One
of the most conspicuous and significant outcome of the process of globalization
and liberalization has been the opening up of economies of evidently all the
countries around the globe. There has been mounting pressure from members of
the WTO for opening of the legal services sector in India. On the other hand,
there has been a strong apprehension of the Bar Association of India and
particularly the Bar Council of India in permitting foreign law firms to enter
India as according to them, it may lead to the shrinking of opportunities
available to the domestic lawyer.
As
India is a signatory to the General Agreement on Trade and Services (GATS), it
has an obligation to liberalise its legal sector. It has not been able to make
much headway on this due to stiff opposition from Indian lawyers'
representative bodies Bar Council of India (BCI) and Society of Indian Law
Firms (SIFL) and legal cases against allowing foreign law firms to practice
international law in India.
The
Indian Legal Profession
The
legal profession in India is one of the most lucrative and cumulative
profession, with approximately more than 6 million advocates practicing in this
arena. The chief players providing service in this sector includes individual
lawyers and majorly family run law firms. It is pertinent to note here that the
right of an advocate to practice law is not a fundamental right but a statutory
right; as it is governed by the provisions of the Advocates Act, 1961
(hereinafter to be known as ‘the Act’) and the Bar Council of India Rules, 1975
(hereinafter to be know as ‘the Rules).
The
Act, states that from the appointed day, there will be only one recognized
class of persons entitled to practice the profession of law; that is advocates.
Section 2 (1) (a) of the Act defines an advocate as an advocate entered in any
roll under the provisions of the Act. To be clearer, a person who has a law
degree recognized by the Bar Council of India and who is enrolled with any
State Bar Council is an advocate entitled to practice law in India. It is also
to be noted that the Rules may prescribe a class of or category of persons
entitled to be enrolled as advocates, also the conditions subject to which an
advocate must have the right to practice and the circumstances under which a
person must be deemed to practice as an advocate in a court.
It
is worthwhile to note here that advocates are divided, broadly, into two
groups: senior advocates and other advocates. Moreover, unlike United Kingdom,
where the legal services are rendered by two classes of legal professionals —
barristers and solicitors; in India there is no such classification per se. The
role of the barrister comprises of litigation, i.e. representing clients in the
proceedings of the courts and giving specialist legal opinions. Solicitors,
conversely, advice their clients on an array of matters affecting their legal
rights, including transactional work; but their work does not include
litigation. In India, these two roles are fused; an advocate enrolled with the
Bar Council of India (the body that regulates the legal professional) is
competent to perform both the services and he often does so.
Moving forward, it is submitted that the legal profession in India, which is viewed as a ‘noble profession’, is not free from the shackles of regulations. In a number of judicial pronouncements delivered by the Honourable Supreme Court of India, these regulations have been justified on the ground of public policy and dignity of profession.
It
is pertinent to mention here that over a past decade there has been a sea
change in this profession and it has become very competitive and promising. It
may be said that the credit, though not absolutely, goes to the processes of
globalization and commercialization, which has, by enlarging and modifying the
Indian economy, resulted in an enormous demand for professional legal services
all around the Indian nation. Needless to say, with the advent of globalization
and the consequent development of corporate and other allied laws and
regulations, the importance of corporate legal advice from lawyers has evolved
into a much bigger practice than litigation practice and consequently has led
to the establishment of overwhelming number of law firms.
Unfortunately, though the demand in the Indian legal sector is met by the domestic lawyers, there is still a dearth of proficient professional legal services, due to the lack of fierce and adroit competition. At this juncture it would be worthwhile to take notice of the following observation made by the Hon’ble Justice Krishna Iyer as early as in the year 1976 in the case entitled Bar Council of India v. M V Dhabolkar – he noted “the law is not a trade, not briefs not merchandise, and so the heaven of commercial competition should not vulgarise the legal profession”.
However, contrary to the abovementioned observation, it is humbly submitted
that there has been a sea change in the erstwhile circumstances, not just in
western countries but even in our homeland, and the never ending processes of
commercialization and globalization have resulted in the integration of the
domestic economy of the countries with that of the world economy, which in turn
has resulted in showing the signs of trade facet of legal profession all around
the globe.
