SILF’s game plan for opening the legal market: Three-phase approach, Rules for ‘Foreign Legal Consultants’

Just a few days ago, Prime Minister Narendra Modi shared his views on one of the most debated topics concerning the legal profession in India – the liberalization of the legal sector..The PM categorically asked the service industry to overcome its fear of foreign law firms, asserting that India is globally competitive..Speaking at the inauguration of the three-day Global Exhibition on Services (GES), Modi said that,.“Why should we need to go outside the country for global arbitration? We shouldn’t think that if foreign lawyers come here, they would take away our jobs”..The question of liberalization had been raised once again in December last year, when the Society of Indian Law Firms (SILF) submitted a note to the Ministry of Commerce. Although it had earlier opposed the entry of foreign lawyers, the ‘Note on Phased Sequential Approach’ marks a definite departure from this stance..SILF justifies this change by arguing that Indian law firms are now much better equipped to face the challenges of liberalisation than they were about 20 years ago..In its note, SILF had stated that out of nearly 1.2 million lawyers in India, more than a million are litigation lawyers. It is unlikely that these lawyers would be adversely affected by the entry of foreign lawyers. The ones that are more likely to be affected are the transactional/corporate lawyers and the law firms..Three-Phase Approach.SILF has recommended a Phased Sequential Approach for the entry of foreign legal consultants / law firms into India..Phase I – Reforming the environment for domestic firms. – Removal of difficulties in the LLP format – BCI clarification that practice of law in LLP format is permissible, income tax clarification conversion of partnership firms to an LLP is not a taxable event.. – BCI Rules to be amended to allow law firms to have websites, firm brochures, directory listings, sponsorship of events and other means of market development and information dissemination.. – Ceasing of all “surrogate practice” of Indian law in India by foreign law firms through various devices and structures.. – Ceasing of practice of Indian law outside of India by foreign lawyers and foreign firms..Phase II – Foreign law firms permitted to have India presence subject to the following. – They meet the prescribed qualification criteria. – Permitted to practice their “home country” law only. – Prohibited from practicing, directly or indirectly, law of India, both contentious and non-contentious.. – Subject to disciplinary jurisdiction of the BCI. – Confirmation from the concerned Foreign Bar Council that any decision of the BCI in disciplinary proceedings will be honoured by such Foreign Bar Council. – Compliance with tax and immigration laws of India. – Reciprocity – ability of Indian lawyers to practice in the foreign jurisdiction on similar terms and conditions..After an agreed period of operation of Phase II (SILF seeks a minimum of 7 years) there will be a thorough review of the progress made thus far..Phase III can only be implemented once this review is completed, and a decision to move to the next phase has been taken..Phase III – Forein law firms permitted to practice in certain Indian laws subject to the following conditions:. – Directly or in joint venture with Indian firms (BCI Rules to be amended then to provide for such arrangements). – Number of foreign law firms to be licensed for direct and joint venture participation, to be limited in the beginning and thereafter a gradual increase in number of foreign firms so licensed;. – Qualifications of such foreign law firms and foreign lawyers to be established – fit and proper test. – Practice to be allowed only in defined areas of Indian law. – No permission to undertake litigation or regulatory work at any level. – Subject to disciplinary jurisdiction of the BCI. – Confirmation from the concerned Foreign Bar Council that any decision of the BCI in disciplinary proceedings will be honoured by such Foreign Bar Council.Rules Regulating Foreign Legal Consultants.The SILF has also proposed the establishment of certain Rules regulating foreign legal consultants, including the minimum qualifications required, and scope of practice..Some of these qualifications include:. – The person must have been admitted to practice in a foreign country as an attorney for a period of atleast 7 years from the date of applying. – He must have been consistently practicing in his jurisdiction for the last 5 years. – He has not been disciplined for professional misconduct by the bar or courts of any jurisdiction in the last 10 years. – He agrees to abide by the applicable rules regulating the BCI and submit to the jurisdiction of courts of India for disciplinary purposes. – He is over 35 years of age. – The Rules also provide that the foreign legal consultant will be strictly restricted to advising only on foreign law and the person licensed will only use the title ‘Foreign Legal Consultant, Not Admitted to Practice Law in India’..Interestingly, the Rules also put a restriction on Foreign Legal Consultant to employ Indian lawyers as a part of operations in India. It further adds that if an Indian lawyer is employed, he/she shall cease to be a member of the BCI and shall not be allowed to practice India law..How this particular provision fits into the bigger goal of market liberalisation is unclear at this point of time..In January an inter-ministerial meeting chaired by the Joint Secretary of Ministry of Commerce was held to discuss this phased opening of the legal sector. With Prime Minister Modi’s statement re-igniting the debate, is this the time when the legal market finally opens up?