Under the rules, foreign law firms are barred from practising in India. Though a liberalisation in policy is due, lawyers are deeply divided about what the new rules should be. Must Indian lawyers and firms get reciprocal rights should the floodgates open? Can India cordon off cross-border movement of lawyers? Outlook organised a debate on the issue among five top lawyers, moderated by Pragya Singh.
Lalit Bhasin, president, Society of Indian Law Firms
Since 1991, law firms have been strengthening themselves to meet challenges from foreign law firms. So, in principle, we don’t oppose their entry now, but (it has to be) phase-wise. The government also says foreign law firms cannot have offices in India, foreign lawyers advising only on certain aspects of Indian law can be allowed in two-three years. First, open the profession within India, allow websites, advertisements, brochures, (not allowing) which blocks growth.
So Large Indian firms are preparing while foreign firms have already come?
LB: No law firm has ‘come’ to India. They have only arrived surreptitiously, clandestinely, unofficially. It’s a farce, illegal, and a surrogate practice—by taking Indian names.
Prashant Kumar, Supreme Court advocate: Yes, similar to surrogate liquor advertising.
Ramesh Vaidyanathan, managing partner, Advaya Legal: My grievance is that clients of foreign law firms are always out of this picture. Inhouse counsel of BSE Top 100 firms insist international legal services provide them immense value-add with their tremendous global experience. An acquisition, say, in Sydney, done by a law firm that has handled coal mine acquisitions in Indonesia adds hugely to the transaction. Let’s be fair—Indian law firms are great but are they being hired for acquisition, say, of a Singaporean company by an Indonesian company?
Also, small law firms are a bit frustrated. That’s why you see so many breakaways and young firms, because big Indian law firms often lack clear and fair ownership structures. Broadly, ownership is fairly transparent among foreign firms. Partners join and retire by established processes, etc. Mr Bhasin spoke on timing, and this can be debated, but we should look at it sooner, not seven years.
Will reciprocity help?
RV: Reciprocity is simply open—if an Indian lawyer meets the qualifications of another jurisdiction, he can practise.
LB: Reciprocity is only on paper. The United Kingdom may allow practice but not give work permits. The US has 49 states, all separate jurisdictions. Lawyers in one state, as Ramesh says, will have to qualify in all others.
PK: The biggest push from legal firms is from these two countries. Please understand, UK’s economy is predicated upon financial services, concentrated there by the power of their legal services. This is a big lynchpin for them to pursue this goal so aggressively. There is a global banking churn, China is developing a big multilateral bank, BRICS Bank is under way. So foreign law firms only talk of corporate ownership—law firms owned by non-lawyers, listed on exchanges, all sort of business-oriented things. Whereas India still perceives law as a profession with numerous obligations. It’s not ‘protectionism’ but to allow entry while serving India’s economic interests, not just of the law firms.
It’s said the government will allow foreign law firms regardless of objections.
Manan Mishra, chairman, Bar Council of India: Our lawyers should not be put to unfair discrimination in the other country, only then we can allow them to practise here. The very simple question before BCI is, why are we so anxious to allow them in India? I don’t think America, UK or Australia even talk of Indian lawyers coming. This is a very serious matter. Conditions in other countries are such that it is impossible for our lawyers to fulfil them.
Litigating lawyers are not affected...
Sanjay Hegde, senior advocate in the Supreme Court: The question is, what do we mean by ‘practice of law’? Are we a vocation, a profession, or somehow compatible with a service-delivery model, as a business? What affects the corporate sector abroad is that they have a certain comfort with MNC law firms. Right now, Indian lawyers and Indian law firms translate what happens in India for the benefit of foreign law firms, who in turn advise them. So, Indian law firms are one more filter. I’m not sure whether this is good or bad but we in India have a long history of resisting foreign domination. From the East India Company to Mahatma Gandhi, we have this fixed idea that what is foreign cannot necessarily be good for India. So Pepsi came as ‘Lehar Pepsi’, you don’t have CNN in India but CNN-IBN, an Indian company to which CNN has licensed its name. Maybe it is time to take that approach, the licence-franchise model. This would be one way to also upgrade Indian practices so that, after seven years, 15 years, the transition is more seamless.
But that is what the law firms fear...
SH: Law firms essentially seem to want to operate where they are Indian-owned, Indian-operated, Indian-managed, with Indian practices, where they will operate as both a filter and a barrier to the outsider. They seem to want that the outsider cannot access India except through them. That I don’t think can continue for long.