The
controversy
The
issue of liberalizing the Indian legal sector by allowing foreign firms to have
an access to the Indian legal market is apparently not a new one and definitely
has never been free from controversy. The opening up of the Indian economy in
the early 90’s led to the entry of the foreign law firms in India. First cases
that came to the limelight were opening up of liaison offices by Ashurst of
UK and White & Case and Chadbourne & Parke of
the US. These firms were granted permission under the Foreign Exchange
Regulation Act (FERA) to start liaison activities only and not active legal
practices.
However, the foreign firms and the foreign governments (mainly that of United
States and United Kingdom) were not content with this reception and demanded
more relaxation in the laws and policies, governing the subject of practice of
the profession in India by the foreign firms and lawyers. From here started a
series of protests by the domestic lawyers and law firms against the move of
the Indian Government in allowing the foreign firms to set up liaisons offices
in the country and eventually led to agitations thwarting any further
relaxation in the matter of entry of foreign law firms.
Simultaneously,
in 1995, Lawyers’ Collective, a public interest trust set up by lawyers to
provide legal aid, moved Bombay High Court under section 29 of the Advocates
Act, challenging the right of foreign law firms to “practice law” in India. It
is submitted that the crucial question which needed the kind attention of and
adjudication by the High Court was whether foreign law firms could set up
offices in India and whether the term “practice the profession of law” extends
beyond appearing before a court to advising clients and drafting legal
documents.
It
was vehemently contended by the Petitioners in the said Petition that the Act
provides that only advocates enrolled in India are entitled to practice the
profession of law in India. It was further argued that the term “practice the
profession of law” would include not only appearance before courts and giving
legal advice as attorney, but also drafting legal documents, advising clients
on international standards and customary practices and transactions.
Conversely,
it was argued by the Central Government, who was the Respondent in the said
Petition that Advocates Act only prohibits foreign lawyers from appearing
before a court and not form advising clients and drafting legal documents. The
Bombay High Court in the said case, observed in an interim order, “In our
view, establishing a firm for rendering legal assistance and/or for executing
documents, negotiations and settlements of documents would certainly amount to
practice of law.” Thus, the Hon’ble High Court very aptly expanded the
scope of the expression ‘practice of law’; thereby, including within its scope
the practice of rendering legal assistance, executing documents and negotiating
and settling the same.
Moreover,
the Court also held that the Reserve Bank of India’s (RBI) license did not
amount to a permission to practice law, but only to establish a liaison office
to act as a communication channel between the head office and their parties in
India. The High Court further ordered the government to conduct an inquiry into
the issue and take appropriate action against the firms. This however, was overruled
recently by the Bombay High Court which held that permissions granted by the
Reserve Bank of India to the foreign law firms as mentioned above in the early
nineties to set up liaison office in India, is not valid in law. The court also
held that practice of law in India, both non-litigious and litigious, requires
prior enrolment under the Indian Advocates Act, 1961. However, notwithstanding
the said sub - judice litigation and the resistance accorded by the domestic
lawyers, many other foreign firms have established their presence in India by
entering into best friends agreements with the domestic law firms and are
outsourcing their legal services to private as well as governmental
organization. For instance, firms like Allen & Overy (advises
on power projects, particularly in the oil & gas sector; acts for Indian
banks, besides doing advisory work for corporate houses in India) , CMS
Cameron(advised the government of Orissa on privatization of the state
electricity system), Denton Wilde Sapte (advises Indian companies like Tata
Electric and Gujarat State Energy Company) , Linklaters (represented
clients in their disputes with the Maharashtra State Electricity Board), Baker
and McKenzie, have been amongst the most active foreign law firms in
India for the past two decades. It is submitted that all these firms have
formidable experience in IPR, infrastructure and energy laws, domestic and
cross border transactions, project financing, TMT, FDI, arbitration and
financial laws.
The regulations hampering the development of the Indian legal sector.
The regulations hampering the development of the Indian legal sector.
