The never-ending debate about entry of foreign law firms in India is again in news.

In a petition filed by the Lawyers Collective it was argued that since the foreign law firms were not enrolled as advocates under the Advocates Act, they could not be allowed to practice even in non-litigious matters, such as drafting documents, reviewing and providing comments on documents, conducting negotiations and advising clients on international standards and customary practice relating to the client's transaction. Agreeing with this view, the Bombay High Court had in December last year held that the practice of the profession of law included litigious as well as non-litigious matters. There were various differing views on the implications of the Bombay High Court judgment.

A writ petition has been filed before the Madras High Court by the Association of Indian Lawyers (Association), a Calcutta based organization having its branch offices in Chennai. 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.

Speaking to Bar & Bench, one of the members of the Association, Karthikeyan, said “the issue is no longer about the entry of foreign law firms, it is also about the manner in which these foreign law firms continue to do business in India despite a ban on them. These firms have already entered India indirectly and are operating out of five star hotels and business centers”. “The lawyers working at these foreign law firms enter India using visitor visa thereby violating immigration norms. Also, the work is done in India but billed in foreign countries, and thereby the foreign firms avoid paying taxes to the Indian Government”, he said.

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.

The writ petition does raise the issue of entry of foreign law firms, however, interestingly it also stresses on other aspects such as the manner in which these foreign law firms currently provide legal services in India. Here are some of the issues:

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.”

Law Firms in the guise of LPO’s

The writ petition also 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.

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.

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.

ARL Sundaresan, Senior Advocate is arguing on behalf of the Association. ARL Sundaresan is the son of former Supreme Court Judge AR Lakshmanan. The case came up before Chief Justice HL Gokhale and V Dhanapalan who have issued notices to all the respondents. The matter is scheduled to come up for hearing on April 8, 2010.

It will be interesting to see the defense of these foreign law firms especially on issue of immigration law violations and the Indian government's stand on reciprocity. The Bar Council has been vocal against the entry of foreign law firms, while the Law Minister has always claimed that the entry will only be after consulting all necessary stakeholders. Several law firms including Linklaters declined to comment at this stage.

A Copy of the writ petition is available here.

Read about the Bombay High Court Judgment 

Read our Editorial on the Bombay High Court Judgment

Read about the Clifford Chance dispute with Indian tax authorities

Reference: A.K.Balaji vs. Government of India & others; W.P. No.  5614 / 2010