Law firms support liberalisation, Bar Council opposes
July, 24th 2006
As the government mulls opening up legal services for foreign firms under WTO framework, sharp differences have emerged within the legal fraternity with domestic law firms supporting liberalisation while lawyers' association opposing any such move.
While most domestic law firms who responded to a PTI questionnaire favoured greater competition but with necessary checks and balances, Bar Council of India and other advocates who have their own practice opposed the move on the grounds that it would jeopardise the growth of the profession.
The questionnaire sought to know reactions on the consultation paper floated by the Commerce Ministry recently on liberalising the sector to firm up India's position at services negotiations in World Trade Organisation.
India has not made any commitment on legal services in WTO neither has it permitted FDI, but the US, EU, Japan and other countries have asked New Delhi to open up the sector.
"We support the move to open the legal sector... entry of foreign law firms will enhance the level of service currently offered in India and there would be more responsibility and accountability towards clients," Som Mandal, partner in India's largest law firm FoxMandal Little, said.
Echoing his views, other law firms such as Lex Nexus, Kachwaha & Partners and S Jalan and Co supported the move to open up the sector. This is particularly essential when Indian companies are setting up overseas operations and acquiring global companies, they said.
However, Bar Council of India Chairperson Jaganath Patnaik said: "We are opposed to opening up the sector as this would ruin the Indian legal system. We have already submitted our comments to the government."
Favouring liberalisation, Shrikant Hathi of Mumbai-based Lex Nexus, which specialises in shipping and energy sector cases, said healthy competition will improve quality.
"Indian legal profession cannot hope to serve its clients by asking for protection. Entry of foreign firms would help globalise the profession and bring in good international practices," Sumeet Kachwaha of Kachwaha & Partners, one of India's leading firms in international law, said.
Asha Nayar Basu of S Jalan and Company said it was a fallacy to think foreign law firms were not present in India.
"Today there are about 38 law firms such as Allen & Overy, CMS Cameron, Denton Wilde Sapte's with their liason offices or referral relationships with Indian counterparts, while others have struck informal associations," she said.
While many domestic firms have supported liberalisation, some firms and lawyers have opposed the idea.
"I fully support the stand taken by Bar Council of India. Opening up legal services sector at this stage would scuttle the growth of the profession in India," senior Supreme Court lawyer Lalit Bhasin said.
But, Basu countered saying only some lawyers who either enjoy a near-monopoly of these referral works or a major share of commercial law work are against the foreign law firms.
Bhasin, who is also president of Society of Indian Law Firms, said the government has to create a level playing field by amending laws such as Advocates Act.
The government must also remove restrictions like having not more than 20 partners in a law firm and ban on advertising by law firms, he said.
In fact, almost all law firms have demanded removing restrictions on advertising and number of partners, besides seeking reciprocal treatment in other WTO member countries.
Senior advocate and former secretary of Supreme Court Bar Council P H Parekh said Indian firms would find it difficult to compete with the foreign firms.
"US firms usually have 2,000 partners, but Indian firms cannot have more than 20 partners," he said, adding that even the biggest Indian firms are smaller than middle-level US firms.
While many foreign law firms are already present in one way or the other, consulting firms like KPMG, Ernst & Young and PriceWaterhouseCoopers are operating in India and have "legal cells" also, Sumeet Kachwaha said.
"It does not make sense to allow foreign consultants to operate in India but not allow foreign legal firms as they would be advising their clients on exactly the same issues," Kachwaha said.
Asked for views on how to open up the sector, law firms suggested taking certain precautions and sought equal treatment for Indian lawyers wanting to practice abroad.
Som Mandal said they have submitted a roadmap to the Attorney General of India on the issue. FoxMandal has suggested following the Singapore model, where foreign law firms are monitored by the Attorney General's office.
Further, the Law Ministry, AGI's office, Bar Council and leading domestic firms must form a committee and set up rules for foreign firms and practice by foreign lawyers in India.
FoxMandal has also recommended that "professional negligence insurance should be made mandatory for all lawyers" to bring greater accountability among the legal fraternity.