The
first and the foremost legislative enactment which, according to many, seeks to
hinder the development of the Indian legal sector is the Advocates Act Passed
in the year 1961 by the Parliament of Republic of India. The Act seeks to
regulate and consolidate the laws relating to legal practitioners and at the
same time also provides for the constitution of Bar Councils and an All - India
Bar. Next in the line is the Bar Council of India Rules, 1975, which also,
according to many, has left no stone unturned in impeding the liberalization of
the sector. It is pertinent to mention here that there exist certain provisions
in the Act and the Rules which blatantly imposes restrictions on trade
oriented legal service sector by not just precluding foreign players
from practicing law in India but also by creating heavy restrictions for the
domestic players as well. These restrictions have no doubt profoundly hampered
the rate of development in the sector and the interest of patrons of legal
services.
It
would be worthwhile to summarize the provisions which preclude the
liberalization of the legal sector in a point form for a better understanding:
1. The first
and the foremost provision which aims at shackling the liberalization of the
legal sector in India is Section 24 of the Advocates Act. Section 24 of the Act
provides that only advocates recognized under the Act can practice law and
further mandates that a person shall be qualified to be admitted as an advocate
on a State roll, if he fulfills the following conditions, namely: -
o
He is a
citizen of India (Provided that subject to other provisions contained in this
Act, a national of any other country may be admitted as an advocate on a State
roll, if citizens of India, duly qualified, are permitted to practice law in
that other country) ;
o
He has
obtained a degree in law from a law school recognized for the purposes of this
Act by the Bar Council of India.
Thus, on a plain reading of the said Section 24, it becomes quite evident that the Act stipulates that foreign citizens, other that the citizens of the Reciprocating Country, have no right whatsoever to practice the profession of law in India.
2. Secondly, in
India there is an absolute bar on advocates from advertising and soliciting for
any purpose and indicating area of specialization . It is submitted that the
bar on advertising has created a situation which is adverse to the interest of
the patrons of this legal service, since non – advertising precludes the
consumers from making an informed choice. Moreover, the restriction on domestic
firms and advocates from advertising their area of expertise has also hampered
the healthy competition which would otherwise have prevailed.
3. Thirdly, in
India only a natural person can practice law and the same is apparent from the
combined reading of Sections 24, 29, and 33 of Advocates Act. As a result,
there is no scope for an artificial juristic body to act as a lawyer. In other
words, a legal service provider cannot be incorporated as a company and still
continue to practice the profession of law in India, as per the provisions of
Advocates Act, 1961.
4. Fourth, the
Rules in clear and unequivocal terms prohibits advocates from entering into
partnership or any other arrangement for sharing remuneration with any person
or legal practitioner who is not an advocate. In other words, lawyers are
precluded from entering into any kind of co-operation with non-lawyers.
Moving
forward, it is interesting to note that the Report of the High Level Committee
on Competition Policy and Law under the Chairmanship of Shri S.V.S. Raghavan
has very categorically summed up the effect of the existing regulatory system
in professional services as follows: “… the legislative restrictions in
terms of law and self-regulation have the combined effect of denying
opportunities and growth of professional firms, restricting their desire and
ability to compete globally, preventing the country from obtaining advantage of
India’s considerable expertise and precluding consumers from opportunity of
free and informed choice”.
It
is to be noted that the restraining provisions laid down above, not just
prevent the liberalization of the existing legal scenario and imposes shackles
on lawyers from having a healthy legal practice, but at a same time also proves
to be adverse to interests of the patrons of legal services. Moreover, it is to
be noted that the provisions of the Act, which seeks to impose ‘artificial
entry barriers’, is in contravention of competition policy and the Competition
Act, 2002.
The
Competition Act, 2002, provides for several factors that shall be considered in
deciding whether an agreement has a considerable adverse effect on competition.
These factors include creation of barriers to the new entrance into the market,
accrual of benefits to consumers, improvements in production or distribution of
goods or provision of services and lastly promotion of technical, scientific
and economic development by provision of services. It is to be noted that the
Raghavan Committee on Competition has very aptly observed that there is an
intention on the part of established elements of legal profession to limit
competition by restricting new entrants.
