A little more than a year after the Bar Council of India (BCI) decided to allow entry of foreign law firms into the country, the scorecard is stuck at just one. Link Legal announced a “combination” with one of the world’s largest global law firms – Dentons – in May last year. But the collaboration is a mere “hand-shake” or at most a co-branding exercise and does not herald an actual “entry” in the real sense of the term, legal experts say.
Bharat Anand, senior partner at Khaitan & Co, said the lack of interest of foreign legal entities shows that “the old play book of one step forward and two steps back” by the BCI would not work anymore. “It’s very apparent that the regular flip flops done by successive governments over the years has been a reason for the international law firms to pause and recalibrate their strategies and plans for India,” Anand added.
Echoing similar sentiments Ritvik Lukose, co-founder and director of Vahura, the country’s largest specialist legal and governance search, and consulting firm, said that from a regulatory perspective, there is a lot of uncertainty and lack of clarity about the issue even a year after the BCI notification. In addition to the revised rules that have been signalled, clarity is required around tax treatment of international law firms’ revenues in India. Everyone concerned is still in a wait-and-watch mode.
Industry observers said the likelihood of a resolution of the simmering issues was unlikely in the near future. “In all probability, the matter would now be taken up by the new government,” Lukose said.
The BCI had published a set of rules and guidelines in March last year to permit foreign law firms to operate in India with stiff riders. As per the BCI’s Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022, foreign lawyers were permitted to practise foreign law and diverse international law and arbitration matters in India on the principle of reciprocity. They could not, however, practise Indian law and their functioning would be limited to non-litigious matters.
They could also be allowed to practise transactional work or corporate work such as joint ventures, mergers and acquisitions, intellectual property matters, drafting of contracts and other related matters on a reciprocal basis. However, they would not allowed any work pertaining to conveyance of property, title investigation or similar works. Additionally, foreign lawyers or firms would have to be registered with the BCI, which would be valid for five years.
The notification was followed by extensive industry and government parleys. Comments and concerns were also sought from the international law firms following which a revised draft of rules was to be prepared.
What complicated matters was the strong pushback to the BCI’s move by the Indian law fraternity largely comprising small- and mid-sized entities and firms. This is evident from the fact that eight lawyers filed a petition against the BCI notification in the Delhi High Court on the grounds that it is in contradiction to the provisions under the Advocates Act and Supreme Court judgment in the landmark AK Balaji case.
The BCI notification allowed entry to foreign lawyers and firms, saying that it won’t hurt Indian lawyers and law firms as they are as competent as their foreign counterparts.
In a lengthy Statement of Objects and Reasons, the BCI had said it “resolves to implement these Rules enabling the foreign lawyers and foreign law firms to practise foreign law and diverse international law and international arbitration matters in India on the principle of reciprocity in a well defined, regulated and controlled manner”.
The plea moved by various lawyers claims that the BCI does not have the authority or power under the Advocates Act to give such permissions. It further contends that the legal profession cannot “be taken over by foreign market forces to defeat the ends of justice nor justice dispensation system be subjugated to such forces”.
The plea claims, “Obviously, the BCI takes care about·the interests of the entire fraternity. However, in the present circumstances, the issuance of the impugned notification clearly reflects their mindset which would definitely going to harm the interests of young lawyers or the advocates who would not be able to compete establishment of foreign lawyers hence, it violates the competitive norms established under the competition law of India.”
In February 2024, the Delhi HC had issued a notice to BCI seeking its response and though the matter is listed for hearing on April 24, chances of the matter being resolved anytime soon are bleak, said sources.
