Monday, June 02, 2008

India not to open legal services sector soon: Ministry of Commerce

The ongoing World Trade Organisation (WTO) talks will not lead to India opening up the legal services sector to foreign firms, Commerce Secretary Gopal Pillai said. However, he has made it clear that permitting foreign legal firms into India to deal with mergers and acquisitions (M&A) as well as arbitration cases will be beneficial. "The Indian legal services sector needs reforms that involve issues related to limited liability, number of partners and advertising restrictions. Once that is done, it has to be ready for liberalisation of the sector," Pillai said.
"In this round, we won't commit opening up of the legal services sector in the services negotiations of the Doha Round. But opening of the sector has great potential for the Indian professionals," Pillai said, adding that foreign lawyers would not come and practice in Indian district courts.
"They are interested in M&A and arbitration between companies." Currently, foreign law firms are not allowed to provide their services in India while professionals in the sector are not comfortable to liberalising the sector for foreign participation. The resistance by the Indian legal professionals for entry of foreign firms into India is because of a multitude of regulations.

For example, advocates in India are not allowed to advertise. More over, there are restrictions on the number of partners in a legal firm, which cannot cross 20. The Bar Council of India Rules prohibit Indian advocates from sharing remuneration with any person or legal practitioner who is not an advocate.
"We understand that there are limitations. But in the future most of them will be addressed. On issues of liberalisation, the commerce ministry will be guided by the law ministry as well as the Bar Council, with whom we are interacting. Surely, Indian law firms with just 20 partners will be at a disadvantage when a US firm with 2,000 partners set up base in India," added Pillai.
At present, there are nearly one million lawyers in India. The global legal services market has been estimated at $220 billion while India's share stands at $300 million.

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