SILF seeks level-playing field in wake of BCI’s move on foreign lawyers

SILF seeks level-playing field in wake of BCI’s move on foreign lawyers

Lalit Bhasin, President and Jyoti Sagar, Associate President, SILF

The Society of Indian Law Firms (SILF) has welcomed the initiative of the Bar Council of India (BCI) in framing the rules for foreign lawyers and foreign law firms to practice in India.

For almost a decade, SILF has supported a regulated and phased entry of foreign lawyers and foreign law firms in the country because SILF believes it will enable new synergies and opportunities for Indian lawyers and law firms. In addition, it will facilitate the exchange of knowledge and best practices and result in increased cross-border legal work. It will also provide much-needed advice on foreign laws to Indian businesses.

However, SILF is concerned about the manner and the timing of BCI’s move. It has, therefore, made a representation before the BCI. It cautioned the BCI that the Rules were not in conformity with the March 2018 BCI vs AK Balaji case judgment of the Hon'ble Supreme Court of India.

The Hon'ble Supreme Court had held that under the Advocates Act, 1961 only lawyers enrolled with State Bar Councils were entitled to practice Indian or foreign law in India.

SILF maintained that the appropriate sequencing should be to first amend the Act. Thereafter, it should enable the practice of law in the country by foreign lawyers. But in absence of such validation, the Rules are open to challenge.

SILF's representation noted that for the past many years, there has been a consensus amongst all stakeholders, including the Government of India, the BCI, and the lawyers that opening the market must not be in an ad hoc manner. On the contrary, it should be a part of an overall thought-out reform of the legal services sector.

The Society suggested a sequential approach to the opening of the Indian legal sector. This meant beginning with regulatory reform of the profession, which continues to be governed by centuries-old traditions even as the world has moved on. It is imperative that by the time foreign lawyers are allowed in the next phase, the Indian lawyers are provided a level-playing field.

The members of the Society felt it was unfortunate that domestic reforms have remained unattended for a long time and were not addressed with the same alacrity as the Rules. A phased approach to opening is an established model used in other jurisdictions, including China, Singapore, Japan, and the Republic of Korea. Such realizations provide guidance on designing and implementing strictures. In these jurisdictions, the carefully articulated programs have continued to be the basis of periodic reviews.

Apart, from the foundational legalities, the Rules raise several critical concerns. The foremost is discrimination between Indian and foreign lawyers and law firms. For instance, while the Indian profession is governed by the code of conduct and regulations under the Act, foreign lawyers and foreign law firms will be governed by their home country's rules. This is contrary not only to BCI's stand over the years but also violates the decision of the Hon'ble Supreme Court of India.

Other important factors have also contributed to the bias towards foreign law firms and lawyers. The rules in India have remained stagnant and do not recognize the concept of a law firm. They do not permit Indian lawyers to form limited liability partnerships; do not permit any form of marketing; and do not permit innovative fee structures (such as contingency or success fees).

But favoring the contemporaries, the Rules allow individual foreign lawyers and companies and corporations to practice in India. They are not bound by the Indian professional code of conduct and have the freedom to undertake marketing activities, enter fee arrangements, and avail of more such bonuses.

Surprisingly, since BCI has ceded disciplinary jurisdiction over the 31 March 2023 foreign lawyers and foreign law firms to respective foreign regulators, they will not only have their own codes of conduct but would be judged by foreign regulators.

SILF has laid emphasis on the fact that access to a market for professional services is anchored on the principle of ‘reciprocity.’ This means if India provides market access to a professional from another country, it must receive equal access to that country’s professional market. However, herein, the Rules are deficient both in the understanding of the concept of reciprocity and in its implementation.

There is no direction or clarity in the Rules on whether the reciprocity would be established in the case of a foreign law firm that has offices in, say, 40 countries, where there is ‘reciprocity’ with some countries and not with others. Or a foreign firm with partners from diverse jurisdictions, with some having ‘reciprocity’ and others not. According to our judgment, reciprocity must be substantive and not theoretical.

It is imperative to note that while a foreign government or competent authority may acknowledge reciprocity, other discriminatory practices like immigration rules and work permits can make a mockery of that reciprocity. Therefore, a free movement of professionals across borders, on an equal basis, is necessary to establish real and meaningful reciprocity. As of now, while the Rules lack substance, BCI cannot be expected to have the wherewithal to deal with complex international relationship issues like ‘reciprocity.’

The Rules are also vague or silent on critical issues including the eligibility criteria for the registration of foreign lawyers and foreign law firms.

Credentials can be self-declared and there is no scrutiny concerning national security. Foreign firms, undertaking multi-disciplinary practice, including law (such as large accounting firms), would be permitted to practice under the Rules. There is no regulation on the relationship with Indian professionals. Thus, the exposure to surrogate practices where foreign lawyers and foreign firms could control Indian lawyers and Indian law firms, and thereby practice Indian law, which cannot be done directly, is happening indirectly!

It is, therefore, in the national interest to lay out a blueprint - the larger mosaic of the future of the Indian profession. SILF has the commitment and belief that a consensus of all stakeholders through consultation and engagement is imperative to achieve positive results.

The Society is committed to providing legal support to the economic development of the country by promoting ease of doing business. Global cooperation among legal fraternities is essential and SILF is actively coordinating successfully with institutions such as the International Bar Association, American Bar Association, Law Society of England and Wales, Inter-Pacific Bar Association, LAWASIA, Bar of European Union, and the Federation of Japan Bar Associations regarding contemporaneous developments in the law.

Importantly, since SILF and its members enjoy global recognition, it welcomes professional colleagues from overseas to practice their profession in India. However, requisite conditions must be in place, including appropriate safeguards and regulatory mechanisms. These must comply with and should be sustainable under the law of India.

After all, it is not only globalization but glocalization that must be the basis of any scheme or action.