Entry of foreign lawyers and law firms in India

Introduction

Foreign legal firms have been attempting to establish themselves in India for many years.
Nonetheless, the Indian legal profession has been so strong that any institution has been
effectively avoided. The Indian government has attempted, but failed, on several occasions to
allow international law firms to enter the Indian legal market but the recent The Bar Council of
India’s recent notification on the “Rules for Registration and Regulation of Foreign Lawyers and
Foreign Law Firms in India, 2022”. These rules have been framed to outline the framework for
the entry and regulation of foreign lawyers and law firms in India.

This study examines whether the shifting presence of foreign lawyers and firms in India
will impact the performance of India's industrial sector by influencing the deployment of
intangible talents inside organizations. Foreign firms offer technology knowledge and capacities,
which are then transmitted to the whole Indian sector through a spillover process. The findings
indicate a substantial association between the increasing presences of foreign firms in the
India and measures the application of various talents in Indian industry. Consequently, facts
support the idea that the competencies of foreign enterprises may spread to other industries.

How will entry of foreign law firms in India considering the Bar Council of India's recent
notification of the “Rules for Registration and Regulation of Foreign Lawyers and Foreign
Law Firms in India, 2022”, and the subsequent press release titled "True facts about BCI's
Rules regarding Entry, Rules and Regulations of Foreign Lawyers and Law Firms in India”
will impact Indian law firms and job seekers?

 Some law firms/teams have 50% or more of their billing coming from foreign clients that
are mostly referred by foreign law firms. A part of this work will go to foreign law firms
that would enter India.
 The first law firms that would enter India are the ones that are referring work to Indian
law firms here, they know how much work they referred last quarter or last year that
would help them to decide if it's a good idea to enter a new market.
 It would not be a stampede of foreign law firms rushing in to set up in India as some
over-optimistic or too pessimistic lawyers tend to suggest it would be a slow trickle.
 Even though India is the greatest emerging market and the powerhouse of the future but
there are many apprehensions around regulatory risk. Law firms will slowly test waters,
open small exploratory offices and increase allocation of budget over time.
 Likely countries from where you will see significant interests are the ones who are big
trade partners of India & have a major cultural preference for their own lawyers. Highly
likely countries from where law firms would come in are: Japan, South Korea, Saudi
Arabia, UAE, Hong Kong, UK, Singapore. Maybe some US & Canadian firms too given
that there are many Indian legal entrepreneurs in these countries who understand the
Indian market. We may see some odd Russian law firms coming in because European
law firms don’t deal with that business any more.
 International law firms headquartered in the UK have some advantages because they may
have offices in many of these countries already, most importantly Germany and US,
although the UK itself does not feature in our top 10 trade partners. Interest of UK law
firms is quite evident from the fact that they have consistently lobbied the Indian
government, even during the recent UK India Free Trade Agreement negotiations.
 International investors also persuaded the Indian government that they would consider
being able to use their own lawyers rather than Indian law firms as a major FDI related
reform. It is expected that this move will increase inflow of FDI as India will be
considered a friendlier FDI destination and international law firms will recommend India
over other destinations for setting up manufacturing given that they can operate here now.
 International law firms have higher cost structures & while they may be able to compete
with big Indian law firms for foreign clients newly entering India, they can’t compete
with niche law firms and smaller law firms. There is a demand for lower cost legal
services that large international law firms cannot & do not intend to cater to, and this is
the fastest growing part of the legal market. This is where opportunity lies for Indian
legal entrepreneurs looking to start their law firms or grow bigger.
 It's absolutely not true that big international law firms will come here and eat up all the
small law firms. That is pure alarmism. But yes, this will increase pressure on law firms
 to diversify, think differently and focus on their core competence so they can differentiate
themselves.
 They are likely to try & use lower cost Indian lawyers/partners for work in other
jurisdictions & benefit from cost arbitrage, especially if those lawyers have dual
qualification. This may create significantly higher demand for dual qualified lawyers in
India.
 Bringing international lawyers into India will be extremely expensive for international
law firms. Natural preference, over time, will be to hire locally.

Conclusion

The initiative to open up the legal services market has been eagerly anticipated by the profession
as a whole. Having said that, such a momentous event should have sought the opinion of the
fraternity before being announced. Fundamental concerns must be addressed, and one can only
hope that the BCI will be attentive and willing to change direction before it is too late.