Domestic doubters and impatient proponents - an analysis of the prospective liberalisation of the In

The Indian legal market has gone from strength to strength in recent years. Coupled with India becoming the fastest growing economy, local law firms have vastly grown, in part thanks to the introduction of new practice areas such as media and communications law. But one thing is holding the market back from exponential growth. Since the Advocacy Act of 1961 the Indian legal market has been closed, meaning that international firms are not allowed to practice in India. This has not however prevented foreign firms undertaking Indian work, but provides that they can only work on a ‘friends’ basis (i.e. whereby work is shared between domestic firms in cases of international disputes) and not actually practice in the country. On the 7th of November, Theresa May visited India with a British delegation to promote relations between the two countries, and the liberalisation of the legal sector was on the agenda. According to Justice Secretary Elizabeth Truss, one reason for the Prime Minister’s visit to India was “to pave the way for UK lawyers to practise there, helping to improve our international business and trade.” This follows the eighth UK-India Economic and Financial Dialogue in January of this year where it was agreed that “India will press ahead with liberalising the Indian legal services market to allow foreign lawyers the right to operate in India.” It is therefore clear that it a matter of when and not if liberalisation occurs. However, this liberalisation is not without its criticisms. An analysis of such a liberalisation leads to the conclusion that India is primed for the entrance of international firms. The vast experience, resources and wealth of international firms will provide a launch pad for the Indian legal market to become a global leader in this sector. This topic has been met with controversy in India, particularly from domestic lawyers who fear interference in the domestic legal market from international firms. However the presence of international firms in India is not a new concept. For many years firms have operated ‘friends’ partnerships. Through this form of partnership, international firms agree to send clients with Indian legal problems to their ‘friend’ firm in India, and vice versa if the Indian firm’s clients have international law issues. Through this system, international firms can expand their reach to India without breaking the Advocacy Act of 1961. Examples of firms which have adopted this system are the magic circle firm Clifford Chance, who formed a relationship with AZB & Partners (2009) and also Allan & Overy with the Indian firm Trilegal (2008). In addition to ‘best friends’ relationships, as a solution to the constraints of the Advocacy Act, international firms tend to have offices in Singapore, a key location for India-facing work. With the current situation in mind, it is prudent to consider firstly the fears and potential downsides to opening up the market before analysing the positive consequences that this action could bring. According to the finance and information and broadcast minister Arun Jaitley, lawyers in India have always feared the intervention of transnational firms. Particularly the Bar Council of India (BCI) has opposed opening the legal market. As recently as this year the bar council argued that international lawyers shouldn’t be allowed to participate in seminars or conferences. In addition the BCI are “opposed to BPOs (business process outsourcing companies) and LPOs (legal process outsourcing companies) as these cause revenue losses to the exchequer, according to it.” Part of the reason for retaining the closed nature of the Indian legal market is the fear that domestic firms will not be able to compete with their foreign counterparts should the market be liberalised. A further fear is that the best Indian talent would be swallowed up by foreign firms, meaning that the growth of domestic firms will stagnate. However these potential negatives must be balances against the fact that permitting international firms to practice in India could bring huge advantages to the domestic Indian legal sector. The main advantage of allowing firms to practice in India is the sheer firepower these firms would bring. In terms of wealth of resources and funds, Indian firms simply cannot compete with the magic circle firms of the UK such as Clifford Chance. As Rohit Kochar, general secretary of the Society of Indian Law Firms (SILF) and managing partner of Kochan & Co, states, Indian lawyers are not short of the skills or expertise to practice law, but “we don’t have deep pockets of a Baker & McKenzie or Clifford Chance or Jones Day.” If one compares the top law firm in India, which according to RSG India’s top 40 at the start of 2015 was ‘Amarchand & Mangaldas & Suresh A Shroff & Co’, and the international firm ‘Clifford Chance’, the difference is stark. Clifford Chance has a staggering 3,300 lawyers based in 36 offices across 26 countries. In contrast, Amarchand & Mangaldas & Suresh A Shroff & Co was based solely in India and had only 370 lawyers in 8 offices. Due to a dispute between partners Amarchand & Mangaldas & Suresh A Shroff & Co has now split into two different firms namely Shardul Amarchand Mangaldas & Co and Cyril Amarchand Mangaldas based in Delhi and Mumbai respectively. To put quantify potential growth of the industry should the market become liberalised, the UK Ministry of Justice “argues that the current worth of the Indian legal market is estimated at US$4bn, and is predicted to rise to US$6.5bn by 2016; this growth could hit US$12.3bn in the same period if it were fully liberalised.” On these estimates, it would seem that liberalisation would help the sector to thrive. In addition to financial benefits, it is believed that liberalising the market would lead to better practices within the legal sector in India, by means of adopting very high international standards of working. Puri writes that “The entry of foreign law firms and lawyers would necessitate an overhaul of the law firm culture in India thereby providing a higher and better quality of service to Indian and foreign clients alike.” Despite strong opposition to the liberalisation of the market from the BCI, the entrance of young forwardthinking lawyers into the market has meant that opposition is beginning to dwindle. These young lawyers see internationalisation as a positive step for India. The Justice Minister Shailesh Vara observed that “the new generation of Indian lawyers are internationalists in their outlook. They want international experience and to work abroad, but critically many want to work with Indian firms who have strong associations with overseas firms.” It therefore seems that the current movement is towards liberalisation of the market, particularly pushed by young Indian professionals with a more globalised outlook. In conclusion, India is ready for the entry of foreign law firms, having developed a strong enough basis to enable existing Indian firms not to collapse under the sheer firepower of foreign firms. Should the vision of the UK and Indian governments’ realised, we could see the market liberalised so as to allow UK firms to practice and form partnerships in India within the next 5 years. This will not only have a huge effect on the Indian legal sector, but will vastly affect the global legal market. The next 5 years could see India really announce itself on the global legal stage.