Foreign Law Firms in India: Hurdles Await

AFTER DECADES OF RESISTANCE, Bar Council of India (BCI), which regulates legal profession, has agreed to allow foreign law firms and lawyers to establish their presence in the country, but with caveats. In rules notified on March 10, BCI said with the world “becoming a global village” and Indian legal fraternity’s proficiency now comparable to international standards, it was opening up the profession to make India a hub of international commercial arbitration.

Big law firms welcomed the move. Many posts by partners on LinkedIn said this was long overdue. “This will lead to expansion of opportunities for both Indian and foreign law firms," said Rajiv K. Luthra, founder and managing partner of Luthra And Luthra-Law Offices India.

The rules define scope of operation of foreign lawyers and firms, which includes advisory work on foreign and international laws, appearance in international commercial arbitration and advisory work on corporate transactions. The rules restrict appearance in any court, tribunal, statutory body or regulatory authority. The nature of work permitted by BCI without registration would cover foreign firms/lawyers doing a ‘fly in and fly out’ and advising on foreign law and diverse international legal issues. Also, the work should not exceed 60 days in a year.

Sajai Singh, chair, corporate commercial practice at JSA and council member, IBA LPD, says he sees this as a starting point. “There is a long way to go for allowing entry to foreign law firms into India in a commercially reasonable manner,” he says. Without addressing aspects such as recognition of Indian firms under Advocates Act, 1961, enforcement of disciplinary action on foreign firms/lawyers under the new rules and clarity on reciprocity, “as of now, the only real possibility for foreign law firms would be to set up a representative office; and while they await clarity, they will be able to create a brand in India,” he adds.

Hurdles And Challenges

After the rules were notified, Society of Indian Law Firms (SILF), an association of India’s top law firms, held a meeting. Following this, a committee formed by SILF decided to write to BCI to point out inconsistencies in the rules. Lalit Bhasin, managing partner, Bhasin & Co and president of SILF, says these rules create more confusion and are open to legal challenge. First issue is Supreme Court judgement in Bar Council of India vs A.K. Balaji (2018) case to the effect that foreign firms or lawyers could not practice in India either in litigation or non-litigation work. “We have taken up this issue with commerce ministry and law and justice ministry saying law should be amended to overcome the effect of the Supreme Court judgement. A line should be added that practice of law in India would also include practice of law by foreign lawyers to be regulated by BCI,” says Lalit.

The rules also seem incomplete. For instance, how will BCI monitor surrogate practice in case a foreign firm at its office in India engages Indian lawyers who might advise on Indian laws? Or how will reciprocity function? Even with reciprocity, Lalit says, many Indian firms and lawyers have been given permission to open offices in U.K. but not given work permits. Finally, Indian firms and lawyers are still far from getting a level-playing field, which calls for liberalisation of the profession in India. Current limitations include restrictions on number of partners and not allowing LLP/company structure.