Foreign law firms’ entry still deadlocked

Foreign law firms’ entry still deadlocked

New Delhi: The entry of foreign law firms into the Indian legal market has been a controversial subject in recent years. The issue has made little progress despite a spate of recent visits by foreign dignitaries and lawyers who have pressed their case against Indian regulators.

Under existing regulations, foreign lawyers are not allowed to appear before Indian courts. But this is not about that kind of lawyer—known more formally as a barrister. This issue surrounds the entry of foreign corporate lawyers or solicitors engaged primarily for transactions and chamber advice.

Leading Indian law firms don’t want regulations to be modified to allow foreign lawyers to service corporate clients in India. Neither does the regulator of the legal sector, the Bar Council of India (BCI).

“They are not needed or required in India," says Lalit Bhasin, president of the Society of Indian Law Firms, a lobby group that has held this view for some years, of which many top firms are members.

Bhasin justifies this position, saying, “Even the clients of these foreign lawyers find them very, very expensive. Their clients have started passing work directly to Indian lawyers."

“And the Indian law firms may suffer the same fate as the accountancy firms of India. The Big Four (Ernst and Young, KPMG, PricewaterhouseCoopers and Deloitte) have virtually annihilated accountancy professionals in India and the same will happen to the legal services (if the market is opened up)."

On being asked about the many jobs opportunities that could possibly be created by the entry of foreign law firms, Bhasin says, “How can there be more jobs? Even the top recruits are being thrown out (from firms abroad) and they are coming back to India."

The BCI’s position is more complex because it regulates both litigators (advocates) and corporate lawyers (solicitors), and the latter are in a minority.

“As far as Indian law firms are concerned, they have done precious little for the Indian lawyers. I’m not concerned with this small, minuscule number of lawyers (corporate law firms)," said Ashok Parija, chairman of BCI.

BCI met with the UK delegation led by justice secretary Kenneth Clarke, but there wasn’t much support for British lawyers being allowed into India.

“I told the British, I will think about satisfying you only if you think about satisfying my three constituents, which are students, teachers and lawyers who are not into non-litigious practice," Parija said.

The BCI, which “solely and only" determines who can practise law in India, was open to negotiating with the British, Parija said. But more reciprocity was needed in recognition of Indian law degrees and allowing Indian lawyers to genuinely practice corporate law in the UK, he said.

Law minister Salman Khursheed did not respond to queries from Mint.

Several foreign firms have established “best-friend" or “good-friend" relationships with their Indian counterparts with an understanding that the Indian firm will eventually merge with the foreign firm in the event of the market opening up.

Several senior partners Mint spoke with from Amarchand Mangaldas, AZB Partners, J. Sagar Associates, Khaitan and Co. and Luthra and Luthra, did not seem keen at the prospect of foreign law firms entering the Indian market.

AZB Partners shared a relationship with UK’s Clifford Chance. Trilegal has best-friend relationship with Allen and Overy.

Other Indian firms also maintain client referral relationships with foreign firms.

Several Indian companies doing business abroad have employed the services of the magic-circle (London) and white-shoe firms (New York and Boston). Some notable examples include: Bharti consulted UK-based Allen and Overy on its acquisition of Zain in Africa last year, and state-owned Coal India used the services of US’s DLA Piper for its initial public offering earlier this year.