Big law firms are afraid that smaller, younger firms will benefit from entry of foreign law firms: BCI Chairman Manan Kumar Mishra

In a move that will likely change the contours of the legal profession in the country, the Bar Council of India (BCI) recently allowed foreign lawyers and law firms to practice foreign law in India on a reciprocity basis.

In March this year, the BCI came out with the Bar Council of India Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022 (BCI Rules) to enable international lawyers and arbitration practitioners to advise in India.

Elaborating on the reasons behind such a move, the BCI had claimed that it would go a long way in helping legal profession/domain grow in India.

The introduction of the Rules sans consultation with the industry has evoked mixed reactions from the legal fraternity. While some lawyers have welcomed the move, others feel that they are rife with ambiguities.

The Society of Indian Law Firms (SILF) recently sent a representation to the BCI seeking clarity on, among other things, the aspect of reciprocity as envisioned by the Rules and how a level playing field can be created for Indian firms and lawyers before the entry of their foreign counterparts.

Bar & Bench's Pallavi Saluja spoke to BCI Chairman Manan Kumar Mishra to gain some insight into the new BCI Rules and the proposed opening up of the Indian legal market.

In this interview, Mishra talks about the rationale behind liberalising the legal market, reactions of the Indian legal fraternity, how reciprocity will work and more.

Significantly, the Chairman reveals that there is a plan in the works to register Indian law firms under the Advocates Act.

Pallavi Saluja: What prompted the sudden need to release the Rules, when BCI had historically opposed the opening up of the Indian legal market?

Manan Kumar Mishra: It is not a sudden move. The Bar Council of India was discussing this matter for a while and we were considering allowing firms of those countries who have already allowed Indian law firms. In the UK, there are around 200 international law firms. Some Indian law firms are also operating there for the last several years.

Time and again, the proposal was coming from the UK that since they have allowed (entry of foreign firms), India should also think about it. Then in light of our government’s policy, we thought that unless we also open up the doors, to the extent which they have opened up, it won’t be in the interest of our young lawyers and budding law firms.

For most of the arbitration cases, even Indian companies opt for Singapore or Hong Kong, or the UK. Therefore, we thought that our lawyers in the long run are going to be the losers. We are producing very good lawyers after this five-years law course, and we have a number of very good law schools and universities. Therefore, now we can compete with most of the developed countries. Our students are much in demand in the US and the UK. Therefore, we thought that now it won’t be in the interest of our lawyers and our law firms if we keep the doors closed. 

PS: We understand that this move was a vital part of the talks regarding the Free Trade Agreement (FTA) with the UK.

MKM: No. In our country, it is still not a commercial activity. Law practice is treated to be a noble profession. Therefore, we have neither consulted the Commerce Ministry nor it has got anything to do with trade agreement. As of today, and in light of the Supreme Court’s judgment as well, it’s a noble profession and we have not treated it as a trade or commercial activity. 

PS: The Society of Indian Law Firms (SILF) says they were not consulted before the passing of these Rules and has even submitted a representation with their grievances.

MKM: Why should we consult SILF? Several thousand law firms are there today. SILF represents only a handful of law firms, the big law firms who were getting benefits in absence of these rules and regulations.

Now we have come to know that these big law firms were the ones who were impliedly and indirectly helping the foreign law firms. Once we have framed the Rules, they feel that the smaller, younger law firms and the young lawyers will also get the benefit of it and now they’ll be losing the market. That is why they have made this representation. We are not giving much weightage to this.

They were impliedly helping the foreign law firms, they were doing their work. Now they are worried because they are going to lose these markets and these activities will be checked. Naturally, the foreign law firms, if at all they come here, will require a good number of young Indian lawyers. The smaller law firms will also be benefitted. They (bigger law firms) are worried because of the fact that we have opened up the door for everyone. 

As a regulator, we consulted the state bar councils, the High Court bar associations, the lawyers' associations. Why should we consult the SILF who represent only a handful of law firms? In fact, it is because of SILF that this process (Rules) was delayed for about 6-7 years. They said, “If you open up, we won’t be able to compete, our firms and lawyers will lose out.”

But when we examined and actually discussed the matter and went in depth, we found that our lawyers are losing out. Therefore, it is necessary to open up.

PS: There seems to be ambiguity in the Rules in terms of what foreign law firms can or cannot do. Can you clarify that?

MKM: The Rules that we have framed are very clear on what all foreign law firms can do.

The field is very limited. The area we have opened up is still very limited because they (the UK) too have opened up a limited field. Our lawyers or law firms can’t practice English law in the UK. They can only practice Indian laws. In similar fashion, on the basis of reciprocity, we have opened up.

PS: A clarification issued by the BCI said that foreign law firms can only advise on foreign law to foreign clients. So, they can’t advise Indian clients? 

MSM: They can advise Indian clients only on foreign law if the Indian client has operations outside India. If they have an office outside India and it relates to international law matters of their own country, then they can advise. Because then the matter is not only related to an Indian client, it is related to a client which has an office in that country and the issue is also related to international laws. Otherwise, they cannot advise Indian clients on Indian laws.  

PS: There seems to be no clarity on reciprocity. How will it work for international firms that have offices across the world?

MKM: We have to examine the country of origin of the law firm. Reciprocity is to be examined on that basis. If a country has no reciprocity, we won’t allow it.  

PS: What reforms will the BCI bring in to ensure that Indian law firms are operating on a level playing field with foreign law firms?

MKM: That is still under consideration. We are examining it… We are discussing and deliberating over it because it will have far-reaching ramifications and effects…We still treat this profession as a noble profession. In the near future, some decisions will be made. 

PS: It is being pointed out that while Indian law firms are not recognized under the Advocates Act, under the new BCI Rules, foreign law firms can get recognized and registered.

MKM: All companies dealing with legal matters are recognized under the Advocates Act. All of this is clarified in the AK Balaji judgment as well.

Actually, we are going to register the Indian law firms as well. We are going to frame rules for registering Indian law firms. State bar councils will be registering the law firms which are operating within their jurisdiction while BCI will register national law firms.

PS: The Rules do not empower the BCI to take disciplinary action against foreign lawyers. Concerns are raised that action taken by disciplinary authorities in the foreign jurisdiction may take its own time.  

MKM: In that case, we have provided that we will immediately suspend their activities and we will ask the concerned country of origin to take appropriate action against the said law firm or lawyers. 

PS: SILF has submitted in its representation that the BCI Rules are not in conformity with AK Balaji judgment of Supreme Court. Do you have a different view?

MKM: In AK Balaji, liberty was granted to the Union of India and BCI to make rules in this regard. These Rules are in complete compliance with the AK Balaji judgment.

PS: How did you come about the amount for the registration of these law firms?

MKM: There was an expert committee that advised on this matter after some study.  

PS: Will foreign law firms be allowed to enter into tie-ups with Indian law firms?

MKM: No. They are only allowed to practice their own laws. If they enter tie-ups, that will allow them to indirectly enter into the Indian legal profession. Some firms have been already doing tie-ups, but that is behind the back. These rules and some more clarifications from us will slowly resolve all these issues.

PS: Have you received any queries related to the Rules from foreign law firms?

MKM: In the month of March, the President of the Law Society came. There was a long discussion. They are very happy. In the next month, there will be another discussion and I hope, thereafter, the UK law firms will start registering.