Rules for a new dawn for the Indian legal industry Premium

As India increasingly becomes a leading hub for cross-border commerce, the globalisation of the Indian legal industry becomes inevitable

India’s tryst with globalisation began in 1991, when the country liberalised its economy. Since then, few sectors have remained as insulated from global practices as the Indian legal industry. At one level, this is understandable given the suitability of Indian qualified lawyers, or advocates, for applying Indian laws in accord with the country’s socio-economic values. However, as India increasingly becomes a leading hub for cross-border commerce, the globalisation of the Indian legal industry becomes inevitable. After years of consultations, the Bar Council of India has also embraced this reality.

Globalisation refers to the range of forces sweeping the world, unhindered by geographical boundaries, which seek to replace protectionist tendencies with a sense of universalism and synchronisation. The broader goal is to craft an ecosystem in which actors, including lawyers, can interact with one another harmoniously and without significant constraints. It is with this spirit that the Bar Council of India had notified the “Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022” in early 2023 (BCI Rules), allowing foreign lawyers to set up their offices in India for some limited purposes. Indeed, the objects and reasons of the BCI Rules consciously note that “the world is becoming a global village” and that “the legal profession in India has to rise to the occasion”.

To summarise the nuanced regulatory framework prescribed by the BCI Rules is challenging. Yet, at the risk of oversimplification, the Bar Council of India has permitted registered foreign firms and lawyers to practise on transactional or corporate work (such as joint ventures, mergers and acquisitions, and intellectual property matters) on a reciprocal basis. Foreign lawyers cannot appear before Indian courts, tribunals, or statutory authorities. But, they are now permitted to advise and appear in international arbitration cases conducted in India, irrespective of whether foreign law may or may not be involved.

Previously, the Supreme Court of India had prohibited foreign lawyers from practising law in India in either litigation or the non-litigation side and restricted their participation in international arbitration cases to visiting India on a “fly in and fly out” basis. The BCI Rules clearly envisage a greater role for foreign lawyers, albeit in an intensely regulated framework. Thus, it is a significant step forward from the existing system. Time will tell how this impacts the Indian legal industry, but the initial signs are that of promise and optimism.

While the BCI Rules may affect the immediate profitability of some Indian law firms and lawyers, the long-term benefits are expected to be immense. For instance, the reciprocity requirement can ensure that Indian lawyers receive increased access to the legal profession in foreign jurisdictions. This could enable a sustained exchange of know-how, skills, and expertise between lawyers across jurisdictions. The entry of foreign firms in India will also increase competition; thereby creating more job opportunities for Indian lawyers, fostering a better work culture and remuneration, and incentivising competing stakeholders to heighten the quality of their services. This should augur well not only for the Indian lawyer community but, equally, for also India’s emergence as an economic leader.

But, as with any liberalisation project, any optimism must be balanced against the risks that an unregulated market often brings. Indian stakeholders have already identified some of these risks in ongoing conversations with the Bar Council of India. For instance, the differences in how Indian and foreign law firms are regulated in their home jurisdictions can create unintended distortions. While Indian lawyers are prohibited from soliciting clients through advertisements, such restrictions rarely exist in other jurisdictions. The ethical rules governing foreign-qualified lawyers may also differ from those in India, creating confusion as to which set of rules will apply in a transaction or arbitration setting. Finally, certain multi-jurisdictional law firms with offices in various countries may have greater monetary capabilities than their Indian counterparts, making it difficult for the latter to compete. This would require the Bar Council of India to carefully regulate the speed and extent of foreign lawyers’ entry into India. If not, the pitfalls of liberalisation may soon outweigh its anticipated benefits.

It appears that the Bar Council of India is conscious of the pros and cons of its decision. This is clear from the imposition of stringent registration (and renewal) requirements on foreign entrants and their continued exclusion from any litigious work in the BCI Rules. But the most important encouragement emanates from the consultative approach adopted by the Bar Council of India. The regulator is not taking any decision in a hurry and remains in dialogue with the critics of its decision. It is for these reasons that one may perceive the BCI Rules with careful optimism, and hope that it ushers the Indian legal industry towards a brighter future.