Thus, the legal regulations sought to be imposed by the Act and the Rules on expanding nature of legal services sector has had an adverse effect on healthy competition in India and in turn the factors provided under the Competition Act, 2002.
Thus, the legal regulations sought to be imposed by the Act and the Rules on expanding nature of legal services sector has had an adverse effect on healthy competition in India and in turn the factors provided under the Competition Act, 2002.
The attempt of liberalization of the legal sector
It
is interesting to note that the legal sector all around the world is
conventionally the most orthodox and regulated sector. Thus India is not an
exception to the same. In other words, access to foreign nationals to this
sector is unreasonably restricted. The evident rationale behind the protection
of this noble profession from intrusion stems from the fact that the very
foundation of this profession is derived from conservative and traditional
statutes, which have been framed and enacted with a preconceived mindset of
precluding the foreign talent from participating in the domestic legal market.
Nevertheless, it is reiterated that the never ending processes of
commercialization and globalization have resulted in the integration of the
domestic economy of the countries with that of the world economy, which in turn
has intensified the demand for liberalizing the legal sector and thereby
allowing the foreign players to explore opportunities in these markets.
The
situation prevailing in India is the same as described above. However, there
have been protests lately, both at the international as well as at the national
level, against this existing state of affairs, which has undoubtedly forced the
Government of India to give the said matter a careful consideration. The 15th
Law Commission of India (, headed by Shri Justice B.P. Jeevan Reddy), had taken
up a study on entry of foreign legal consultants and liberalization of legal
practices in India, in keeping with the guidelines evolved by the International
Bar Association (IBA), and General Agreement of Trade in Services (GATS), which
is an organ of World Trade Organization (WTO). The Law Commission had, in its
Working Paper, pointed out that India was a party to the General Agreement on
Trade and Services (GATS) and within a period of five years from January 1,
1995, it would be under an obligation to enter into successive rounds of
negotiations periodically with a view to achieving a progressively higher level
of liberalisation which includes free trade and services without regard to
national boundaries.
Moreover,
the Law commission indicated that the Bar Council of India had to choose
appropriate model, suiting conditions of our country, so that appropriate
amendments could be made in the Advocates Act, 1961 which would arm Bar Council
of India with necessary powers to meet the challenges ahead. Further, it is
interesting to note here that the Law Commission had forwarded its Working
Paper to the Bar Council of India, the Bar Association of India, the High Court
Bar Associations, Law Secretaries of States, National Law School of India
University, Ministry of Commerce, Ministry of Law and some eminent members of
the Bar for eliciting their views on various proposals made in the Working
Paper. However, unfortunately no response has been received so far from most of
the organisations, including those, who are now agitating on the proposals made
in the Working Paper of the Law Commission.
Furthermore,
it is interesting to note here that the former Prime Minister, Dr
Manmohan Singh, had lately, at the International Congress and
Exposition on Trade in Services, which was held in New Delhi, pitched for a
more open legal sector in the country, stating that the expertise in international
law, commercial law and third country law is necessary as the Indian economy
increasingly integrates with the global economy. He also indicated that the
Government would soon set up a high level group in the Planning Commission to
look into all aspects influencing the performance of the services sector and
suggest policy measures that would need to be taken to sustain its
competitiveness in the coming years.
Lastly, it is pertinent to mention here that in the year 2007 the Law Ministry planned for the phased entry of foreign firms. In the first phase, foreign law firms will be allowed to advise clients on laws in other countries. This could involve giving of advice to the multinationals working in India on legal implications in various countries on account of developments taking place in India. In the next stage, foreign law firms will be allowed to enter into partnerships with Indian firms. Such partnership may provide consultancy services to Indian clients on issues pertaining to Indian law, but the overseas firms will not be allowed to appear before courts. Moreover, the market access for practicing Indian law in a full-fledged manner will be considered only after these two stages.
