Opinion

Why it's a good idea for foreign law firms to be barred from practice in India

The entry of foreign law firms will hurt the average Indian’s ability to find adequate legal representation.

During a recent visit to India, Shailesh Vara, the United Kingdom’s minister for the Courts and Legal Aid, expressed optimism about the government opening up the legal services sector to law firms and lawyers from abroad. With the present government’s enthusiasm for foreign investment, he said, India should not miss out on the opportunity the draw the best international legal talent to its shores.

Yet the path to convert this into reality is tough and twisted, and for sound reason. Since 2009, the courts and Bar Council of India have opposed the liberalisation of the Indian bar not out of fear of competition – as many claim – but on principle.

Liaison offices

The dispute has its genesis in 2009, when Lawyers’ Collective, a not-for-profit litigation and legal advocacy organisation, moved the Bombay High Court against three foreign law firms for operating “liaison offices” in India. Lawyers’ Collective contended that these makeshift offices, which were not registered in India, and mostly operated out of the suites of five star hotels, were illegal because they violated the conditions for permission granted by the Reserve Bank of India under the Foreign Exchange Regulation Act. The RBI’s conditions mandated that these firms should not undertake any activity of a commercial or industrial nature, besides liaison work. In reality, these three firms were not only networking with Indian corporations, lawyers and law firms, but were also providing legal advice.

That second contention of the petitioner referred to The Advocates Act, 1961, which governs lawyers and the legal profession in India. Section 29 lays down that only those registered as advocates are entitled to practise law in India. Section 33 prohibits anyone not registered as an advocate from taking up litigation at any level.

The foreign firms argued that “practicing law”, under Section 29, referred only to litigation, and therefore they were free to provide legal advisory services – what is known as transactional lawyering. Yet in December 2009 the court held that the “practice of law” includes both litigation and non-litigious matters. It would thus take an amendment of the Advocates Act for foreign law firms to offer their full bouquet of services in India.

For and against

There is no dearth of voices in support of opening up India’s legal sector to overseas firms. For one, it would increase the availability of lucrative employment opportunities for Indian professionals and graduates.

What is lost amidst this clamour is that legal service is not a commodity. Access should not be contingent upon one’s ability to pay. Arguments regarding “opening up the market” with regard to sectors like say, manufacturing, or even insurance, are not of relevance to the legal sector where the yardstick is fundamentally different – access to justice.

Already, it is quite clear that financial capacity determines the quality of legal representation an individual receives, and consequently, in most cases, the quality of justice obtained. Yet this does not permit opening the floodgates to the power and logic of the market.

Access to justice

The entry of foreign law firms will hurt the average Indian’s ability to find adequate legal representation. First, top overseas firms will enter the market, signing up the best legal talent. Then middle-rung entities will come in, who will absorb those of mediocre calibre and acumen. The recruitment data from India’s law schools shows that, given a chance, every third law graduate would choose to work in a law firm. Small, independent lawyers are a vital component of India’s legal community, making sure people of most income groups have access to representation. The entry of corporate firms will lead to a sharp fall in independent practitioners.

It is likely, also, that foreign firms will refrain from practicing criminal law, since the structure of criminal litigation in India is very different from that abroad.

Data from the United States, which is at the forefront of commercialised and corporatised legal service, is disquieting. A 2011 study by the World Justice Project shows that an alarming number of Americans simply forego their right to representation in civil litigation matters because they cannot afford to pay.

A robust, institutionalised legal aid system would still mitigate this effect.  The right to free legal aid is now a fundamental right, but access to legal services in all types of case is no less fundamental to the process of delivering justice. Enthusiasm for the market should not be allowed to diminish its importance.

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