So the writ petition filed before the Madras High Court by the Association of Indian Lawyers (Association), a Calcutta based organization having its branch offices in Chennai came up for hearing recently. The government appears to have scrapped plans to move the Chennai writ petition against 31 foreign law firms to the Supreme Court, as the petitioner's plea for an injunction against the foreign firms was stayed for two weeks until the government and foreign firms could formulate responses. Government counsel, and additional solicitor general of India, Muthukrishnan Ravindran, prayed for more time, citing pending discussions between the government and the BCI on regulating foreign firms. Reports suggest that the Government counsel did not mention law minister, Veerappa Moily's plans of 20 July that the case should be moved to the Supreme Court. The court ordered the respondents to file their counter-affidavits by the next hearing on 19 August, when the question of permanent stay would be adjudicated based on the written and oral submissions of the parties.
A little background into this: The writ petition not only deals with the issue of entry of foreign law firms, but also on the modus operandi currently adopted by these firms to provide legal services in India. A.K. Balaji, one of the representatives of the Association has filed this writ petition alleging violations under the Advocates Act, Immigration Act and a number of other issues. The Bar Council of India, Union Law Ministry, External Affairs Ministry and the RBI are amongst the Government respondents. There are 31 foreign law firms in the dock including UK’s Allen & Overy, Clifford Chance, Linklaters, Freshfields and US law firms, WilmerHale and Shearman & Sterling. Integreon, one of the largest LPO’s in India has also been dragged in this dispute. Several law firms including Allen & Overy and Simmons & Simmons have outsourced legal work to Integreon.
Some of the KEY issues as per the writ: (Bar & Bench: Writ Petition filed against 31 foreign law firms and an LPO – Immigration law violations also
Law Firms in the guise of LPO’s
The writ petition alleges that most foreign law firms exist in India through the Legal Process Outsourcing (LPO) outfits. The petition states that most foreign law firms have their back end offices in India, which not only does their back end activities, but also provides legal services in India. Clifford Chance is one such law firm, which has a back office in India. The Clifford Chance back office is supposed to undertake only office billing and technology related work for Clifford Chance and its best friend in Saudi Arabia, Al-Jadaan & Partners.
A Rational Take: This can only be determined by an inquiry, wherein should an LPO be found guilty of practicing Indian law, legal action indeed can be initiated against any such LPO. However, as propounded by many industry experts on all forums, Indian legal outsourcing companies generally neither have Indian clients nor do they “practice Indian law”. LPOs provide support services that facilitate the practice of law, for example litigation support, document discovery and review, drafting of contracts and patent writing. Barring the big LPOs, most outsourced legal work consists mostly of back-end, low-profile, labour-intensive para-legal work done under the supervision and on instructions of a qualified attorney authorized to practice law in another jurisdiction. So it really seems like a far fetched possibility since the markets LPOs target, the type of work they do, the talent pool they are looking at, etc. are all very very specific to promoting their line of business which is certainly not in the area of Indian law.
Entry of Foreign Law Firms – Immigration Law violations
The Association has not only questioned the entry of foreign law firms, it has also challenged the mode of entry of the foreign lawyers into India, as it has alleged immigration law violations by foreign lawyers. Most lawyers working at these foreign law firms, especially in the Capital market space visit India using tourist visas. A Magic circle firm associate who didn’t want to be named said “procuring tourist visas to India is the easiest way to visit India. Therefore, most lawyers opt for it, since our visits do not last more than two weeks at a stretch.”
A Rational Take: Fair enough, though a matter of factual inquiry again, should LPO/foreign law firm executives be found guilty of immigration law violations, they should be put in the dock. But to use this as an excuse to ban entry of law firms that are generating valuable employment in India seems like sheer foolhardiness. It’s akin to a case of throwing the baby out along with the bath water.
