Foreign law firms entering India is a booster shot for the legal sector’s growth momentum

The current practice for the India leg of a transaction or advisory matter is that foreign law firms engage local law firms through formal or informal tie-ups and referrals. (Representative Image)

The winds of change take time to impact. This is what has occurred with arguably the most impactful decision taken in independent India’s complex legal history. In a sweeping change, the Bar Council of India (BCI) issued the BCI Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022 (Rules), which was published in the Official Gazette on March 10.

This notification has come as an enormous surprise since all similar attempts have been scuttled in the past. To refresh our memories, we can go back to 2015 when a proposal for phased entry of foreign lawyers in non-litigious services and international arbitration was initiated by the Government.

Subsequently, the draft Bar Council of India Rules registration and regulation of foreign lawyers and law firms in India had been provided (Office Memorandum dated June 26, 2016 of the Department of Legal Affairs). This draft was withdrawn by the BCI about three months later citing that in a State Bar Councils’ gathering, all lawyers’ bodies opposed the entry of foreign firms.

More Competition

The tide has turned and we can gear up for huge positive impacts on transactional work even while litigation remains outside the purview of the Rules.

The current practice for the India leg of a transaction or advisory matter is that foreign law firms engage local law firms through formal or informal tie-ups and referrals. This dependency will disappear once a foreign law firm sets up its office in India.

It remains to be seen if these tie-ups will survive or be swallowed up by the competition with the new entrants. With competition comes the case for rationalisation of billings rates and fees, which will lead to consistency, economies of scale and cost optimisation for clients.

Global Outlook

The entry of foreign lawyers will ensure seamless advice for multinational companies (MNCs) operating in India since the foreign law firm engaged by MNCs usually has a global presence with suitable knowledge of the MNC’s global operations. The clear advantage to a client will be holistic advice provided by a single law firm without any accountability concerns on the interpretation of local law provisions by another firm.

This is a massive gain for an in-house legal team which typically has to deal with more than one law firm and multiple lawyers to understand the implications of local laws and practices. It will also eliminate the administrative hassle of coordinating with different systems and centralised operations will ensure efficiency in time and effort.

Employment Avenues

There will be ample avenues for lawyers as foreign law firms will hire from the existing market. There are more than 1,7oo law colleges in India as per a statement provided to Parliament about a year ago. The ever increasing number of law graduates passing out from these law colleges will have an additional career path now.

Indian lawyers will have access to the vast network of foreign law firms with opportunities to work and grow their careers in a territory outside India. Further, short-term movements and secondments to offices outside India will improve the outlook of local lawyers. It will be much simpler for Indian law students to apply for global internships in these firms.

Similarly any lawyer already working in such a foreign law firm will have the option to return to India without compromising on their established career with that firm. The salaries of lawyers are envisaged to go up significantly from the current benchmark though they may not be at par with the corresponding salaries in more developed jurisdictions.

International Best Practices

Apart from providing advice, another important aspect is that international best practices will be introduced in India which will enhance the quality of work and deliverables. This includes investment in latest technology, access to relevant research databases, real time updation of global developments in the legal field, knowledge of latest contracting clauses and terms. With improved tools at their disposal, lawyers will be equipped to effectively handle complex international matters from India.

Over the years foreign law firms have thrived on innovation which has been a key contributor to establishing legal hubs in Hong Kong and Singapore and these same benefits can accrue to the Indian legal landscape. Such an enabling environment is very conducive to upskilling the existing talent pool.

The entry of foreign lawyers and law firms will be a gamechanger for the India legal sector. There will be some initial hiccups and challenges while implementing the Rules. In order for the objective of the Rules to be successfully achieved, close collaboration is required by all stakeholders.

Eventually once everything settles and the market matures, we will realise that everyone has been enriched by the vast global legal knowledge and India will march towards its goal of becoming a global business hub.

Sourish Mohan Mitra is a lawyer based in Delhi who specialises in corporate, commercial, mergers & acquisitions, joint ventures and real estate transactions. He can be reached at sourish24x7@gmail.com; Twitter: @sourish247. Views are personal and do not represent the stand of this publication.