LB: I don’t think that is correct, historically or factually or logically. Look at Indian accountancy. Now people only hear of the Big Four, which gobbled up our firms. My friend is right that the practice of law has business and litigation aspects, but business aspects are almost as essential, rather more essential, these days. You have trillions of investment dollars coming to infrastructure—can it work without legal support? Only law firms can provide this, and Indian firms are quite equipped to. I don’t agree with Ramesh that we have to learn from them. No! I think we have to first unlearn what we inherited from all these people. Our law firms are second to none in competence, speed, delivery, quality...
PK: ...and cost effective...
LB: ...Ramesh talked of clients. When asked specifically at a cii roundtable, Indian corporates said, no, we’re quite happy with Indian firms. If Indian law firms need expert advice, we do referrals overseas.
A large number of lawyers in high courts and the SC, tribunals and commissions are briefing counsel. What about them?
MM: Yes, after five or ten years this will badly affect litigating lawyers. In India, most litigants might have money but they are ignorant. The moment foreign firms arrive, we’ll lose clients. Today before the Supreme Court, our lawyers get Rs 15 lakh, Rs 20 lakh, Rs 2 crore. Won’t clients prefer foreign lawyers? That is the attraction, naturally. Indians go to white skin...
RV: No, no.
MM: BCI never treated its lawyers as inferior. We produce world-class lawyers, without whom no foreign law firm can work in India. We never say we need expertise from them; this is some sort of inferiority complex. BCI is adamant to remove such complexes from the minds of government, authorities and lawyers.
RV: I’m not suggesting Indian law firms are inferior. Can we say we have experience in rail privatisation? So should we not borrow best practices? Big corporations, large Indian companies, Government of India go to the Big Four because PwC or E&Y draw on international exposure. I would be more deprived if...
LB: And there are abuses...
RV: Yes, there are pluses and minuses.
Is this a talent thing?
SH: No. Indians have great native genius. The point is that if we marry this genius to practices that are now more or less the industry norm worldwide, I think we will run faster towards resolution than if we say ‘No, no, no, we will stick to homespun or khadi’. Khadi is nice, looks nice for occasions, but doesn’t suit all occasions.
Let’s hear some specific problems if foreign firms come.
PK: Our first problem, which is inhibiting international businesses, is that we don’t allow even fly-in fly-out (FIFO) where their lawyers can come for specific work, engage with Indian lawyers and law firms, leave. There is a complete ban. Practically, fifo is a necessity, so it happens even in breach of law. Second, even the Big Four have huge legal teams here, taking away work from legitimate Indian practices, hurting them badly. What is being touted is straightaway allowing foreign legal firms. Even Japan, which started opening up its legal profession in 1987, does not permit this yet. Nor does Indian law. Desirability is a different aspect—we are debating the legal regime to allow them. The first step, obviously, is to address where there is a need and then, I think, reciprocity etc.
Then there is a need in litigation, right?
SH: ‘Practice of law’ includes transactional work—that’s the kind of work law firms are concerned about.
PK: It’s more than that. Other than litigation, for instance, Malaysia recently excluded constitutional, administrative, criminal, family, succession and trust law from foreign practice, and also retail banking, registration of patents and trademarks, client representation, appearing or hearing before any quasi-judicial body...
What’s left for foreign firms to do?
PK: Transactional things they have no experience with. It’s a win-win for domestic and foreign professions—our ultimate goal here. More than necessary restriction hurts even Indian law firms and businesses, but it should be done so that the local profession acquires skills but the core of the practice remains with the profession in India.
LB: We don’t favour FDI in legal services, with profits shared as dividend, as among UK firms. We are also against multi-disciplinary practice which will open floodgates for Big Four into legal services. LPOs (legal process outsourcing), already passing work to India, want direct dealings with overseas law firms. This isn’t client interest but interest of US/UK law firms, representing their business interest in India and China. They are looking at all avenues for growth—like East India Company.
SH: Yes! Fear of the East India Company—but we still speak English, we still follow Anglo-Saxon principles of law. The world is getting smaller; there is a sort of homogenisation; you can’t indefinitely put up barriers and say you are going to ‘island’ India off like a North Korea. Our younger generation will anyway build the linkages.
LB: But there are no barriers. We have excellent relationships with other countries.
But those relationships don’t go anywhere.
LB: That’s not so; referrals have been there for four-five decades.
PK: To pitch their own legal sector, they claim Indian legal services are rudimentary. Truth is India has cutting-edge service providers in areas they claim to be setting new gold standards in.
Then there should be no objection?
LB: I can share with you why we are now agreeable in principle to opening legal services. Because I am very confident that Indian law firms are looking to open offices outside India.
