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.

Bar council opposes foreign law firms [India]

The Bar Council of India (BCI) has locked horns with the Centre over the entry of foreign law firms. While the Centre has told the Bombay High Court that it has no objection to foreign law firms setting up shop in India, the BCI has opposed the move saying only lawyers enrolled with an Indian bar council can practise.

“If a foreign lawyer is allowed to practise in India, it will be opening flood gates for committing professional or other misconduct with impunity,” said the BCI affidavit.

Also, the BCI will have no disciplinary jurisdiction over a foreign lawyer, who could challenge the sovereignty and integrity of the nation. “The days are not far off when terrorists attacking India will be defended by foreign lawyers, who would themselves support such terrorists’ cause. These are not imaginary fears,” read the affidavit.

Lawyer’s Collective first filed a case in 1995. The high court will decide if foreign law firms can set up offices in India and if the term ‘practise the profession of law’ extends beyond appearing before a court to advising clients and drafting legal documents.

The Centre has given its nod because it thinks the Advocates Act only prohibits foreign lawyers from appearing before a court. At present, a foreign lawyer can practise in India only after enrolling with a state bar council. Enrolment ensures that a foreign lawyer meets the qualification and professional standards set by the BCI.