Liberalisation of Indian Legal Service Markets.

 

Introduction

“If 20 global law firms hire 2,000 youngsters from India, whose future are we stealing?”

  • Mr. Gopal Jain.

It is believed by Mr. Jain that when foreign players can come and play cricket in India, why can’t foreign lawyers come and practice in India. He stated that international exposure of legal market can only benefit the Indian legal fraternity and ensure globalization.

 

The need for Liberalisation

Growing of Trans-National deals: There is nothing to hide that India has started looking forward  to switch international markets abroad in sectors like IT, bio-technology ,BPO services to work full time for foreign clients hence there will be a immediate need for Indian legal service spanning jurisdictions.

Board of specialised advisory: A foreign company do not posses expertise in specialised advisory which is often needed.

 

Example: Licensing of 3g spectrum.

Reciprocity Interests: Som modal partner of Fox Mandal said "...it is only fair and in the interest of reciprocity that foreign firms be allowed to practise in India. Indian law firms are allowed to open offices and practise in many jurisdictions."If the Indian firms want to expand various sectors abroad then they have to adopt the changes of closed economy and open legal market to liberalise them by allowing foreign firm and advocates to carry out works in India..

Increase in competitions:Liberalisation would create a increase in competition resulting into the rapid development of Indian legal education system, legal systems as well as professions. International level of competition would take a grown and develop the economic conditions thus enhancing the quality and capacity of service provided. An opportunityfor the Indian lawyers to branch out internationally

Benefits to the clients: The Indian clients would be benefited if liberalisation takes place as setting up foreign firms would charge less to attract customers and business. The cost of travel would be go down thus service charges will automatically be less. Also the areas where Indian laws are not developed the clients won’t face any issue regarding their right and getting correct judgements.

Professionalism: Currently many of the Indian legal firms lack professionalism and fall behind, but if there is entry of foreign firms or liberalisation then everyone would be more profession in terms of competing and doing better than the other.

 

There will a be positive impact toward the other sectors like real estate business and retails .if a sectors gains benefits then the other sectors will also move a step forward to take up risks.

Negative points of Liberalisation

Few negative points of liberalisation were:-

Citizenship

According to the advocates act and the guidelines of BCI the legal service can be provided only by the natural citizens of India and must not be bellow the age of 21 years and must be enrolled to BCI.

Brain Drain Theory

This theory states that if there is liberalisation of Indian legal market takes then the foreign companies will come and take the creamy and the brilliant students suiting into their organisations this would obviously lead to the nation losing its treasures and also the foreign firms will attract the young ones through handsome packages and opportunities and fly them away from India making a development in their country.

Pseudo-Colonialism

It is believed that if Indian legal market is exposed to liberalisation then the foreign authorities would interfere into India’s internal legal matters questioning the sovereignty and he repetition of history would take place leading colonialism and we will again become puppets.

Loss of opportunities

Just  as the  entry of retail giants like Amazon ,flip cart , Mytra and others have taken up the customers and bushiness of the shopping malls , small retailers and dealers so ,there is unpronounced fear that the same is going to happen loosing the opportunities for local law firms and advocates which is a primary concern.

Unemployment

As there is a considerable gap between legal training and education in India when compared to foreign counterparts, as a result the nature of Indian students are not competitive which raises a serious question of employability of fresh legal graduates as legal professionals.

BCIs Argument

The Indian lawyers might not be able to compete with the foreign services provided, due to the lack of financial aids, further the chairman of BCI Gopal Subramanian had added in an interview that ‘legal profession is a mobile profession and the Bar Council cannot consider this profession as a business. It is a duty of the BCI to protect each and every lawyer of this country’.

Case laws

Lawyers Collective Vs Bar Council of India (2010 (2) Mah LJ 726)

Facts of the Case.

  1. Two foreign law firms of USA and UK had branch offices in different parts of the world and had seek for permission from RBI to set up liaison offices in India during the period of 1993 to 1995.

  2. The RBI initially granted the permission under certain conditions which actually restricted them practising direct law in India.

Issues rose

  1. Whether there was a validity and legality of the permission given by RBI to the foreign firms.

  2. If assuming the permission being valid ,whether the foreign law firms only  enrolled as a  advocates under the advocates act 1961 would be allowed to carry on with the setting up of liasoning activities in India .in simple terms whether practicing non litigious matter amounts to practicing profession of law under section 29 of the advocates act 1961.

 

Judgements

The court held that the permission granted by RBI was unjustified as the coding ‘to practice the profession of law ‘has wider meaning and can cover both the aspects of litigious and non litigious matter, so the verdict was that the foreign firms must get the enrolment as advocates under the advocates act of 1961 to carry on with the liaisonactivities.

Criticism faced by the judgements

  1. Thecriticswho crossed the verdict stated that, it was mistake to say only advocates can draft a legal document and no one else but what about the charter accountants, company secretaries, engineers, and non enrolled law graduates or works who draft a majority of legal document work, shall they be left in a bay?

  2. The view of the government was accepted by the court which stated that practising law means to work in courts, which is demeaning the works of millions of legal and Para legal services which are provided outside the courts.

  3. As per the permission of the RBI was concerned we can also grant it valid as RBI had already started terms and condition of the liasoning activities which clearly mentions that the foreign firms can neither generate income nor it can ender services and the conditions was not breached by any of the firms .

  4. The decision of the judiciary was not clear that whether the foreign firms can practice foreign law in India.

 

The above issue was solved by the next case

A.K Balaji Vs the Government of India (AIR 2012 MAD 124).

