Foreign Law Firms react to foreign law firm Rules by BCI

The recently notified Bar Council of India (BCI) Rules allow foreign law firms and lawyers to practice in India, albeit only on foreign and international law in non-litigious matters, and on a reciprocal basis..Previous attempts to liberalise the Indian legal market have been met with staunch opposition – either for the absence of safeguards for Indian firms and lawyers or the lack of clarity surrounding the regulations. And after decades of dread and deliberation (and a few jokes along the way), the long-awaited move finally seems to have become a reality.Indian law firms and in-house counsel seem to have welcomed the move for the most part. But what about their foreign counterparts? While some Practice Heads of these foreign firms welcome the move wholeheartedly, others expressed reservations regarding certain aspects..Chair of Baker McKenzie's Global India Practice Mini Menon vandePol, welcomed the development as a significant step towards the liberalisation of India's legal sector – one that aligns with the country's broader economic development goals. On a personal level, she expressed excitement at the prospect of returning to her home country to set up the firm’s first Indian office.“For over 60 years, we have been supporting Indian-headquartered companies as they expand, finance and diversify their businesses into global markets. Baker McKenzie is already considered one of the strongest international firms active in India and, in fact, more than 300 of our lawyers have and continue to work on India-related transactional and international arbitration matters.”She added that this development will give Baker Mckenzie a better platform and allow the firm to be closer to its clients.“Allowing us to open an office in India is very welcome and will give us a better platform, allow us to be closer and more accessible to our clients, bringing global best practices and legal AI tools to streamline work to create efficiencies and cost effective, commercial solutions.”.Echoing Vandepol views, Co-Head of Ashurst’s India Practice Shishir Mehta said,"This is clearly a decisive move for the next phase of growth in the Indian legal sector and marks a new era for lawyers and clients in the country. This development, I believe, will work well in tandem with the recently announced India-UK FTA.".Amit Kataria, India Head at King & Spalding, said,"We, at King & Spalding, remain excited about the Indian economy, and the legal services industry in India. It’s an important jurisdiction for us and our clients investing in India. We are eager to remain participating in the country's incredible growth story and providing world class legal services to our clients within four corners of the regulations.”.Sherina Petit, Head of India Practice at Stewarts, is pleased that the BCI has taken this step forward towards adapting to global legal trends and addressing the shortcomings in the UK-India trade deal regarding foreign legal practitioners. However, Petit has called for further refinement and clarity on certain aspects to assist lawyers with easing into the transition..Some of the aspects raised by Petit include the 60-day limit on ‘fly in fly out’ and disclosing client details, amongst others.“The revised provisions for fly-in, fly-out present operational challenges to cross-border legal work. The 60-day limit prima facie seems impractical, and the requirement for visiting lawyers to register with the BCI and disclose client details raises confidentiality and ethical considerations. These compliance measures may inadvertently affect the advice being given to Indian conglomerates by increasing burdens on foreign professionals.”.Mehta agrees with Petit on the ‘fly in fly out’ regulations. He says, “There have been no changes to the existing 'fly in fly out' practices and, in fact, the new Rules regulate them more than before.”.Petit says that by offering greater clarity, the BCI can support foreign firms as well as Indian corporations in efficiently addressing these changes and reduce potential disruptions to legal services for Indian clients..The BCI Rules prescribe a registration fee of $15,000 for individual foreign lawyers and $25,000 for foreign law firms intending to work in India. There is also a refundable security deposit of $10,000 and $30,000 to be paid by foreign lawyers and firms respectively. The Rules also provide for a renewal fee of $8,000 for individual lawyers and $15,000 for firms is to be paid every five years. Firms and lawyers looking to fly in and out will have to pay $3,000 and $1,500 respectively.Foreign lawyers have differing views on the fee structure, with some saying that it is as per international standards, and others saying it is too steep..While vandePol says that Baker Mckenzie will comply with all regulatory requirements, Petit thinks that the financial requirements for registration do not align with commercial realities.“A handful of foreign firms generate sufficient business in the country to justify the substantial costs associated with registration, renewal and the mandatory security deposit for establishing an Indian office. These burdens are compounded by additional individual lawyer registrations and fees for each foreign jurisdiction represented, not to mention the unspecified costs of obtaining certificates from various governments and competent authorities.Furthermore, these costs disproportionately burden smaller firms. While large industry players may be able to absorb the initial costs with the expectation of long-term returns, the high costs associated with obtaining foreign legal expertise leaves small firms disadvantaged when advising clients engaged in cross-border matters.”Petit suggests that the BCI should reconsider these financial barriers to ensure that its approach to liberalising the Indian legal industry benefits the full spectrum of practitioners..Petit points out that a major point that has yet to be addressed by the BCI is the compatibility of the amended rules with the Advocates Act, which currently restricts the practice of law in India to Indian citizens.This is the same view recently expressed by Society of Indian Law Firms (SILF) President Lalit Bhasin. In an interview to Bar & Bench, Bhasin said that the obvious course of action would have been to amend the Advocates Act, 1961 first. Petit agreed saying,“This amendment needs to be accompanied by a corresponding amendment to the Act. No announcement or timeline has been made as to when the legislative change may take place, so it is not clear when law firms will be able to start registering their foreign practices with the BCI.”.Mehta called for clarity on what shape and form the amended Advocates Act will take.“In my view, for the final landscape to emerge, it would be worth keeping an eye on two key aspects for everything to tie together. First, the eventual shape and form the amended Advocates Act takes, as this is pending after it was put out for public consultation earlier this year. Second, clarity and certainty on the implementation phase of the new Rules, including the harmonisation of the tax treatment of legal services rendered in India and the ability to ring fence them from other global operations.”.A new provision allows Indian lawyers to register as foreign legal practitioners without giving up their right to practice Indian law. Petit said that this rule leaves a critical gap unaddressed: the rules remain silent on the status of Indian-qualified lawyers who are based abroad and advise Indian clients on foreign law and whether they need to also register as foreign lawyers.“Given the increasing demand from Indian businesses for foreign-based advice, the BCI needs to issue further clarification to provide much-needed certainty for Indian lawyers practicing abroad,” she said..On how her firm will go about acquiring Indian lawyers, vandePol said,“It’s too early to say but we are looking to work together with the BCI to create and deliver opportunities for talented lawyers and new law graduates who are attracted to our global law platform.” Vandepol concludes by saying that the firm is looking forward to further expanding in India.“Building on the strong connections we have established with many of India’s leading law firms and talented lawyers, we look forward to further expanding and deepening these relationships, exchanging experiences and best practices with our peers. None of this would have been possible without the commitment and strong support from the Indian government and the Bar Council of India. As a firm that has long advocated for a greater international legal presence in India, we are deeply grateful and excited by this opportunity to contribute to the growth of the Indian legal sector.”.Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.