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Road map for reform

Road map for reform

India Business Law Journal 
February 2015
 
Lalit Bhasin, the president of the Society of Indian
Law Firms, explains why he now supports the
phased entry of foreign law firms
 
The government of India, in consultation with the country’s legal profession, is in the process of formulating its position with regard to opening the legal services sector to foreign legal practitioners. The government is of the view that the competitiveness and attractiveness to foreign investors of India’s manufacturing sector will improve only if we improve the quality of our services sector. We thus need to introduce reforms in our legal services market. The government has underlined the need to ensure that any such reforms are gradual and calibrated. This is particularly important given the sensitivities of the legal fraternity on this issue.
 
The government has set up a high profile inter-ministerial group (IMG) under the chairmanship of Rajeev Kher, the commerce secretary, to prepare a road map for reforming and opening the legal services sector in India. 
 
The road map will comprise two broad phases. Phase I will introduce domestic regulatory reforms and the simultaneous partial liberalization of the sector, including the opening up of international arbitration and mediation services and advisory services in foreign law and international law. The opening up is likely to be spread over a period of five to seven years. Phase II will go a step further with the proposed opening of certain advisory and non-litigious services in Indian law.
 
It is clear that the road map will not include any proposal to open representational or litigious practice of any law, including Indian law, to foreign competition. It is also important to note that every stage of the reform process will be subjected to the regulatory oversight of the Bar Council of India (BCI), which is the regulatory body for India’s legal profession.
 
The road map will not prescribe details such as the scope of practice that may be undertaken by foreign lawyers and law firms, the titles that may be used, the disciplinary rules, the number of years of prior practice experience required, etc. These important issues will be under the strict remit of the BCI.
 
The Society of Indian Law Firms (SILF), of which I am the president, has informed the IMG that Indian law firms are now ready for a phased sequential approach to the entry of foreign lawyers and law firms. SILF vehemently and successfully opposed the entry of foreign law firms for nearly two decades, and I have previously written for the pages of this magazine opposing any such entry. During this period India’s legal profession has experienced monumental growth, not only in terms of the number of lawyers and law firms, but also in terms of the quality of services provided.
 
Indian law firms are now second to none in the world in terms of their knowledge, efficiency, research, competence, use of technology and speed of disposal. One can now say with daring certainty that given a level playing field, Indian law firms can successfully stand up to the competition from foreign law firms, as long as their entry is managed in a phased sequential manner.
 
Even the BCI has indicated that it is now ready to discuss the road map for legal reform, as long as the plans are calibrated to meet the requirements of the various stakeholder groups. The Department of Legal Affairs of the Ministry of Law and Justice, meanwhile, has stated that it will be guided by the advice of the BCI.
 
It must be emphasized that India’s legal community will not agree to any proposal that will result in commercialization of the profession. In other words, SILF is not in favour of foreign direct investment being allowed in the legal sector and profits being shared as dividends, as they are in corporate bodies, which is very common in the case of law firms in the UK. SILF is also opposed to the entry of multidisciplinary practices (MDP), where lawyers and other professionals, such as accountants, practise together. While the Indian legal services sector is prepared to face competition from foreign law firms, allowing MDP firms would open the door for the “Big Four” accountancy firms to enter India’s legal services sector. The BCI is of the view that under the five year integrated law courses in India, students are already getting sufficient exposure in fields like economics, accountancy and commerce, and hence the need to permit MDP firms is not felt. Furthermore, law firms in India take recourse to lateral assistance where required. 
 
It is heartening to note that the road map being prepared by the government will mention that access to foreign lawyers will be subject to the principle of reciprocity. The implementation of this principle will be best addressed through mutual recognition agreements, the negotiation of which will come under the sole remit and prerogative of the BCI. SILF and the BCI are in complete agreement with this approach. In terms of the domestic regulatory reforms that will accompany the phased opening of the profession, the BCI and SILF both favour permitting Indian law firms to issue brochures, build websites, access bank finance, increase the limit of professional indemnity and structure their practices as limited liability partnerships.
 
The initiative to liberalize India’s legal profession is timely, topical and significant. The discussions with stakeholders are ongoing and a clearer picture will emerge once the road map is ready for further deliberations by the IMG, the BCI and SILF. 
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