Lastly, it is pertinent to mention here that in the year 2007 the Law Ministry planned for the phased entry of foreign firms. In the first phase, foreign law firms will be allowed to advise clients on laws in other countries. This could involve giving of advice to the multinationals working in India on legal implications in various countries on account of developments taking place in India. In the next stage, foreign law firms will be allowed to enter into partnerships with Indian firms. Such partnership may provide consultancy services to Indian clients on issues pertaining to Indian law, but the overseas firms will not be allowed to appear before courts. Moreover, the market access for practicing Indian law in a full-fledged manner will be considered only after these two stages.
Analysis of the Entry
Furthermore,
before highlighting the advantages or disadvantages of the anticipated entry of
the foreign law firms into the Indian legal service market, it would be of
utmost importance to understand the nature of the work which the foreign law
firms will be dealing in, since much of the misunderstanding with regard to the
entry of foreign law firms, is caused by the misinformation circulating around
us. To be more practical, the main work which the foreign law firms will
transact in India will be that of advising/soliciting clients on an array of
legal issues, of both international as well as of domestic nature, and/or
drafting legal documents. In other words, the foreign firms will chiefly
concentrate on corporate and/ or commercial transactional work.
Conversely,
it can be asserted that the foreign lawyers might not appear before the court
of law for the purpose of representing their clients in the course of whether
civil proceedings or criminal trials. The rationale for the said assertion
stems from various facts, including, language and cultural problems, dearth of
knowledge of the legal system of the land and also because of dearth of trust
of and support from the domestic litigants, on account of absence of
experience, as regards litigating in the Indian courts.
As Alison Hook, Head of the Law Society's International Division states: "An English lawyer appearing in an Indian court is complex matter. He would lose the case. He will have language and culture problems. All that we have ever asked for is to allow British law firms to complete transactions. This would be good for greater foreign investment in India”. Similarly, Mr. Ritvik Lukose, Vice President of Rainmaker T&R, a leading legal recruitment and training firm, maintains that “foreign firms might not be interested in litigation, as it is not lucrative enough and requires thorough study of the legal system of the land”.
Thus, it can be safely deduced from the preceding paragraphs that since the majority of lawyers in India are involved in litigation, it is utmost unlikely that they will be adversely affected by the entry of foreign law firms.
The advantages of entry
As Alison Hook, Head of the Law Society's International Division states: "An English lawyer appearing in an Indian court is complex matter. He would lose the case. He will have language and culture problems. All that we have ever asked for is to allow British law firms to complete transactions. This would be good for greater foreign investment in India”. Similarly, Mr. Ritvik Lukose, Vice President of Rainmaker T&R, a leading legal recruitment and training firm, maintains that “foreign firms might not be interested in litigation, as it is not lucrative enough and requires thorough study of the legal system of the land”.
Thus, it can be safely deduced from the preceding paragraphs that since the majority of lawyers in India are involved in litigation, it is utmost unlikely that they will be adversely affected by the entry of foreign law firms.
The advantages of entry
The
rationale that could be vehemently advocated in allowing foreign law firms to
function and transact work in India is that the foreign firms will bring with
them a fresh pool of professionalism, competence and expertise, which the legal
profession here has incessantly failed to develop. In other words, permitting
the entry of foreign law firms in India will certainly bring in competition and
raise the standards of service in the legal sector, which most Indian law firms
and lawyers are not ready to face. Moreover, without prejudice to the preceding
paragraph, it would be pertinent to mention here that the advantages of entry
of the foreign law firms could also be appreciated in the light of the credible
surge in foreign investment and numerous benefits to the patrons of the legal
services and to the aspiring lawyers.
In the age of consumerism and competition, consumer’s right to free and fair competition is paramount and cannot be denied by any other consideration. Trade in legal services focuses on benefits accruing to consumers from legal services sector, particularly the quality of service available with respect to particular fields. It is to be noted that with the advent of foreign law firms in India, the patrons of legal services will be highly benefited, on account of more available options, the resultant competition and accessibility to a fresh pool of professionalism, competence and expertise, which the legal profession here has incessantly failed to develop.
