Opening up of the Indian legal market 5 th Annual ITech Law Conference February New Delhi Rajiv K. Luthra Managing Partner Luthra & Luthra Law Offices

2 Present Indian Scenario India remains one of the few untapped markets India remains one of the few untapped markets Demand for corporate advisory legal services has grown significantly over the last decade Demand for corporate advisory legal services has grown significantly over the last decade Lawyers from UK, USA and Australia interested in entering the Indian market Lawyers from UK, USA and Australia interested in entering the Indian market Litigation is not a market access issue Litigation is not a market access issue

3 Present Indian Scenario Advocates enrolled with the Bar Council can practice (S 29, S 33 Advocates Act, 1961). Advocates enrolled with the Bar Council can practice (S 29, S 33 Advocates Act, 1961). An Indian citizen can be enrolled as an advocate. National of any other country may be admitted as an Advocate, if citizens of India are permitted to practice law in that other country (S 24) An Indian citizen can be enrolled as an advocate. National of any other country may be admitted as an Advocate, if citizens of India are permitted to practice law in that other country (S 24) Bar Council of India may prescribe conditions for recognition of foreign qualifications in law (S 47 ) Bar Council of India may prescribe conditions for recognition of foreign qualifications in law (S 47 )

4 Lawyers Collective vs. BCI &Ors Writ in the Mumbai High Court on ability of foreign lawyers to “practice the profession of law” in India Writ in the Mumbai High Court on ability of foreign lawyers to “practice the profession of law” in India In its affidavit, Government of India has claimed that to “practice the profession of law” in India does not include In its affidavit, Government of India has claimed that to “practice the profession of law” in India does not include –Advise/drafting of documents on foreign/international law –Advising both Indian as well as foreign clients –Such foreign lawyers need not enroll as Advocates under the Advocates Act

5 Lawyers Collective vs. BCI &Ors Lawyers Collective vs. BCI &Ors Thus as per the Government, foreign law firms can set up offices in India so long as they: Thus as per the Government, foreign law firms can set up offices in India so long as they: –Comply with FEMA –Do not practice Indian law –Do not appear before courts/quasi judicial bodies –Foreign lawyers will not be subject to the disciplinary action of the Bar Council of India for misconduct

6 Indian v. Foreign Law Firms INDIAN FIRMS Nascent stage of growth. Nascent stage of growth. Limitation on number of partners to 20 Limitation on number of partners to 20 Prohibitions on information dissemination (R 36 of BCI Rules). Recently allowed to maintain limited websites Prohibitions on information dissemination (R 36 of BCI Rules). Recently allowed to maintain limited websites Though firms allowed to form LLPs Advocates Act and Bar Council Rules may need to be amended Though firms allowed to form LLPs Advocates Act and Bar Council Rules may need to be amended FOREIGN FIRMS Established large multi- national firms with offices in several jurisdictions. Generally no restriction on number of partners in several jurisdictions Permitted to advertise Limited Liability Partnerships

7 Indian v. Foreign Law Firms INDIAN FIRMS No contingent fees (R 20 Sec II, Chap II, Bar Council Rules) No contingent fees (R 20 Sec II, Chap II, Bar Council Rules) No partnership or sharing of remuneration with non-advocates (Chapter III, Bar Council Rules) No partnership or sharing of remuneration with non-advocates (Chapter III, Bar Council Rules) Indian corporate lawyers across India would not be more than 3,000 Indian corporate lawyers across India would not be more than 3,000 FOREIGN FIRMS Contingent fees allowed Limited restriction on structure of practice in number of jurisdictions Prominent UK firm alone has over 3,500 lawyers

8 Level playing field Stark disparity between Indian and foreign law firms Stark disparity between Indian and foreign law firms Allow liberalization in phased manner but after strengthening the domestic industry Allow liberalization in phased manner but after strengthening the domestic industry Provide a transition period to attain critical mass necessary for competing with foreign law firms Provide a transition period to attain critical mass necessary for competing with foreign law firms Allow Indian firms to take benefit of LLP and advertising laws Allow Indian firms to take benefit of LLP and advertising laws Law must ensure that all lawyers practicing in India are subject to the professional discipline rules Law must ensure that all lawyers practicing in India are subject to the professional discipline rules

9 Entry of foreign trained lawyers Is entry of foreign trained lawyers possible today? Is entry of foreign trained lawyers possible today? –Foreign LLPs can establish place of business in India –But under Advocates Act, only advocates can practice law –Not possible to merge with existing Indian LLP as R.2 Chapter III of BCI Rules prohibits advocates from sharing remuneration with non-advocates –Government to frame rules for carrying on business of foreign LLP

10 Other issues on entry of foreign trained lawyers Other issues on entry of foreign trained lawyers Other issues on entry of foreign trained lawyers –As stand alone entities practicing both foreign and local law –In a merger with existing law practices –As foreign legal consultants practicing only international law –As a JV practicing foreign law but with the local law firm subsisting

11 Proposals on entry into India The UK team report to JETCO has envisaged a phased approach to liberalization The UK team report to JETCO has envisaged a phased approach to liberalization First 3 years limited license under which First 3 years limited license under which –Negotiate, draft and advise on contracts governed by Indian law –Advise on incidental points of Indian law, –not permitted to issue formal opinions on Indian law –can hire Indian lawyers (who cannot issue opinions on Indian law or appear in court) –but not enter into partnership with Indian lawyers/firms

12 Proposals on entry into India After 3 years they would get a full license under which After 3 years they would get a full license under which –continue to negotiate, draft and advise on contracts governed by Indian law –advise on incidental points of Indian law, –issue formal opinions on Indian law –can hire Indian lawyers who can issue opinions on Indian law but not appear in court –can enter into partnership with Indian lawyers/firms

13 Proposals on entry into India UK Proposal makes it clear that foreign lawyers want the ability to practice Indian law and come in as stand-alone entities UK Proposal makes it clear that foreign lawyers want the ability to practice Indian law and come in as stand-alone entities Position of foreign law firms recently changed to state that they will only practice foreign/international law Position of foreign law firms recently changed to state that they will only practice foreign/international law These firms are already gearing up by hiring law students and lateral lawyers from Indian law firms These firms are already gearing up by hiring law students and lateral lawyers from Indian law firms

14 Viable options for liberalization Middle path between Middle path between »allowing free entry of foreign firms with no restrictions on practice of the kind of law »and only allowing the practice of foreign law JV or merger between existing and foreign law firm is most viable option JV or merger between existing and foreign law firm is most viable option But unlike models where the JV entity subsists side by side with the local law firm But unlike models where the JV entity subsists side by side with the local law firm

15 Viable options for liberalization Merged firm would comprise of Indian as well foreign lawyers Merged firm would comprise of Indian as well foreign lawyers Will advise on Indian and foreign law Will advise on Indian and foreign law Firms will share in the profits, which can be increased in phases Firms will share in the profits, which can be increased in phases Managing partner of merged partnership would be an Indian citizen with certain number of years of practice in India Managing partner of merged partnership would be an Indian citizen with certain number of years of practice in India Clients may seek advise on Indian as well as foreign/international law from one firm Clients may seek advise on Indian as well as foreign/international law from one firm Lawyers would be subject to the disciplinary rules of the BCI Lawyers would be subject to the disciplinary rules of the BCI

Thank you!