SILF is no longer opposed to entry of foreign lawyers provided it happens in phased manner – SILF President Lalit Bhasin

The Society of Indian Law Firms (SILF) has decided that it will no longer oppose the entry of foreign lawyers into India, provided it happens in a phased manner and subject to certain conditions. The decision was taken in a General Body meeting of the SILF held last month.

SILF has been opposing the entry of foreign lawyers for the past 20 years along with the Bar Council of India (BCI) and Bar Association of India. However, it is now of the view that Indian law firms are much better equipped to face the challenges from foreign law firms.

Lalit Bhasin, President of SILF told Bar & Bench that based on SILF’s General Body meeting, he had a meeting with Joint Secretary, Ministry of Commerce and Cabinet Secretary to convey SILF’s decision.

Bhasin wants the entry of foreign law firms to happen in a phased manner, and subject to the approval of the BCI. SILF has suggested to the Commerce Ministry a phased sequential approach for entry of foreign lawyers into India over a period of five to seven years, as mentioned by Bhasin in his article published in Business Standard.

“Under Phase I, there is a need to reform the environment for domestic firms, which includes removal of difficulties in the LLP format, clarification from the Income-Tax Department that conversion of partnership firms to a LLP is not a taxable event etc.

Bar Council rules need to be amended to permit issue of firm brochures, maintaining websites, directory listings, sponsorship of events, and other means of market development and information dissemination for a firm.

After completion of Phase I, foreign lawyers and foreign law firms may be permitted to have presence in India subject to certain conditions, such as prescribed qualification criteria, permission to practise only their “home country” law and prohibition against practising, directly or indirectly, the law of India.

In the third phase, foreign law firms and lawyers may be allowed to practise directly or in joint venture with Indian firms, in certain areas of law of India, subject to disciplinary jurisdiction of the BCI. Among other things, this has to be on a reciprocity basis – that is, permission for Indian lawyers to practice in the foreign jurisdiction on similar terms and conditions.”

In the article, Bhasin has stated that those who are likely to be affected by entry of foreign lawyers are transactional/corporate lawyers and law firms, who are now equipped to face the challenge since the Indian legal profession has grown in stature, competence, knowledge, technology, efficiency and speed in the last twenty years.

Interestingly, Amarchand Mangaldas Senior Partner Pallavi Shroff in her article published in Business Standard, states that in the course of discussions by a committee set up by the Ministry of Corporate Affairs to explore the possibility of opening up the legal sector, the foreign law firms have refused to submit themselves to the jurisdiction of the Bar Council of India Conduct Rules and the Advocates Act.

Shroff sees this as a major hurdle in the opening up of the legal market.

She states,

“Any international firm setting up a domestic office would be required to submit to Indian law and Indian law disciplinary rules. An avoidance device to ring-fence international law firms from professional misconduct liability and indemnity of misconduct in the territory of India are a serious mismatch and are not a level-playing field.”

Shroff goes on to say that there are several restrictions on Indian lawyers and law firms that actually do not encourage the growth of large-sized firms in India. She says,

 “There is a need to create a level playing field before foreign firms are allowed to enter and practise in India.”

Should the Ministry of Commerce set the wheels in motion based on SILF’s recommendations, it will be interesting to see how the Indian legal market opens up.