Entry of Foreign Law Firms: A 1991 moment for the Indian legal industry

In this age of collaboration and integration, we must expect this move to precipitate new possibilities for not only the legal fraternity but the economy as a whole. (Representational image)

The stream of optimism which engulfed the nation owing to the 1991 economic liberalisation is set to repeat itself, for the legal field. In a momentous decision, the Bar Council of India permitted foreign lawyers and law firms to practise in India on the basis of reciprocity.

As of now, overseas law firms will operate in the non-litigious areas such as arbitration, foreign law and international legal issues. The dilemma of whether or not to globalise the nearly US $1.25 billion legal services industry finally culminated in the right decision to open up the sector, which could do with some stimulation by foreign players.

Big Benefits, Opposition Too

This step will give an impetus to the free trade agreement between the United Kingdom and India, which is still in the works. Impelling economies to give greater access to each other’s services sectors will be greatly beneficial for Indian firms too.

Foreign law firms will now be authorised to render their services on transactional work like mergers and acquisitions, joint ventures, contractual disputes and intellectual property rights. The corporate law sector will be enriched by the foreign work ethics in respect of alternate dispute resolution mechanisms like arbitration, mediation and conciliation which are being extensively promoted in India.

The debate around giving approval for access to the Indian legal services industry was premised on the aspect that the burgeoning competition in the legal domain and the absence of reciprocal ingress for Indian firms and lawyers into foreign legal landscapes would ultimately dislodge the existing players from the favourable business position that they occupied. This was a rather specious argument against globalising the legal industry.

More Growth Avenues

On the contrary, the new policy will generate more employment and better remunerative avenues for Indian lawyers. Foreign law firms will engage and seek assistance on the law, provisions, rules of practice and ancillary issues from native lawyers and law firms.

For instance, foreign lawyers would not take pains to enter a District Court to argue on an application for interim relief. They would prefer to engage an Indian advocate who has considerable experience of appearing before that particular Court in similar matters and knows the required court craft to assist them in crafting the best possible legal strategy.

In this age of collaboration and integration, we must expect this move to precipitate new possibilities for not only the legal fraternity but the economy as a whole. Lots of incidental industries like the real estate sector will be greatly benefitted as foreign law firms will open their offices in India.

Why Fear Competition?

The legal profession is considered a “noble profession” which is why it is consciously kept divorced from the vicissitudes of the market forces. But to deprive the legal industry from the rewards of liberalisation forever would be unhealthy for the holistic growth of the sector.

The legal profession is essentially a part of the “services” sector. Therefore, the constant effort of lawyers should be in the pursuit of elevating the quality of the services which are rendered to the client. It is the client who should be at the heart of legal services and not the lawyers themselves.

The client can be best serviced if there are more options to weigh and make an informed decision. The entry of foreign law firms would eventually create a healthy competition between Indian and foreign law firms which would increase alternatives for a potential client.

Every industry and sector should be exposed to foreign competition for it to imbibe the gold standard of work culture. The liberalisation of the legal sector will indeed be mutually beneficial to both Indian as well as foreign lawyers and will ensure the adoption of best professional practices. The Indian legal industry was ensconced in a cocoon and therefore this reform will certainly widen its horizons.

Barriers Don’t Help

The advent of foreign investment will enrich the Indian economy and will offset every scepticism which mushroomed in this regard.

The access that Indian lawyers and law firms would get into foreign economies would also enable Indian legal professionals to engage with foreign clients and enhance their legal acumen, experience and financial compensation.

The Government should actively negotiate with foreign economies to streamline legal education so that lawyers trained in India are able to practice abroad with ease and vice versa.

Sunlight is the best disinfectant. It is only when we are open to exposure to sunlight that we can derive its qualitative benefits. The Indian legal industry is no longer going to be a feudal and anachronistic sector and its liberalisation would be a harbinger for change.

Kaustubh Mehta is an advocate who practices in Delhi. Views are personal and do not represent the stand of this publication.