself suggested some of the safeguards which could be adopted. In this connection, it has referred to article XIX(2) of the GATS which allows the process of liberalisation to take place with due respect for national policy objectives and level of development of individual members, both over-all and individual sectors.

The fact remains that India is in the process of globalizing its economy. In the process, the legal market opening up to competition from the international legal market is rather inevitable. Instead of deliberating about the advantages and disadvantages of the legal markets being opened up to foreign firms, it is perhaps more sensible to accept that the entry of foreign firms in India is only a matter of time. However, this should not mean that their operations should not be regulated, since otherwise they may just push out the Indian firms. For law school graduates, their presence in India could well translate into an increasing range of job opportunities, apart from their presence in India significantly influencing the way in which the Indian legal market evolves in the 21st century.

Lastly, I would like to conclude that, whether today or tomorrow; opening the doors of the domestic legal market to competition from the international legal market is rather unavoidable, so instead of providing resistance to the entry of foreign law firms, there should be a sincere attempt by all (the government, domestic law firms and legal practitioners) to rework the situation, in order to derive utmost benefit from it. The common good must come in the way of no one's vested interest. I am not in favour for allowing foreign law firms just for monetary purposes, rather I support it in order to make Indian lawyers more effective.

Entry of foreign lawyers in India in a phased manner is the need of the hour so as to allow the Indian legal service market to keep abreast with the global legal industry.

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