Opening up of Indian legal service sector: Vasani

Post the initiation of efforts by the Government of India towards globalisation of Indian Industries, the country has witnessed some phenomenal changes in the economic landscape with more and more Indian companies expanding their global reach. However, the legal profession in India has failed to catch-up with the globalisation efforts and has been operating under the protectionist provisions of the Advocates Act, 1961. The Bar Council of India has also been vehemently opposing the entry of foreign lawyers into the country. Under this pressure, the Government too has been reluctant to bring in the required policy and legislative changes. This has affected growth and competition in the legal profession, resulting in limited options for clients for legal services and also deprived the clients of better quality of legal services and response time.

For the last several years, foreign law firms have been lobbying hard for gaining entry into the Indian legal practice by making representations to the Law and Commerce Ministries of the Government of India. 

I am of the view that India should allow the entry of foreign law firms for advising on Corporate/M&A and transaction oriented work. It is not fair to say that we want foreign investments (FDI) but not foreign law firms. However, their right of appearance in the Courts of Law in India should be regulated on the basis of reciprocity offered by their country to the Indian lawyers. Our experience has been that these firms have better technology based infrastructure and client support systems. Also, their drafting and documentation skills are of much higher standards as compared to their Indian counterparts. These strengths would immensely benefit the Indian corporate sector in terms of high quality of legal services as we will have many more options in terms of choosing the right legal service providers for a given transaction based on the nature thereof.

I believe international law firms would take only a minor market share in India as they would be far more expensive than their Indian counterparts unless they change their business model and match their billing rates with Indian law firms. Competition from foreign law firms could sharpen up the large domestic firms in India which with a few exceptions are slow in their responses just now. Moreover, when international law offices open here I would expect to see some of their international legal work is being done in India using Indian lawyers and consequently significant employment being generated in India.

The Government of India can bring in a policy change by making suitable amendments to the Advocates Act, 1961. In this connection it is also important to note that India is a member of the General Agreement on Trade and Services (GATS) under the WTO which obligates the Government to enter into successive rounds of negotiations with the member countries periodically with a view to achieving a progressively higher level of liberalization which includes free trade and services without regard to national boundaries. However, due to pressures from the Bar Council of India, this issue has been kept on the back-burner in the last few rounds of WTO negotiations. 

The recent Bombay High Court Judgment has only interpreted the present law on the subject as the High Court cannot address the fundamental policy issue of opening up of the sector.