“A landmark announcement”: A look at the BCI’s rule changes for foreign law firms, and why they matter.
Isaac Hickford – 18 April 2023
‘In India, [the] legal profession is treated as a noble profession (…) [The] Legal Profession is not treated as a commercial activity or service in India. Law is not a trade, and briefs no merchandise, so the leaven of commercial competition or procurement should not vulgarize the legal profession’ -Hon’ble Justice Krishnairyer, V.R.
Last month, the Bar Council of India made an announcement that would open the door for Western law firms to establish offices in the country for the first time. In many ways, it symbolised a change in the cultural landscape that has limited the practice of foreign firms in India over the last few decades. But it also presents an opportunity for law firms in the UK and the US to tap into a market that is ever-growing: “It’s a matter of sheer numbers,” Hitesh Kalwani, a senior marketing professional at a major law firm in Mumbai explains, “We are the fastest growing economy in the world, with a population of 1.4 billion. So firms are taking a serious interest in the infrastructure being developed here.” And there’s no doubt about it, the scale of the foreign direct investment in India over the last few years has been staggering. In fact, amongst the BRIC nations (Brazil, Russia, India and China), India’s rate of growth over the last year is at the top of the pile: “With all the political uncertainty surrounding those regions, I think it puts India in an advantageous position in comparison,” Kalwani tells us, “as businesses and investment increases in India, the demand for legal services increases too.”
So what has changed? Until very recently, foreign law firms could only operate in India on a fly in, fly out basis: “There is a stipulated period of 60 days, in which their advice, or the scope of the work that they do for clients in India, has to be limited to international law,” Kalwani explains. But this is changing. The Bar Council of India has announced that foreign law firms (while still restricted to international law and cross-border matters) will now be free to establish permanent practices in India. “They still won’t be able to represent clients in courts, tribunals or other regulatory bodies, which are specific to the Indian jurisdiction,” Kalwani clarifies, “but they will be allowed to set up permanent practices to provide advice on international law and cross-border transactions.”
Of course, this paves the way for firms in the UK and the US to open offices in the country, something that, as Kalwani points out, is already underway. In 2022, Dentons – the largest law firm in the world by number of offices – became the first global law firm to announce a combination with an Indian firm when it joined forces with Link Legal, a group with offices in New Delhi, Mumbai, Bengaluru, Hyderabad and Chennai. “India is of enormous economic and strategic importance to our clients,” Elliott Portnoy, global CEO of Dentons tells us, “and it is a country with outstanding legal talent.” With the go-ahead from the Supreme Court on the BCI’s latest changes, Link Legal will become known as Dentons India, and more are expected to follow suit: “There is a publication called the India Business Law Journal, which puts together a list of foreign law firms who currently advise clients in India,” Kalwani adds, “If I were to take you through that list, it's essentially the top 50 biggest law firms across the world in terms of size and revenue.”
As Kalwani is quick to emphasize: “This announcement from the BCI is a landmark announcement. Of course, the Indian legal market is becoming more liberalised with each passing year, but it’s now beginning to follow a similar kind of template to what we’ve seen in Singapore.” In 2008, the Singapore government introduced Qualifying Foreign Law Practice (QFLP) licences, which allowed foreign firms to provide legal services in Singapore so long as it was provided through Singaporean lawyers. By 2012, foreign lawyers who had passed new Foreign Practitioner Examinations (FPE) were free to practice corporate and commercial law in Singapore. While it’s early days in the developing relationship between the West and India’s legal market: “It’s really exciting, not just for Indian law firms, but for the firms all over the world that have been working with Indian clients.”
Yet in some ways, the prospect of UK and US law firms setting up shop in the country is generating a mixed reception in India. Already, there are Indians who are worried about how openly commercialised legal industries from overseas will change the sector: “For certain people who are more conservative in their mindset, there is a worry that the presence of competitive foreign law firms with a corporate focus will pull students away from practicing law the way it was intended in India – to serve justice to those who don’t readily have access to justice” Kalwani explains. There’s no doubt that the more commercialised legal markets in the West come with the draw of big salaries too, and it is speculated that the hourly charge for legal services will increase substantially with the addition of large international players into the Indian market.
Yet there are plenty of reasons to be optimistic. For one thing, competition can have a welcome influence. Firms at the top of any market will always be pushed to improve by the presence of competition. What’s more, there is good reason too to believe that principles remain a motivating factor. Of course, as is so often the case, the reality of practice isn’t always a perfect reflection of the values it was built on. But here again, competition from overseas firms can place a greater emphasis on how firms are perceived by the general public in the country they find themselves.
Regardless, influence goes both ways. As Western firms seek to adapt to new markets, those markets shape the service those firms provide. Just as the presence of UK and US law firms will have an impact on the profession in India, so too will India’s emerging legal market shape these firms moving forward. Besides, change is often a good thing.