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The Economist Reports Impediments to Practice by Foreign Lawyers in India

August 19, 2010

Barristers at Madras High Court

Barristers at Madras High Court (Ben Piven)

The Economist recently surveyed the landscape facing global law firms in a number of countries around the world. Some countries, like China and Brazil, appear to be wide open to foreign firms, while others, like South Korea, are steadily opening up. In stark contrast, India recently raised the drawbridge in the face of the army of foreign lawyers amassing on its shores.

The Bombay High Court late last December ruled that the practice of law in India by foreign firms is illegal. In that case, brought by top tier international firms such as White & Case, the court ruled that “foreign law firms can function in India only if all the advocates in their offices are enrolled with the bar councils of Indian states or with the Delhi-based Bar Council of India….” One commentator blamed India’s closed legal market not only on protectionism, but also a lack of modernization generally:

Cyril Shroff, managing partner at Amarchand Mangaldas, India’s biggest law firm, says a more liberal regime, both internally and externally, is inevitable—but he would oppose opening the field to foreigners unless life was also made easier for locals. “The real question is how we can modernise the Indian legal market.” Ms Hook says her society agrees with the idea of India undertaking “holistic” reform, domestic as well as external.

The Economist noted that there is one developed country that still strictly limits the practice of law, Canada. There, foreign lawyers must pas provincial as well as national bar exams. “Between 1999 and 2009, the Federation of Law Societies received 4,515 applications from foreign advocates and issued only 1,708 certificates. Of the 1,027 English lawyers assessed, only 375 got the desired bit of paper.”

What do you think? Should India follow other BRIC countries and liberalize its legal market? Or does it harm native Indian attorneys and the Indian legal system?

Update: Mark Ross, former partner at the UK firm Underwoods solicitors and currently with Lawscribe, a leading LPO firm, comments on liberalization of the Indian legal market:

I recently returned from the North American South Asian Bar Association (NASABA) conference. Out of all the sessions I attended over the course of the three day event by far and away the most thought provoking and certainly the one that sparked the most intense and combative question and answer session focused on the pros and cons of the opening up of the Indian legal services sector to foreign law firms.

At first glance the pressure mounting on the Indian government to open up the market to foreign law firms appears to be increasingly exponentially. To the untrained eye the liberalization of the market is imminent. It is clear to me that this is a somewhat naïve viewpoint and that there will need to be some substantial “in-house” changes before foreign law firms are allowed to formally set up shop in India.

The major reason why there are regulatory barriers in place is because of the perceived inability of the domestic Indian firms to compete with the major foreign firms that would enter the market once liberalized. The consensus among those reluctant to open up the market is that the best talent will be swallowed up by foreign firms. This will then have disastrous consequences on domestic firms who simply do not have the financial muscle to compete.

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