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Members of the Society of Indian Law Firms, and Finance Minister Arun Jaitley held an informal interaction of sorts at the National Media Centre in New Delhi. The event, hosted by Jaitely, saw an impassioned Lalit Bhasin talking about the entry of foreign law firms into the Indian market.
In the past, Bhasin has been quite vocal in his opposition towards foreign law firms. Today, however, the SILF President did indicate a softening of stances.
“We opposed the entry of foreign law firms for more than 20 years and there was a reason to do that. We had to prepare ourselves. We had to come up to certain level to compete with foreign law firms. Now I can say that we have achieved our expertise, efficiency and competency.”
“Let the alien invasion happen. We are equipped to face them.”
At the same time, Bhasin did point out that it should happen in a phased manner as has happened in other jurisdictions, such as Singapore. In fact, an inter-ministerial group has been formed to study the Singapore model.
Bhasin also spoke about the growth of “multidisciplinary practice”, something that is eating into the business of law firms.
“These Chartered Accountancy firms are trying to take away a large chunk of law practice. They are doing it unashamedly.”
The attack is not particularly surprising; SILF has already filed complaints against audit firms for engaging in the “unauthorised practice” of the legal profession.
On his part, Jaitley did make a few unexpected observations. Describing the growth of the Indian law firm, the former lawyer said,
“We must seriously introspect as to the growth of structured law firms in India. There are many segments of the economy, which have in the last 25 odd years picked up quite rapidly. Considering the number of lawyers we have in India, I am not so sure whether the creation, expansion and even the size of law firms have kept pace with our otherwise position at the global level.”
“Therefore, on the one hand we claim to be one of the fastest growing economies but at the same time, law firms have not grown at that pace.”
He added, “I don’t know what the issues are but everyone needs to put their minds together to find out why this growth has been relatively smaller?”
With regard to entry of foreign law firms and how SILF has evolved its stand, Jaitley declined to comment, stating that the Law Ministry and the Commerce Ministry are already dealing with the issue.
The former lawyer though did add.
“We have always suffered from the fear of the unknown. This fear of the unknown can create a certain amount of protection but when that protectionism gets beyond a point, it puts you in a smaller silo where the levels of ambition also get limited.
I virtually can’t see any segment of the service sector in Indian economy to be on the defensive while dealing with foreign competition. And if you are defensive in services then we are going to be invaded. Our ability to dominate global trends is not going to be there.”
“The time has now come where we also need a massive change if we want to capture a global space for ourselves and that will be possible if we get out of the defensive mode.”
“It’s really three things that matter – professional ethics, competence and cost. I don’t see why we cannot beat the rest of the world in cost. You have a distinct cost advantage”
AZB & Partners’ Ajay Bahl, one of the earliest participants in the Indian law firm story, was next to speak. Admitting that the pace of growth had been slow compared to other industries, Bahl said,
“When we started our practice, it was largely a litigation-based environment where people were not willing to pay us for advice. It has taken a huge effort actually to build up that respect for the firm. What we are hoping for is that now our big clients will take us overseas. When you say firms overseas have grown, they have not grown because of themselves but their clients grew outside the world and have taken them along.”
And although Bhasin may have spoken in favour of an “alien invasion”, it was the last speaker of the day that really showed how apprehensive Indian law firms continue to be.
Speaking about liberalisation, Kochhar & Co’s Managing Partner Rohit Kochhar said,
“While we should be ready to face the onslaught and nor fear the unknown, there are some practical realties we have to bear in mind. If you take the country of France, which has had a very well developed legal system with very renowned law firms. The top ten law firms are actually owned, managed and run by the English. So the point I am making is that these foreign law firms have such deep pockets, they can actually invade a country like India with the business plan, which says ‘We have planned losses for 5 years and then we will deal with what has to be done thereafter”.
“We Indian law firms have the skills, the talent and our acumen is second to none but we don’t have deep pockets of a Baker & Mckenzie or Clifford Chance or Jones Day. We cannot run a law firm as a business where we have planned losses for 5 years and then we take on the world. That is the practical reality we have to bear in mind while we ready ourselves for the invasion of the next East India Company.”