Alarmed by Rules on entry of foreign law firms, Society of Indian Law Firms to send representation to Bar Council

Alarmed by Rules on entry of foreign law firms, Society of Indian Law Firms to send representation to Bar Council

Demands the creation of a level-playing field in the country

The Society of Indian Law Firms (SILF) has decided to send a representation to the Bar Council of India (BCI) on the latter's recently released rules allowing the entry of foreign law firms into India.

The representation will point out the deficiencies, irregularities, vagueness and illegalities in the Bar Council of India Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022 notified recently.

SILF will also demand the creation of a level playing field for Indian law firms and ask BCI to withhold the Rules’ implementation.

On the opening up of the Indian legal market to foreign law firms, Lalit Bhasin, the President of SILF had earlier said, "It is a welcome step, but the BCI Rules need to be ironed out. Particularly, the interest of the Indian legal profession should be safeguarded."

While both Indian and international lawyers welcomed the BCI's move and believed it would be beneficial for the profession, they felt clarity was needed in several aspects.

Bhasin has now formed a drafting committee to prepare the representation. The committee includes Jyoti Sagar (Chairman, Jyoti Sagar Associates); V Lakshmikumaran (Founder & Managing Partner, Lakshmikumaran & Sridharan); Pallavi Shroff (Managing Partner, Shardul Amarchand Mangaldas); Amit Kapur (Joint Managing Partner, J Sagar Associates); and L Badri Narayan (Partner, Lakshmikumaran & Sridharan).

Even as managing partners of Indian law firms expressed their concerns regarding the decision to open up the Indian legal market, they were also in favour of challenging the Rules before the courts.

However, the SILF President suggested the first step should be dialogue and a representation would be sent to the BCI, the Union Ministry of Law & Justice, and the Ministry of Commerce.

Legal luminaries were concerned and expressed that BCI Rules were brought in a hurry due to internal and external pressure. They felt that the Indian legal profession needed to be reformed if it wished to compete with international law firms. This was due to the lack of a level-playing field, as Indian firms are restrained from forming LLPs, advertising, and marketing.

In 2017, the BCI Chairman had agreed to introduce certain reforms in the system, but nothing transpired.

Pertinently, while Indian firms are not recognized under the Advocates Act, 1961, foreign law firms can be registered in India under the new Rules.

Similarly, BCI cannot take disciplinary action against foreign law firms and lawyers; only the disciplinary authority of the firm's own jurisdiction can take action. Also, BCI may only report to that country's regulatory authority, which would decide whether to take action or not. This process could take a long time.

Also, there is a lack of clarity on reciprocity, as it would be country-wise. What it would mean in terms of global law firms that have offices across the world, and what foreign lawyers could or could not do is also unclear.

Another moot point is that foreign law firms are allowed to lobby, which is not permitted in India. Will foreign firms be able to lobby on the basis of reciprocity and how will the BCI prevent it?

At the same time, the suitability of foreign lawyers in India’s context (given that there are no barriers or restrictions), will put India at risk.

All this means the Rules are contradictory to the clarification issued by BCI. These are ultra vires of the Advocates Act and are beyond its ambit. The Rules are also against the decision of the Supreme Court in the AK Balaji case.

SILF stressed that with the new Rules, India had lost its bargaining power in any of the trade negotiations.

Bhasin highlighted the point that the Rules were brought in sans any discussion with Indian law firms.

He stated, "The methodology should have been to circulate certain Draft Rules, giving a certain timeline, say 1-2 months. We know you are under pressure, but give us time, take our view, and then come out [with the Rules], as it is normally done. The Rules have become automatically applicable without anything more being done, it is virtually more like a midnight declaration."

He added, "The problem, which I have discussed with my colleagues, is you may have good intentions to bring these Rules, but you are still running the risk of these rules being challenged by anyone on the ground that these are against the law laid down by the Supreme Court in AK Balaji’s case of 2018. The SC very clearly and categorically said, ‘Foreign lawyers and foreign law firms cannot practice law in India.’ And the practice of law was defined by the SC as not just litigation but also all the corporate, transactional work, and every type of legal work."

Meanwhile, Jyoti Sagar stressed the need for a level playing field to be created for Indian firms. He said, "We cannot compete with our hands tied behind our backs. The entire issue of marketing and business promotion activities should be allowed. We have no provision in the Advocates Act which recognizes firms, and these Rules say foreign law firms, foreign lawyers, corporations, and companies, whereas, under our Advocates Act, it is only individuals who can practice law and individuals collectively in a partnership can practice law."

Questioning the reciprocity under the Rules, Sagar said, “There is nothing in the Rules which actually deals with very critical issues. So they have a concept of a foreign lawyer who has a primary qualification. How do you apply that to a law firm? If you have reciprocity with the UK (because they seem to rely a lot on the UK), you do not have reciprocity with many other countries. If those countries’ nationals are partners of a large law firm with 1,000 partners, can those lawyers come and practice in India? Then what happens to reciprocity? What does reciprocity mean in terms of a global firm with 50 offices across the world? You are reciprocal to what and whom?"

He further criticized the language used in the draft Rules, "Law firms do not have primary qualifications; it is the lawyers who have. The Rules are very poorly drafted, which leaves a lot of scope for unfair play. And fighting reciprocity is a very key element. You see what reciprocity in the UK is. Can an Indian law firm even go and succeed in the UK? If all of our Indian law firms got together and set up a common law firm in the UK, we still cannot compete. They will not give you work permits, there will be immigration difficulties, and so on. By doing this, the Bar Council and the Ministry of Law have given away the bargaining point that we had in any trade locations."

Likewise, Shardul Shroff, the chairman of Shardul Amarchand Mangaldas weighed in on the lack of disciplinary provisions in case of a breach on the part of the foreign firm or lawyer.

He also pointed out, "The cornerstone of registering an Indian lawyer is suitability. If you see the enrolment or membership form for enrolling in a State Bar Council, you need to have the support of a domestic lawyer. You must have worked with or have exposure to a lawyer of 10 years standing. Where is all that in the context of this registered (foreign) lawyer?"

Aseem Chawla, the founder of ASC legal at Solicitors & Advocates said, “For SILF, it has to be a very balancing act as it echoes the view of a large section of law firms."

Cyril Shroff, the founder and managing partner of Cyril Amarchand Mangaldas stated, "We should not challenge the Rules. We should not be on the wrong side of history. We should make a strong representation."

Other law firm partners present at the meeting were Ashish Razdan (Khaitan & Co), Arush Khanna, Charandeep Kaur (Trilegal), Mohit Gogia (S&R Partners), Mukesh Bhutani, Nishith Desai (NDA), Rohit Kochhar (Kochhar & Co), and Shweta Bharti, Suhail Nathani (ELP).

The new BCI Rules allow foreign lawyers and law firms to practice foreign law in India on a reciprocity basis. Justifying the move, in its statement of objects and reasons, the BCI mentioned, "The time has come to take a call on the issue. BCI is of the view that opening up a law practice in India to foreign lawyers in the field of practice of foreign law; diverse international legal issues in nonlitigious matters and in international arbitration cases would go a long way in helping the legal profession/domain grow in India to the benefit of the lawyers even in India."