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‘A lot of grey areas’: India legal market liberalisation met with optimism though questions remain

While the international legal community has largely been sanguine at the Bar Council of India (BCI) opening the door for foreign lawyers and law firms to establish offices and practice in India, uncertainties remain.

The BCI announced the decision on 15 March in its ‘Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022’. The BCI said in a statement that ‘time has come to take a call on the issue.’

The new rules set registration fees at $25,000 for an individual lawyer and $50,000 for a firm. Registration will be valid for five years, after which time lawyers and firms will need to renew within six months. A grant of registration does not give lawyers the right to live in India, and the Indian government reserves the right to cancel registration, with ‘valid reason’.

Foreign lawyers are permitted only to advise on corporate and transactional work, and cannot appear before courts or tribunals. They will also be allowed to act as advocates in international arbitrations.

The move marks the first major step in opening up the Indian legal market since the Supreme Court in 2018 upheld a 2012 ruling allowing foreign lawyers to practice foreign law in India on a ‘fly-in, fly-out’ basis, for a maximum of 60 days in any 12-month period.

Lawyers continuing to practice in India on this basis will not be required to register under the new rules.

Firms including Herbert Smith Freehills, Baker McKenzie, and Dentons welcomed the news in public statements.

Each of these firms has made recent moves in the area. Herbert Smith Freehills invested in its India practice in 2022 with the promotions to the partnership of corporate and M&A lawyer Siddartha Shukla and project finance specialist Dhananjaya Chak. In February 2023, it hired arbitration specialist Anuradha Agnihotri from prominent Indian firm Trilegal.

Baker McKenzie also increased its focus on India, appointing healthcare & life sciences industry group head Peerapan Tungsuwan, Buenos Aires managing partner Adolfo Duranona, antitrust and competition partner Teresa Tovar, M&A and venture specialist Aarthi Belani, and Johannesburg office indirect tax head Virusha Subban to its global India practice group’s steering committee in November 2022.

Dentons, meanwhile, announced its landmark combination with Indian firm Link Legal in October 2022.

But the BCI’s move was little trailed, and firms have yet to develop detailed plans for how to respond.

‘The news has taken everybody by surprise’, said Ashish Raivadera, South Asia managing director for the partner practice group at legal recruiting and advisory firm Major, Lindsey & Africa. ‘Nobody saw this coming.’

The announcement also comes with uncertainties. In Raivadera’s words: ‘Everyone is trying to understand what the legislation says and how it might be interpreted’.

‘There are a lot of grey areas’, said Naveen Tuli, managing partner of Major, Lindsey & Africa’s EMEA and APAC in-house counsel recruiting group.

For one thing, the BCI’s guidelines do not make clear whether individual lawyers will be required to register in addition to their firms.

Tuli also highlighted that the picture of how foreign firms will relate to Indian practitioners remains fuzzy: ‘What does it mean if a firm wants to hire local Indian lawyers, for example?’

A comparison with Singapore is perhaps inevitable: ‘It feels a lot like the early days of liberalisation in Singapore’, said Raivadera. ‘Singapore is still not fully liberalised after about 40 years. Not all the big New York firms are in Singapore, as they calculate that it’s a cost they don’t need.

‘The main question international firms will ask is, what is the cost-benefit of opening an office in India rather than cross-servicing from Dubai, Singapore, or London?’ There will always be firms that want to plant a flag. Magic circle firms and white-shoe New York firms, though – we’ll wait and see. If one breaks rank, the rest will likely follow.’

The rules’ focus on transactional and arbitration work will also impact how the market develops. ‘If firms decide to move into India’, Raivadera explained, ‘they’ll try to snag the big Indian conglomerates who want to do global work.’

Much will depend on any further decisions from both the BCI and the Indian government. And, for Tuli, there is reason for optimism here: ‘The Indian government wants liberalisation as it will ease foreign direct investment. It’s a very significant move, and it can only serve for the betterment of the legal profession in India.’

Raivadera echoed this sentiment in his overall summary of the news: ‘It’s a step in the right direction.’

Still, as Singapore shows, the opening of a legal market can come slowly. And the pace of change in India will likely be measured in years or even decades.