In the age of consumerism and competition, consumer’s right to free and fair competition is paramount and cannot be denied by any other consideration. Trade in legal services focuses on benefits accruing to consumers from legal services sector, particularly the quality of service available with respect to particular fields. It is to be noted that with the advent of foreign law firms in India, the patrons of legal services will be highly benefited, on account of more available options, the resultant competition and accessibility to a fresh pool of professionalism, competence and expertise, which the legal profession here has incessantly failed to develop.
It
is not out of place to mention here that in, In Re Sanjiv Dutta, Deputy
Secretary, Ministry of Information and Broadcasting, the Supreme Court
Observed that, “…some of the members of the profession have been adopting
perceptively casual approach to the practice of the profession…they do not only
amount to contempt of court but to the positive disservice to the litigants.”
Further, it is to be noted that with the arrival of the foreign law firms there will be a tremendous surge in employment avenues for the Indian lawyers. At the same time, the arrival will enable the junior lawyers grab a handsome pay package and law student’s easy access to internship programs; which is evidently not their catch in the present scenario. "Foreign firms in India shall not really eat into the pool of available jobs. They would mainly recruit law school graduates and in the process provide an opportunity to them to gain a first-hand experience in cross-border and even domestic commercial transactions, that will be the mainstay of such firms," says Prof HD Pithawala, an eminent advocate, solicitor and professor at Government Law College (GLC), Mumbai .
Further, it is to be noted that with the arrival of the foreign law firms there will be a tremendous surge in employment avenues for the Indian lawyers. At the same time, the arrival will enable the junior lawyers grab a handsome pay package and law student’s easy access to internship programs; which is evidently not their catch in the present scenario. "Foreign firms in India shall not really eat into the pool of available jobs. They would mainly recruit law school graduates and in the process provide an opportunity to them to gain a first-hand experience in cross-border and even domestic commercial transactions, that will be the mainstay of such firms," says Prof HD Pithawala, an eminent advocate, solicitor and professor at Government Law College (GLC), Mumbai .
Furthermore,
it’s interesting to note here that the law schools and colleges in India have
welcomed the entry of foreign legal firms; as they feel that legal sector
cannot be barred when India is opening up other sectors. In fact, law schools
and colleges argue that the government's proposed move in this regard would
boost competition in the legal sector. It would be worthwhile to note here that
Dr A Jayagovind, vice-chancellor, National Law School of India University,
Bangalore opines "As the bar council of India itself is opposing the
move, I cannot commend on the impact of the entry of foreign legal firms on the
profession here. On the education system, it would be a welcome development.
Anything that improves competition would be a welcome development”.
Similarly,
Dr Manoj Kumar Sinha, director, Indian Society of International Law and
secretary, All India Law Teachers' Congress, says "Allowing foreign
private law firms in India will certainly help the lawyers get better job
opportunities and break the monopoly of a handful private law firms working in
India. It is equally important that the government must put enough safeguard to
protect the interest of the Indian legal community”.
The disadvantages of entry
“We
must take care that globalization does not become something people become
afraid of” - Gerhard Shcroeder
As
regards the disadvantages, the most important one that needs to be brought to
the attention of the readers is the possibility of the domestic law firms, in
light of the existing unfavourable circumstances, being overpowered in
performance and revenue by its foreign counterparts. The law firms situated in
countries like United Kingdom, United States and Australia have overwhelming
lawyers force, operate on International scale and primarily function as
business organizations designed to promote commercial interest of their giant
client corporations. The size, power, influence and economical standards of
these large international law firms would definitely affect the share of the
domestic law firms. It can be said that the Indian law firms cannot, at the
present scenario, match, howsoever far they may stretch it, the foreign law
firm’s size, power and most importantly economical standard.
It
is pertinent to note here that the non – capability of the Indian law firms to
compete with their foreign counter parts, stems from the various unnecessary
and frivolous restrictions, which the domestic law firms here are subjected to;
and the same restraints have been explained hereinbefore. In brief, the Indian
law firms are statutorily precluded from advertising and thus indicating their
area of expertise. Moreover, the domestic law firms are prohibited from raising
capital and are also precluded from entering into any kind of co-operation with
non-lawyers. Foreign firms, on the other hand, are not shackled by such
limitations.
