LIBRALISATION OF INDIAN LEGAL MARKET FOR ENTRY OF FOREIGN LAW FIRMS

News

The Department of Legal Affairs (hereinafter referred to as the “DLA”), Ministry of Law & Justice (hereinafter referred to as the “MLJ”) through its Notification no IC-14/8/2016 dated 25th July 2017 convened a meeting of various Indian state holders on the 28th of July 2017, to discuss the liberalisation of India Legal Market.  The agenda of the said meeting was highlighted as follows:

  1. Entry of foreign law firms in India and framing of rules thereof.
  2. Proposal of setting up office of Foreign Firms in SEZ IFSC in GIFT Gujarat.
  3. Any other issue with the permission of the Chair.

 

BACKGROUND

The present initiative follows from PTI report dated 27th February 2015, that the Shri Narendra Modi-led government was serious about pushing the legal liberalisation agenda and had started talks with the Bar Council of India (BCI) to that purpose.

The proposal itself was first mooted at the government held high-powered “national services conclave” on the 12th of November 2014 to improve and reform the country’s services sectors where the commerce ministry unveiled a proposal “for a phased opening up of the sector in non-litigious services and international arbitration”.

MODEL UNDER CONSIDERATION

The Government was considering and open to several internationally adopted models for liberalisation of the India legal sector including the Singapore and the Chinese model as per Commerce Ministry secretary also present at the meeting.

FIRST STAGE

The first stage can be allowing foreign law firms to set up shop in special economic zones (SEZs) such as the Gujarat Financial Tech City (GIFT), where they could advise domestic and foreign clients on non-Indian laws as well as represent clients in arbitrations.

INBA PROPOSED AMENDMENTS TO THE ADVOCATES ACT, 1961

INBA is of the view that the present Advocate Act needs to be  duly amended  to ensure a smooth entry of foreign law firms via the proposed GIFT model and also to bring about much needed reforms in the domestic legal sector. The following are some of the suggestions on the proposed amendments to the Advocates Act:

  1. The Act should be duly amended to govern both practicing and non- practicing legal professionals who can be divided into the following categories:

  1. Sole Practitioners & Senior Counsel Offices

  1. Law Firm – (Domestic and Foreign). The presently law firms are not be regulated and BCI has only power to regulate individual advocates.  Client cannot seek any remedy in case of any malpractice by the law firm. There should be an independent regulator for the Law Firms and they must be obligated to make complete proper disclosures about themselves to the clients so that client can verify the information from the regulator.

  1. Inhouse Counsel – The BCI does not recognize Inhouse counsel though they are legal professionals and are giving legal opinions on day to day basis. Even Government Sector employs the inhouse counsels.  Hence Inhouse counsels should also be regulated in some form they are rendering legal opinion and practicing law.

  1. Globally, the lawyers are being regulated differently for each type of practice and even entry level qualifications are different.

In this regard it is pertinent to note that in the present system a non practicing lawyer who has not appeared before the court for several years can  re-join the practice and start appearing before the court, without any additional requirements or qualifications.

Similarly, the current system propagates a generalist or one man master of all system and actually hinders specialist practice of law and professionalism, hence you can have a  Real Estate Lawyer rendering the opinion on tax matters.  Introducing a specialist approach  will help to improve the profession and facilitate delivery of better services to the clients bringing indian legal profession at par with global standards.

Further, there should ideally be a specialist group of experts regulating each of the specialised legal practice areas.

  1. The foreign law firm must be allowed to practice the law of their own jurisdiction. Each lawyer of the firm must be duly qualified to practice in its own jurisdiction.    All the foreign individual lawyers and foreign firms must be duly registered in India at the time of rendering advice and such registration should be renewed yearly by the regulator after a proper due diligence exercise.

  1. The foreign Law firm must be allowed to hire Indian lawyer and such individuals must be duly registered with the relevant regulatory authority in India.

The very purpose of allowing foreign law firms to have India offices will be defeated if they are not allowed to hire Indian Lawyers.

American Bar Association has given an ethic opinion that US Lawyers can engage the dual qualified of foreign lawyers jurisdiction.

This opinion had really helped to outsourcing of  legal work to India.  If this was not the case then it would have adversely affected the Indian economy:

  1. Majority of the LPO businesses would have suffered and witnessed a drastically reduced business leading to wide spread unemployment in Indian legal sector.
  2. Indian lawyers would have also lost a good opportunity to learn international transactional law and procedure.

  1. A certain minimum qualification criteria should be laid down for becoming the member of Bar Council and individuals who are not appropriately qualified should not be allowed to regulate better qualified colleagues.

  1. It is also pertinent to note that as per certain media reports several Indian Law Firms have already hired foreign lawyers to work in India and this practice should also be regulated and such lawyers should not be allowed to be based with the firms domestic practice but such firms should be obligated to open offices in GIFT SEZ for the foreign lawyers to operate out of and provide only foreign law advise.

That new disruptive technology is emerging and it is quite possible in future. The physical office or presence of individual lawyers may not be much relevant. All meetings and discussion will be done on cloud.  Artificial Intelligence has already started giving opinion and simple drafting.

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