Govt begins paving way for foreign law firms

Govt begins paving way for foreign law firms

The Union government has started clearing the way for foreign law firms to practice in India even as it is in the middle of consulting India’s legal fraternity about their their concerns over impending foreign competition.

Union law minister H.R. Bhardwaj said on Tuesday that the government had started negotiations with Indian lawyers to prepare the ground for the entry of foreign law firms in India. “We’re negotiating this issue," said Bhardwaj on the sidelines of a seminar on international tax.

The ministry plans to wrap up consultations with domestic law firms by December, but Bhardwaj declined to put a timetable to any liberalization, saying that “these things aren’t?decided?in?time frames."

At stake is a booming sector that is very tightly controlled by Indian firms and lawyers that?operates under significant government regulations, some dating back to the British rule.

India’s robust economic growth and a growing influx of foreign firms has created a growing appetite among prospective clients and major non-Indian law firms to want to open the sector for foreign firms.

Even if there is a consensus and political will to open the influential sector, it could be a drawn out process.

If liberalization is allowed in the sector, it will require amendments to the Advocates Act and the Limited Liability Partnership Act, along with the evolution of a regulatory mechanism to ensure there’s a level playing field for the foreign firms stepping in.

The government met with representatives of leading law firms including members of the Society of Indian Law Firms (Silf) on 17 September to hear their views. It has asked them to suggest “safeguards" to cushion Indian firms from overseas competition once the sector is opened up, said Bhardwaj. However, the Indian legal fraternity says it is concerned that the government has already begun an exercise to alter definitions in the law, which are needed to allow foreign lawyers to practice here.

“A note circulated by the ministry at the meeting last week suggested we fall in line with the proposed liberalization of legal services," maintained Silf president Lalit Bhasin. Bhasin is also a partner at the law firm Bhasin and Co.

The law ministry has, however, assured the lawyers that it was open to a dialogue and has asked the society to submit its comments by 31 October. The society is also slated to meet with ministry officials on 3 October.

“But, three days ago, the ministry of law filed an affidavit in the Bombay high court pleading that practice of law in India should be interpreted as the practice of Indian law alone," Bhasin points out. “This would bring the foreign lawyers who practice international law in India outside the purview of the Indian Advocates Act."

The affidavit was filed in a case where Lawyers Collective, a legal service provider in matters of public interest challenged few foreign firms that were holding licences with the Reserve Bank of India that granted them permission to have liason offices in India.

The Indian Advocates Act regulates the legal practice in India.

Sanjiv Shankaran contributed to this story.