Further, Mr. Saradindu Biswas, an ex-vice chairman of the Bar Council of India, feels that Indian lawyers need more professional grounding and knowledge to compete with foreign lawyers. "Be it in appearance, documentation or in-depth knowledge about law, the Indian lawyers suffer some serious shortcomings. Unless we make our law teaching institutions more responsive to today's needs, it may not be possible to compete with foreign lawyers who want to come and open practice here," he adds.
Similarly, Mr. Cyril Shroff, Managing Partner, Amarchand & Mangaldas & Suresh A Shroff & Co says, “The domestic law firms which are not strong enough to face the competition, many of them collapse and they get bought out for ridiculously low values and as the result the domestic players, they shrink in size.”
Further, Mr. Saradindu Biswas, an ex-vice chairman of the Bar Council of India, feels that Indian lawyers need more professional grounding and knowledge to compete with foreign lawyers. "Be it in appearance, documentation or in-depth knowledge about law, the Indian lawyers suffer some serious shortcomings. Unless we make our law teaching institutions more responsive to today's needs, it may not be possible to compete with foreign lawyers who want to come and open practice here," he adds.
Similarly, Mr. Cyril Shroff, Managing Partner, Amarchand & Mangaldas & Suresh A Shroff & Co says, “The domestic law firms which are not strong enough to face the competition, many of them collapse and they get bought out for ridiculously low values and as the result the domestic players, they shrink in size.”
Furthermore, expressing his reservations on the government move, Mr. AS Chandioke, President, Delhi High Court Bar Association, says, "The bar association has asked the government on several occasions to change the legal curriculum and suggested that a uniform legal course should be brought in the country. If we are to compete with foreign firms, we need a level-playing field." He further pointed out, "Abroad, law is a business, not a profession and lawyers are allowed to have websites. Before you open up the legal profession, there is need to introduce advance-level legal courses in the country. We have enough talent in the country to beat anyone in the world. We just need safeguards and training. If their lawyers are allowed in, it may raise some jobs hopes, but on the whole it will lead to exploitation of our legal services."
Thus, it can be safely asserted that liberalization without first putting Indian firms on an equal footing will be unjust and will put them at a competitive disadvantage.
DEVELOPMENTS IN CHRONOLOGICAL ORDER
Early 1990s
|
White and Case LLP, Chadbourne & Parke LLP and Ashurst were
granted permission by RBI under the Foreign Exchange Regulation Act 1973
(FERA) for setting up of liaison offices in India.
|
January 1, 1995
|
General Agreement on Trade in Services (GATS) came into
existence obligating countries to open up the service sector to Member
Nations. India is a signatory to the GATS.
|
1995
|
Lawyers collective files a petition in Bombay HC against the
opening of liaison offices in India by Foreign Law Firms
|
1995
|
Bombay HC judges held that the RBI licence did not provide
permission to ‘practice law’, but only to establish a branch office to act as
a communication channel. Post the decision, White & Case and Chadbourne
& Parke closed their India offices however UK-based Ashurst stayed
behind.
|
1999
|
Bombay HC stated that the RBI should not grant permission to
foreign law firms to open offices in India.
|
2005
|
Reports of opening of a law firm in Delhi by a Nigerian national
|
January 18, 2007
|
The Society of Indian Law Firms (SILF) and Britain's Law Society
signed a MoU regarding cooperation in the legal profession.
|
November 18, 2007
|
In a joint conference of the Bar Council of India (BCI) and
State Bar Councils, they requested that the Centre shouldn’t take a final
decision without consulting with them.
|
November 26, 2007
|
British Indian Lawyers Association objected to the opening of
the legal industry for foreign law firm without ensuring reciprocal entry
clearances for Indian lawyers into the UK.
|
January 12, 2008
|
The Limited Liability Partnership (LLP) Bill was passed by the
Indian Parliament.
