Even as the two entities spar over the entry of foreign lawyers and firms into India, the Society of Indian Law Firms (SILF) has sent a representation to the Bar Council of India (BCI) detailing its criticisms of the latter's Rules allowing market liberalisation.

SILF had recently formed a committee of lawyers headed by Shardul Amarchand Mangaldas Chairman Shardul Shroff to suggest changes to the amended BCI Rules.

In its letter signed by President Lalit Bhasin sent on July 9, SILF has said that the amended Rules suffer from unclear drafting and legal lacunae which could facilitate the backdoor practice of foreign lawyers, thus affecting their Indian counterparts.

Before critiquing the Rules, SILF "congratulated" BCI on its endeavour to open the legal services sector to foreign lawyers, saying that it was always in favour of the move, albeit in a phased manner.

However, it also highlights instances of "conceptual issues apart from pure drafting issues, ranging from grammatical errors to repetition, vagueness, and lacunae." These include the definitions of "Foreign Lawyers", "Indian Advocate/Lawyer", "Foreign Law Firm", "Indian Law Firm", "Indian-Foreign Law Firm".

But first, SILF highlights the ways by which the BCI Rules may be deemed as ultra vires the Advocates Act.

Legal loopholes

At the outset, SILF says that the Advocates Act, 1961 has to be amended before the new Rules can take effect. Referring to the Supreme Court's judgment in AK Balaji, SILF stated,

"...in that case, the Hon’ble Supreme Court gave liberty to BCI and the Government to make suitable rules only in respect of two specific matters concerning foreign lawyers – that is, concerning fly-in fly-out practice and participation in arbitration matters. That judgment did not say that there was legal authority for general rules permitting the entry of foreign lawyers and foreign law firms in India."

It points out that Section 16(1) of the Advocates Act provides for only two classes of "Advocates", whereas the BCI Rules create a number of classes including "Foreign Lawyer", "Indian Advocate/Lawyer", "Foreign Law Firm", "Indian Law Firm", "Indian-Foreign Law Firm".

Next, SILF points out that Rules made under Section 49 (1)(c) and (e) of the Act - which purportedly include the BCI Rules in question - require prior approval of the Chief Justice of India and the Central government.

"Absent such approval, there would be a serious ultra vires exposure to the Rules," the representation states.

Surrogacy and backdoor entry by foreign firms

SILF claims that some of the BCI Rules are designed to allow foreign lawyers and law firms to directly and indirectly engage in the practice of Indian law, both in litigious and non-litigious fields. As examples, it cites the following:

"See Rule 2(v), last paragraph, which further dilutes the concept of permissible domain by omitting "foreign law" and bringing in discretion for BCI to allow other areas:

"Foreign Law Firm refer to entities and individuals practising exclusively in non-litigious areas as defined under Rule 8, unless explicitly allowed by the Bar Council of India to undertake additional activities in accordance with Indian laws."

Another example given is of Rule 8(2)(b). The letter states that while there is a specific prohibition introduced regarding litigious practice, there is no such prohibition on "non-litigious" practice of Indian law.

It states that as per Rule 8(3), foreign law firms registered under the Rules can carry on the practice of law (including Indian law) – both litigious and non-litigious – through Indian advocates who are partners or associates in such foreign law firm.

"So, the door to Indian law practice is closed under Rule 2 (c) and Rule 8 (1), but a very large window is opened by Rule 8(3)...Rule 8(3) conflicts with the objects and reasons, as well as several preceding rules, such as Rule 8(2)(c) and the undertaking to be given by the applicant in Rule 4(k)."

Pointing out inconsistencies in Rule 9, SILF says that Rule 9(ii) allows a registered foreign lawyer or foreign law firm to "Engage and procure legal expertise/advise of one or more Indian Advocates Registered as foreign lawyers and/ or Indian-Foreign Law Firm/s registered as Foreign Law Firm”.

"This sub-rule uses ambiguous words like "engage" and "procure" - it does not describe the nature of the engagement or procurement. Is it employment? Is it an independent third-party arrangement?"

Further, it states that under Rule 9(iii), foreign firms and foreign lawyers will be entitled to seek advice from Indian advocates and not Indian law firms, without assigning reasons why. It goes on to state,

"Rule 9(vi) is about the entitlement of Indian "Lawyers" (and not Advocates) to work "abroad". Interestingly, this disjointed provision finds its way into a Rule that deals with "Incidental Matters.....in connection with practice of law in India". This rule suggests that BCI is exercising extra-territorial power to regulate what Indian lawyers can or cannot do abroad."

The Society has highlighted that foreign law firms are creating surrogate legal structure/entities to building legal-tech intellectual property and AI-based legal-tech products.