Law as a business as opposed to ‘Noble Profession’
Bar Council has imposed various restrictions on the practice of law in India including restrictions on advertisement of legal services by lawyers. The practice of law is treated as a noble profession in India, but the foreign law firms are treating it as a trade or business and a ‘money spinner’. The Association has annexed the pages from the websites of the foreign law firms and newspaper clippings about these foreign law firms claiming to have an India practice. It is alleged that these instances tantamount to ‘advertisement’ of legal services by the foreign law firms in India.
A Rational Take: And who are we kidding here again? Where does the idea of law as a noble profession go when legal luminaries in India defend companies like Union Carbide, or tainted ministers? Do we question their ethics? No, we do not. Right or wrong, they treat their decisions as professional ones and their profession as a business, certainly not as a noble or charitable act; so why then should the BCI bring the concept of treating law as a noble profession when it comes to foreign law firms entering India?
To propound the concept of nobility in the profession the BCI needs to do much more than simply use this as an excuse to follow a protectionist policy. How are foreign law firms different in their operations from Indian law firms? Are they not following business diktats or are they blindly basing all their decisions on preserving the nobility of this profession? There are hundreds of lawyers in India who are poorly paid. The argument about allowing the domestic market to develop is being put forth by large law firms working in a consortium to retain their hold over the market. It’s a typical case of the pot calling the kettle black wherein larger Indian law firms are doing exactly the same thing that they are presume will be done to them by the entry of foreign law firms. Are these large law firms not competing against other miniscule law firms in India which hardly have the resources to match theirs?
The BCI needs to revisit the Advocates Act, amend the same so as to ensure a level playing field for all and stop playing “Big Brother”. In a country that is churning out more and more lawyers every year, it would be imprudent not to see the writing on the wall.
Suggestions on Reciprocity
The writ petition also gives a host of suggestions on reciprocity. It suggests that if foreign law firms are allowed to ‘exploit’ 5% of the Indian legal market, then Indian lawyers should be allowed to exploit 5% of the respective legal market. The United States legal market is estimated at $300 billion (Rs. 1,50,000 crore) and the Indian Legal market as per RSG Consulting is estimated at $800 million (Rs. 3,200 crore). This may not be practical, as questions such as - What is the size of the Indian legal market that is being ‘exploited’ by these foreign law firms? Do Indian corporations need foreign law firms? Since most law firms or lawyers are tight lipped about their revenues and fees, fixing these percentages seem far-fetched.
A Rational Take: I am compelled to agree with the above questions raised by this author. This, by far, seems to be a flimsy ground raised to divert attention from crucial issues.
FACT 1: India is a signatory to the General Agreement on Trade in Services (GATS) which is an organ of the World Trade Organization (WTO) and is under an obligation to open up the service sector to member nations. 'Services' would include any service in any sector except services supplied in the exercise of governmental authorities as defined in GATS. "A service supplied in the exercise of governmental authorities" is also defined to mean any service that is supplied neither on a commercial basis nor in competition with one or more service suppliers. Under this definition, the legal profession is also taken to be one of the services which is included in GATS.
Fact 2: The fact is also that India is in the process of liberalising its economy. The opening up of legal services to competition from the international legal market is inevitable. Instead of perpetuating an endless debate about the pros and cons of the legal markets being opened up to foreign firms, it would be more rational to accept the entry of foreign firms in India which is now increasingly being seen as only a matter of time. For law school graduates and independent lawyers, the entry of foreign law firms in India means increasing job opportunities, and for the legal industry at large, it means raising the bar for professional standards, due to faster servicing, more efficient delivery and lower costs.
Hence India only stands to benefit from the arrival of foreign law firms and considering how much we love framing laws, needless to say their entry will be regulated by a copious set of laws to please even the harshest critics of this sane decision, when it is reached.
References
A Passage to India: Are Foreign Law Firms in the Country’s Future?
Advent of Foreign Law Firms in India\
Entry Of Foreign Law Firms-a Boon Or Bane For Indian Lawyers
http://indianeconomy.org/2008/02/16/liberalization-its-good-for-them-but-not-us/
Seems pretty interesting.
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