The Foreign Lawyer - Indian Law Firms undone or reset?

There is no doubt in anyone’s mind that with the notifying of the rules for the Registration and Regulation of Foreign Lawyers and Law Firms in India through the Notification dated 10^th March 2023, the Bar Council of India has undoubtedly taken a bold step by recognizing that legal practice, in the backdrop of mature and complex commercial transactions in the new borderless global village, has come of age. The Bar Council of India is no longer in denial - “it has risen to meet the global challenges in the Legal Arena” and is a most welcome leap.

Like all else, change comes with many questions/uncertainty and sometimes resistance. What will this change hold for us, the practising lawyers who have very profitably networked with foreign lawyers and law firms in supporting their clients’ charter of the legal terrain in India, sometimes rowing on the boats of solid brands of well-established firms who have been around for decades?

The home-grown brands brought to the world beyond India a stamp of trust and reliability offered to foreign firms with clients but no ability to navigate the Indian legal ecosystem themselves. Now, it is all set to change, or then maybe not! How far have the rules set out that the participation of foreign lawyers may be there but only enough to ensure that while a foreign client benefits by having a lawyer well versed with the law of their jurisdiction, the Indian Lawyer continues to be the trusted soldier when it comes to holding fort on matters regarding Indian law.

As set out in Chapter IV of the Notification, a “Foreign Lawyer” (a term used here-in-after interchangeably for Foreign law Firms as well) entitled to practice law in a foreign country can now, after following due process as per the Notification, practice law in India in non-litigious matters subject to exceptions, conditions and limitations as set out in the Notifications. It, however, appears that the areas of practice of law by a Foreign Lawyer/Foreign Law Firm shall be laid down by the Bar Council of India; what will not be permitted, however, is representation by Foreign Lawyers before Courts/statutory or regulatory authorities.

Clear permission is given for foreign lawyers to carry out transactional work/corporate work. While to the naked eye, this seems like an obvious intent that Foreign Lawyers can only work on transactional work like M&A transactions/joint ventures etc., one must bear in mind that the Notification does not state anywhere that such representation would be for clients having offices in the jurisdiction of the foreign Lawyer or with respect to Foreign Law, this to my mind holds the key to the answer to the question - what next!

Foreign Lawyers (exceptions exist) bring with them a brand, just by virtue of being trained in a more mature system, something that most Indian law firms are still grappling to accept - ‘Professionalism’. They bring to the table what is often neglected – ‘Meritocracy’. The Foreign Lawyer in the field of corporate law will now offer its services to not only its client but also the domestic Indian client, and here the story of change unfolds. The client now will have the ability to choose from the bouquet of lawyers/law firms, such as lawyers who breathe the mantra “Client Comes First”.

The Competition set to unfold is immense and will begin with the Titans of the Globe versus those of the domestic Indian market. This clash of Titans will now be about the Lawyer in the law firm who delivers, as that will now be needed of the hour.…as even for a Foreign Law Firm, the need of the hour will be good lawyers who can live up to the expectations that the brand will carry as it steps into this new domain-the Indian market and for the established Law firm players retaining their talent will be the start of the story - The Big Poaching Phenomena! The good news, however, is that there will also be a reverse brain drain of talented lawyers returning to India, which will be a prized catch for both Foreign and Indian Law firms.

Again, to the naked eye, litigation lawyers seem tucked away safely from this unfolding narrative of globalization of Indian law. But is it so? Can a Foreign Lawyer or Law Firm not engage a local counsel and brief a senior counsel alongside a local counsel - I wonder! I guess it is a matter of interpretation, but until clarified, it may well be the case, and a footprint is left in the litigation arena.

Now comes the challenge again for the established law firms, preventing the drain of talent from stepping into the mushrooming world of smaller firms. After all, a talented independent litigation lawyer trained in the corporate ecosystem will bring to the table what Foreign Law Firms seek: trusted synergies where they cannot tread the path alone without the fear of losing the client and at reasonable costs. This has, in the past, been an area where Indian firms have collaborated very well with Foreign firms, but it will continue to be the case only; time will tell.

Notwithstanding, the restriction on litigation, participation in arbitration (in International commercial cases) by the Foreign Lawyer has been given an unfettered green flag-a very welcome step to now open the doors for India to be a preferred venue/seat in even foreign contracts not involving any Indian party which will see the growth of world-class Arbitration centres.

Last but not least, real estate and conveyancing. This, to my mind, is where the challenge will be unique. The restriction is with respect to “involvement or permission to do any work pertaining to conveyancing of property, title investigation of similar works”. Real estate is no longer a game of sale/purchase. It can be a small but significant portion of a corporate deal/joint venture and event project finance. Real Estate transactions have significantly transformed over the last few years, so much so that I think even the Transfer of Property Act and related state acts need to be overhauled.

Big ticket corporate leasing in itself has transformed. One such example of the evolving real estate structures is the REITs and the INVITs. One wonders if this will be within the ambit of corporate work or Real estate matters similar to conveyancing. The oversimplification of putting in buckets corporate and real estate work to my mind will be where there will be further clarity needed given that the restriction is on “involvement”, but can these intersections of corporate and real estate matters be called “similar matters” to conveyancing of property and other similar works, where the restriction is explicit. Perhaps No, or then perhaps this area will see Guerilla lawyering, again leading to the need for good lawyers without duplication of the importance of brands, again making talent supreme!

Though the answer to the question of what next is veiled in complete uncertainty, one thing can be said with complete certainty, it will all boil down to talent. But another aspect can be a game changer in these uncertain times - Collaboration!

Foreign Law Firms rightfully bubbling with excitement with this news will have to take a studied approach as they make their foray into the Indian market. They will be stepping into an ecosystem which comes with a unique set of challenges and learning how to deal with what will come with its issues. Working closely with established Indian law firms will help them navigate these challenges, which they have trumped over the years. It will be interesting to see if regulators view this as an opportunity to bring such collaborations under FDI caps and conditionalities.

Collaborations will also help create an era of lawyering that will blend locally savvy lawyers into the more mature international approach without making it only about take-home packages—a massive win for the continuous evolution of qualitative legal services in the time to come. We must be reminded that poaching and attrition will not affect only the Indian Law Firms it will have a ripple effect through the entire ecosystem worldwide, as it will become a vicious circle.

These are times of transition for the Indian Lawyers as it is the talented Indian Lawyers who will rule the roost under all eventualities. Still, it is a time of reset for the established Indian Law Firms who will have to find ways to collaborate with the Foreign Law Firms to ensure that the objective of the bold step is not lost- “There is and should be no commercial competition or procurement associated with the legal profession”. When there is a lack of clarity, the intent and the object of the law dictate interpretation - lest we forget.  

Purnima Singh Kamble is a Partner at Fox Mandal & Associates.

Disclaimer: The content of this Article does not necessarily reflect the views/position of Fox Mandal & Associates but remain solely those of the authors.