There’s no case to create barriers between advocates and in-house counsels

The Government’s introduction of the Advocates Amendment Bill in February aimed to remove the distinction in a limited context.

By Vardaan Ahluwalia and Varsha Yogish 

India is among the few common law countries that treat in-house counsels and advocates differently. Legal rules mandate in-house counsels to cease being advocates upon taking full time employment despite meeting educational and enrolment requirements. This limitation restricts them from representing their employers in court and from claiming attorney-principal privilege for their legal advice.

The Government’s introduction of the Advocates Amendment Bill in February aimed to remove the distinction in a limited context. With the stated objective of modernising legal practice with changing times, the Bill proposed significant changes – including elevation of professional standards, improving legal education and boosting competition by allowing entry of foreign firms. However, following Bar Council of India’s (BCI) objections, the Government has taken the Bill into re-consideration in late February. The BCI’s primary concern was that more consultations should be carried out as presently the Bill may impinge upon its autonomy. It remains unclear if the BCI opposes recognizing in-house counsels as legal practitioners, leaving room for constructive dialogue.

On the whole, as India competes to position itself as a leading destination for foreign capital, the government’s reform push is understandable. The nature of legal services and global expectations have evolved. A 2024 study by the International Bar Association estimates that lawyers (including in-house counsels) contribute to $1.6 trillion to the global economy and promote rule of law. Given India’s rich common law heritage, eliminating this distinction is a low-hanging fruit, requiring only minor regulatory tweaks to align with established practices rather than a complete overhaul.

Global corporate governance standards

Unlike India, other mature legal markets such as the United States, the United Kingdom, and Singapore already afford the same statutory status to practicing lawyers and in-house counsels. As corporations navigate complex legal frameworks, laws should enable management teams to obtain effective legal advice and representation in a cost-effective manner.

Notably, in Upjohn Co. v. United States, the U.S. Supreme Court underscored the critical role of confidentiality and upheld the in-house counsel’s right to invoke the attorney-principal privilege for its employer. The Court noted that the privilege encourages ‘full and frank’ communication between attorneys and their employers, thereby advancing the public interest by ensuring compliance and administration of justice.

The accepted rationale is that statutory confidentiality strengthens trust in legal processes by enabling in-house counsels to fulfil their fiduciary duty to shareholders and facilitate informed decision making. Additionally, such frameworks enhance corporate transparency and reinforce whistleblower protections by safeguarding disclosures made to in-house counsels. This, in turn, allows them to protect the company’s broader interests, encourages stakeholders to seek early legal guidance, and facilitates necessary corrective actions.

As India progresses economically, its legal framework must evolve to match global standards. Restricting in-house counsels’ rights hinders cost efficiency and ease of doing business. The Bill’s proposal to expand the definition of “legal practitioners” is crucial to bridge this gap. When combined with clarificatory amendments to key laws such as the Bharatiya Sakshya Adhiniyam (Evidence Act), Companies Act, SEBI Act, and other legal procedure codes –  this reform could create a more balanced and globally competitive legal framework. This view has also been endorsed by General Counsels' Association of India in its representation on the Bill to the Government.

India could adopt safeguards similar to those of other countries to ensure a balanced approach. These include: (i) Limiting attorney-principal confidentiality strictly to legal advice, excluding business matters, illegality, or fraud; (ii) Allowing in-house counsels to represent their employers only in court, provided they choose to remain advocates; (iii) Enforcing a Code of Conduct to ensure neutrality and adherence to professional and ethical standards.

Conclusion

In conclusion, the government’s willingness to acknowledge the role of in-house counsels through statutory recognition is a laudable step toward strengthening India’s legal framework. This reform will pare legal costs and improve operational ease of doing business by enabling companies to access in-house legal expertise while maintaining confidentiality. Further, given the economic disparity in earnings within the legal profession, these measures could help create more corporate employment opportunities for Indian law graduates. In fact, extending attorney-principal privilege to foreign law advice issued from India could encourage companies to set up in-house legal service centres to help India emerge as an offshoring destination for legal services.

This progressive move also aligns domestic regulations with international standards, granting in-house counsels the same professional recognition as other regulated professions such as doctors, chartered accountants, and company secretaries. As legal and corporate landscapes evolve, we hope the government continues with its reforms drive in the revised Bill with these crucial amendments in the Advocates Act and related laws, creating an adaptive, efficient legal environment for long-term growth.

(Vardaan Ahluwalia is General Counsel, and Varsha Yogish is Lead Counsel at Premji Invest.)

Views expressed are personal and do not represent the stand of this organisation.