To Bar Or Not To Bar?

While heavy arguments are being brought up for and against the entry of foreign firms in insurance and aviation, the Indian legal sector is losing sleep over attempts by foreign legal firms and lawyers to set up shop in India. And opinion is clearly divided within the legal profession itself.

The advocates of reform feel that entry of Foreign Legal Consultants (FLCs) is a natural fallout of liberalisation and is as important for India as opening up other sectors of the economy. But for most lawyers, it does not make sense as only a few countries in the world permit crossborder law practice. This apart, they feel that once FLCs are permitted in the country, Indian firms are likely to be left out in the cold by their transnational and foreign clients.

"This is a vexed problem which has been troubling the Bars of not only India but, practically, of every country which has a formal legal system," says K.K. Venugopal, one of the country ’s top lawyers. "As things stand, it appears that the ideal solution to the problem is to have the institution of F L Cs established worldwide by having a uniform model law which is enacted by every country which is a signatory to the General Agreement on Trade and Services (G AT S) . "

The votaries of opening up— call them the liberals— opine that having accepted the challenges of globalisation and GATS, India should try to integrate the Indian legal system internationally without compromising the future of its own legal and judicial system. But conservatives firmly believe that India is not prepared to face giant western law firms: the playing field,in other words, is far from level.

"Foreign firms are not interested in court practice but are interested in consultancy and documentation, integral parts of the legal profession," says a lawyer opposing alien entry. According to sources, despite Indian laws not permitting it, there have been instances of foreign legal firms operating from hotels under the garb of liaison offices. The clash of opinions was most evident at a seminar hosted by the Union Internationale des Avocats (U I A) or the International Association of Lawyers at Mumbai.

While most lawyers allege Government inaction in this area,

Lawyers Collective, a legal journal, under the leadership of lawyers Indira Jaising and Anand Grover, approached the Mumbai High Court against these firms. According to Jaising, the apprehension is not of competition but concerns national interest. Even if Indian firms are allowed to practise abroad, an Indian name would be a handicap there and so India should not allow foreign firms. The court decided that the practice of law does not entail merely appearance in court but also drafting of contract documents— indeed, this is where the real money lies.

"The Government is totally inactive and is doing nothing in this matter," says leading lawyer Anil B. Divan. Not only this, the Government had not taken the help of professionals and legal experts in framing rules for entering into international and multilateral legislations which affect the Indian legal sector directly or indirectly, he says.

According to Divan, the entire lobbying for entry of F L Cs comes from US and UK-based megafirms; small firms are not interested and can’t aff o rd to go global. "American law firms and the US government have been aggressively pushing for the legal services market in other countries for the benefit of their countrymen. It is due to American pressure that the concept of trade was enlarged to include ‘services’ under G AT S." He says large international law firms are primarily business organisations dominated by commercial rather than professional standards. Their very size, power and economic muscle could adversely affect the legal systems of host countries.

IRONICALLY, while the American Bar— by far, the largest and most powerful in the world— is anxious and most active, along with Canada, to have a free movement of lawyers throughout the world, it has a bad record at home. The large majority of American states do not allow movement of lawyers from other states or countries.

Another important issue is that of reciprocity: lawyers and F L Cs of only those countries which allow Indians to practise should be allowed in India. "The Bar Council is keen on reciprocity," says J.B. Dadachandji, one of the most prominent corporate lawyers in Delhi. "There is no basis for allowing foreign firms if there is no reciprocity."

Incidentally, the provision of reciprocity figures prominently in the Advocates’ Act,  1961, governing legal practice in India. Section 24 (1)(a) says, "a national of any country may be admitted as an advocate on a state roll, if citizens of India duly qualified, are permitted to practise law in that country." Further, Section 47 (1) states that, "where any country prevents citizens of India from practising the profession of law or subjects them to unfair discrimination in that country, no subject of any such country shall be entitled to practise the profession of law in India."

However, Venugopal, who supports the entry of foreign lawyers, says that although reciprocity is in vogue in many countries, it does not make much sense in India as foreign lawyers would have to obtain a recognised law qualification in the host country. "It is difficult to conceive of a French lawyer or a German lawyer or for that matter, an American lawyer who would like to study the course of law in India so that he may set up practice in Indian law in competition with Indian lawyers."

While the

Lawyers Collective continues its fight, there’s intense lobbying with the Government to frame rules for the operation of FLCs in case they are allowed. "The Government should appoint an expert committee with the Attorney General, lawyers, MPs and the Bar Council to lay down some regulatory framework for FLCs, as sooner or later, with globalisation being pursued by India, some regulatory mechanism has to come up," says Dadachandji.

Divan, though not totally supportive of the idea, relents on this. "It does not pay to be hostile," he says. "The approach of the Indian legal system should be open and constructive. It has to be based on reciprocity, national interest, accountability to Indian disciplinary authorities and sufficient protection from domination by large mega foreign law firms in consonance with national interests clearly contemplated by G AT S. "

One option could be the Hong Kong model wherein F L Cs are allowed to practise the laws of their own country and not of the host country. And while the Government remains apathetic towards this question, international bodies are fast closing in on regulatory mechanisms and multilateral legislations paving the way for cross - border practice of lawyers. The World Trade Organisation is in the process of drafting guidelines in this direction and so is the International Bar Association and the U I A. It’s time the Government too, woke up to the issue and took the bar in its own hands.