|
December 16, 2009
|
Bombay HC ruled out that the ‘practice of law’ as mentioned in
the Advocates Act includes litigation and non-litigious work which cannot be
carried out by foreign law firms.
|
April 2010
|
A writ petition was filed in the Madras HC against entry of
foreign law firms.
|
September 28, 2010
|
Law Ministry issued a press release reiterating BCI’s stand to
not permit foreign law firms into India.
|
April 1, 2011
|
Ashuruts entered into a best friend referral arrangement with
Indian Law Partners (ILP).
|
February 21, 2012
|
Madras HC ruled against the practise of Foreign Law Firms in
India without enrolling with the BCI under the Advocates Acts. However, it
allowed the foreign lawyers to ‘fly in and fly out’ on a temporary basis.
|
April 2012
|
BCI appeals against the judgement of the Madras HC allowing ‘fly
in and fly out’ of foreign lawyers.
|
July 2012
|
SC directs RBI to refrain from granting permission to foreign
law firms.
|
April 26, 2014
|
SC Justices SS Nijjar and PC Ghose and retired judge AK Ganguly
stated that foreign lawyers should be allowed to work on arbitrations in
India to make domestic arbitration more attractive and to unburden the
courts.
|
September 2014
|
UK law minister Shailesh Vara spoke in favour for the entry of
foreign law firms to practise non-Indian transactional law in India during
his visit to India.
|
November 2014
|
SILF decides favour the entry of foreign law firms in India.
|
December 2014
|
A source from the ministry of commerce stated that the commerce
ministry is working on a proposal for a phased opening up of the legal sector
in non-litigious services and international arbitration.
|
January 6, 2015
|
SC adjourned the case relating to the entry of foreign law firms
in India. The next date of hearing is on February 27.
|
January 8, 2015
|
Meeting of the Inter-Ministerial Group (IMG) on Services under
the Chairmanship of the Commerce Secretary to consider a Roadmap for Legal
Reforms in India.
|
February, 2015
|
Joint meeting of Bar Council of India (BCI) and Society of
Indian Law Firms (SILF
|
Conclusion
In light of the ongoing wave of globalization and liberalization; the incontrovertible fact remains, that the need of liberalizing the Indian legal sector is unarguable and beyond doubt. In my opinion, it is extremely affirmative of the view that the advent of foreign law firms in our country, will not just favourably add up to our foreign reserves and in due course the GDP, but, will also beneficially result in surge in employment for the law graduates being debutants to the legal profession (both litigation and corporate), in terms of better exposure and an handsome pay package; will also prove advantageous for the law students, in terms of easy access to internship programs; and most importantly will be in the interest of the domestic patrons of legal services, in terms of availability of better professional services, being the direct outcome of the consequent boost in competition in the legal market. However, before the foreign law firms are given the green signal for establishing their base in our country, it is of utmost importance, that the Government should revamp the state of affairs, existing in the legal sector, in order to do away with the unreasonable restrictions (discussed above), which undisputedly impose shackles on the healthy development of our country’s legal profession. The reason being that without the eradication of the unnecessary restrictions (embodied in our anachronistic laws), which seek to hamper the growth rate of our domestic law firms; the domestic firms will not be able to efficiently and productively meet up with the challenge which will be posed by their foreign legal counterparts.
Moreover,
on the same principle, It is important that the entry of the foreign law firms
in our nation, should be coupled with the enactment of an impressive legal
framework and also with the shaping of a promising regulatory mechanism, which
will ensure that the arrival of the foreign law firms will result only in
health competition in the domestic legal market and not in the annihilation of
our domestic law firms. 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.
Lastly,
I would like to conclude that whether today or tomorrow; the opening up of
doors of the domestic legal market to competition from international legal
market is rather inevitable, so therefore, instead of offering resistance to
the entry of foreign law firms, a sincere attempt should be made by all (being
the Government, the domestic law firms and the legal practitioners) to rework
the situation, in order to derive utmost benefit from it. However, it should be
done on a reciprocal basis and other countries should also permit the Indian
lawyers to practice on their soil in a similar manner as they are permitted
here in India.
But they are allowing foreign law firms in India now
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