"Foreign law firms, specifically on emerging side are able to do so, as foreign regulations permits so. Whereas, law firms in India, including emerging law firms, cannot innovate on this front, due to the restrictions under the Act and BCI rules, that Advocates are not permitted to pursue any active business opportunities."

SILF also expresses concerns over other surrogate structures including brand-sharing, intellectual property sharing arrangement, profit sharing, royalty fees with Indian law firms.

"BCI must have investigation powers for such surrogate legal structures. Hence, it is critical that foreign law firms which obtain registration from BCI are made subject to the Chapter V (Code of Conduct of Advocates; Disciplinary Proceedings) for any such investigations (if required) to be conducted by BCI basis any formal complaints received."

Fly-in fly-out fees

SILF claims that BCI lacks the authority to collect any fees or charges for fly-in fly-out arrangements since Section 49(1)(h) of the Advocates Act only empowers BCI make rules for "the fees which may be levied in respect of any matter under this Act". With Advocates Act unamended, it does not contain provisions on registration of foreign lawyers or firms.

Pointing out the ambiguities in the provisions in the Rules governing fees, SILF says,

"This framework is unfair and onerous for foreign lawyers and foreign law firms. SILF opposes this framework. As far as SILF is aware, there is no other country in the world which has such a framework for visiting overseas lawyers. Apart from that, this framework is not implementable in any practical sense. There is no mechanism in place for the BCI to monitor the movement of foreign lawyers in and out of India...Indian lawyers are not required to pay fees to foreign regulators or report their visits. The BCI is setting a perilous precedent."

Reciprocity

That brings us to the issue of reciprocity, or rather the lack thereof, in SILF's view. It says that the expression "duly qualified" in Section 24 of the Advocates Act must be understood to mean and as possessing "qualifications required to practice law" in a country.

"For example, if an Indian citizen, has all the qualifications required to be licensed to practice law in Country X...and this Indian citizen can be admitted to practice in Country X, then a citizen of X who has obtained the qualifications required under the Advocates Act, would be eligible for enrolment as an "Advocate" with a State Bar Council and thereby be entitled to practice law in India as an Advocate."

However, SILF states, Rule 4(d) permits the registration of a foreign lawyer based on a certificate issued by the government of the foreign country or another competent authority. It goes on to state,

"In cases of artificial persons, it is not clear which country would be considered the "country of primary qualification" to determine reciprocity registering a "foreign firm" under the Rules would then automatically provide a backdoor entry to lawyers from non-reciprocating territories."

Disciplinary action against foreign lawyers

SILF states that the BCI Rules expressly exclude the applicability of Chapter V of the Advocates Act to foreign lawyers, resulting in foreign lawyers being outside the purview of disciplinary action by State Bar Councils or the BCI.

"Indian advocates will be disadvantaged as they will be subject to disciplinary action in the foreign jurisdiction. In contrast, lawyers from such foreign jurisdictions will escape disciplinary action in India."

It further states that since Indian lawyers are barred from advertising their services,

"Since BCI has ceded its regulatory and disciplinary jurisdiction to the home country's regulator, no action can be taken against foreign lawyers or foreign law firms that market and advertise their practices in India."

SILF requests

Given these reservations expressed over the amended BCI Rules, SILF has asked for the following:

• Commence consultation with SILF and other stakeholders of the Indian legal fraternity on Phase I (domestic reforms) to be implemented before any foreign lawyers or foreign law firms are given the privilege to practice any type of law in India;

• Implementation of Phase I for domestic reforms in an immediate and time-bound manner;

• Facilitate SILF's meeting in person with the Committee set up by BCI under the Chairmanship of Mr Cyril Shroff for presentation on the Rules and deliberations on revisions to address stakeholders' concerns

• Suspension of the Rules pending the consultations, review, and revisions set out at (i) to (iii) above;

• Keep in abeyance of applications, if any, received from foreign lawyers or foreign law firms seeking registration

The SILF and the BCI have been at loggerheads over the recently amended rules allowing the entry of foreign lawyers and law firms into India.

SILF has stated that it supports the liberalisation of the Indian legal market, but is mainly concerned with how the changes are being implemented. However, the BCI has questioned SILF’s motives, accusing it of protecting the monopoly interests of a select group of law firms. 

On June 28, SILF issued a detailed statement questioning whether the BCI wants to bring in foreign law firms to India to demolish Indian entities.

BCI then retaliated, accusing SILF of professional misconduct for constantly undermining its authority as regulator of the legal profession.

The BCI said that it is seriously considering issuing notices to the SILF representatives responsible for issuing press releases containing “misleading public information” about the entry of foreign law firms.