The case emerged out when a association of advocates had files a writ petition claiming that the foreign law firms and foreign advocates are practicing the profession of law in India thus dishonouring the advocates act of 1961 and guidelines of BCI and request was pleaded before the madras court to restrict the foreign lawyers from practicing both the litigations and non litigations matters of law along with the commercial transaction within the country.

The court stated that it was true that no foreign law firms would be allowed to practice profession of law in India either litigious or non litigious without fulfilling the condition of the advocates act of 1961 but on the counterpart it also added that no foreign lawyers or firms were barred from giving legal advice to their Indian clients on matters of foreign, international law or the law of their own countries and would be allowed to visit India temporarily on a basis of ‘fly in and fly out’ serving the other purposes.Infact the foreign lawyers were not barred holding arbitration proceeding arising out of disputes of contracts on  international and commercial arbitrations.

It also cleared the blur that BPO companies provides various customised services like secretarial support , word proceedings proof reading and transcriptional services does fall under the purview of BCI rules or 1961 Advocates act.

This case was first positive turn toward the favour of liberalisation of Indian legal market and in favour of foreign lawyers opening the doors temporarily makingIndia a hub for international arbitration.

Further appeal was made to Supreme Court challenging the decision of the madras court in the case.

BCI Vs A.K Balaji and Others (Civil Appeal Nos. 7875-7879 of 2015)

  1. The main contention raised by BCI was that the judgements of the madras court is not in concord to the judgement of lawyers collective case as that judgement had clearly stated the complete restrictions of presence of foreign firms or advocates at all in the Indian legal market.

  2. The Supreme court had to modify the orders of the Madras court which followed that the ‘fly in and fly out’ wont result into practicing but only a casual visit in India, also the powers of the Bar Council of India was increased stating the advise to clients or casual visits of a foreign lawyer would be determined by BCI.

  3. TheSupreme Court also stated that the foreign firms won’t have the absolute right to conduct the international arbitration as well as if the BPO services were found to practise law then the rules of the advocates act 1961 and the BCI would be applicable.

 

But the counsel arguing in favours of the globalisation said that not opening Indian legal market to foreign players is not a pragmatic approach as it would flow away the foreign investors from investing in India thus hindering the economy.

Current Scenario

 

Soon after the judgment of A k Balaji case, the Narendra Modi government had initiated talks with the BCI regarding opening the Indian legal market to foreign players and liberalise it with a strong intent of globalisation and development in February 2015and India is a part of WTO and GATS which obliges Indian government to be under a agreement to liberalise various services including legal sector.

 

The new draft rules of BCI 2016 provide the following;

  1. It allowed the foreign law firm and lawyer to set up their office in India.

  2. It is subjected to registration with bar council of India and the initial tenure of 5 years and practicing non litigation or non Indian law.

  3. The foreign lawyers would e deemed as Indian lawyers under section 29, 30, 33 of the advocate’s act 1961.

  4. Barring of foreign lawyers from appearing before the Indian courts and the tribunals or to ensure any advice from the Indian lawyers.

  5. allowing the partnership of the Indian lawyers and the foreign lawyers to hire

  6. Registration fee of individuals $25000and  $20000 for partnership firms

  7. Participation in international arbitration of a foreign lawyer is allowed.

  8. In order to practice in India a foreign lawyer has to keep a refundable security deposit.

  9. Registration of foreign lawyer should be on reciprocal basis.

  10. There will a requirement of certificate from the home ministry and other bodies  similar to foreign bar councils

  11. Both Indian and foreign lawyers must undergo same disciplinary and ethical obligations.

 

Recommendations andConclusions

Any Developments or change cannot be bought in one goit should be done phase wise.

The first phase:

Liberalising the domestic markets by allowing more partners to be the part of organization and passing the limited liability bill and allowing the practise of advertisements

Second phase:

Foreign firms or advocates would be allowed to practice foreign law that is specific areas of law. They must not be allowed to form joint ventures and the ratios between the Indian lawyers and the foreign one should be specified. The foreign firm or lawyer should be granted with market specific number of licences

The final phase:

The foreign firms will be granted permission to form 49 percent of joint ventures in India.Laws must be created by means of profit sharing between India and foreign firms.

 

Recommendation to Indian Firms

  1. If Indian firms merge with one another then there will be consolidation resulting into much better economic scale, bargaining skill and god influence to policy decisions.

  2. Indian firms would be able to attract talented people if they don’t lack professionalism.

  3. Indian firms should take up risky and diverse projects in order be a good competitor to foreign firms and equip them into specific skilled tasks.

  4. They should have soft skills like trainings in a specific matter and play a vital role in Indian legal systems.

  5. Indian firms should create global footprints by setting up various firms in foreign countries thus expanding business and promoting globalisation.

The reforms of the educational systems in India

The Indian legal education should be more competitive oriented , the system of Japan can be followed where the student on the basis of their eligibility are distinguished as lawyers and judges and special trainings are given  based of their professional fields. More focus should be given on drafting, formatting styles along with soft skills .Granting autonomous status to universities for setting up separate regulatory bodies for legal educations. Best teachers should be brought and campus infrastructure should be more IT based.

 

The liberalisation of the Indian legal market is bound to happen sooner so there is an immediate need to buckle up for the Indian firms in various skills and adopt the winds globalisation.

Sneha Saha,

Amity University

Maharashtra.

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