The Bar Council of India (BCI) has been making headlines for formally permitting the entry of foreign law firms and lawyers in India, albeit in a limited scope, vide its 2022 Rules for Registration of Foreign Lawyers and Law Firms in India. The move has sparked a debate throughout the legal industry. Opinions, views, and predictions of how this unprecedented move will likely impact the Indian legal industry are varied.
LAWYERS ADVANCE THEIR ARGUMENTS
BCI’s move has found appreciation and critique. A sizeable portion of the legal industry argues, favouring the entry of foreign Lawyers and firms that the move will benefit the Indian legal sector by increasing competition, thereby improving the quality of legal solutions, demand for quality resources, and increased pricing of legal services. Competing with foreign Firms is also likely to nudge Indian firms and practices to adopt a professional management strategy and a better compensation structure. While growing pains are inevitable, the move will result in massive growth in the longer run.
On the flip side, concerns have been raised about ambiguities in the new Rules regarding ‘reciprocity’ and how it will work in the case of entry of foreign law firms in India; registration of foreign law firms under the Advocates Act, 1961, while Indian law firms remain unrecognised; lack of jurisdiction to initiate disciplinary proceedings against foreign lawyers and firms; the legality around marketing strategy for lawyers and business promotion activities of foreign firms; lack of clarity around application of the concept of ‘primary qualification’ to law firms; and more.
Undoubtedly, there’s merit to both sides here. Rules of the game will likely get more precise as players enter the field and encounter practical, real-world problems. However, most people have lost sight of the fact that the legal industry is not one egalitarian piece of machinery – the playing field is far from levelled.
OUR SECTOR-WISE ANALYSIS OF THE MOVE
There cannot be a ‘one-size-fits-all’ impact of foreign lawyers and law firms establishing their operations in India. This is simply because of the differences in how the legal industry is structured internally – Tier 1 large firms, compact boutique firms, independent chamber practices, and Legal Process Outsourcing (LPO) units – all claiming a different positioning within the legal market.
Tier 1 law firms
The more significant Tier 1 law firms have a high number of clients, finances, and human resources. However, that might change in the upcoming years. A foreign law firm in India will most likely compete directly with well-established Indian firms, especially for quality human resources. The newer foreign firms will probably poach Tier 1 partners and senior associates to help them penetrate the Indian legal industry. This means that the talent cost borne by Tier 1 firms will increase exponentially.
When handling legal matters for foreign clients, the work related to international transactions, non-litigious matters and international dispute resolution might dry up, as the clients are likely to prefer their main counsel for the job, which in most cases, will be foreign firms. Of course, areas where foreign firms are not allowed to operate yet, viz. litigious matters and advice related to Indian law, will remain unimpacted.
Tier 1 firms in India will also have unique collaboration opportunities with foreign firms and lawyers. Like the Link Legal-Dentons combination, many more foreign firms might now be open to collaborating with Indian firms to build their positions in each other’s legal industries.
Boutiques and chamber practices
Boutique law firms will face many of the same challenges as Tier 1 law firms, particularly on the human resources front. However, lawyers in boutique firms are less likely to move to more prominent firms due to work environment, work-life balance, preference to work with smaller teams, etc. This is not to say that boutiques will not face attrition, but not to the same extent as Tier 1 firms.
Independent chamber practices and boutique firms are prone to face a unique challenge in the financial aspect. Since chambers and boutiques focus on delivering the highest quality output to a comparatively compact list of clientele, they might not have as many disposable funds as Tier 1 firms.
This means that boutiques and chamber practices need more financial resources to move towards retaining their existing lawyers and invest in practice development and brand-building initiatives. Therefore, now it is more important than ever to choose one’s battles wisely. A tailored marketing strategy for lawyers and law firms can contribute volumes to your firm’s growth.
A unique opportunity these practices and firms will likely get is handling more litigious and Indian law-based work for foreign firms and lawyers. Not all foreign firms will be open to full collaboration with more prominent Indian firms. However, almost all foreign firms need Indian lawyers to work with them. It is the right time for chamber practices and boutique firms to bolster their existing ‘Instructing Counsel-Local Counsel’ relationships with foreign firms and leverage the same to their advantage soon.
Eager to read more about how the entry of foreign firms and lawyers will impact boutiques and chamber practices in India? Read our SWOT analysis here!
Legal Process Outsourcing Units
LPOs are the only domain where foreign entities have an established presence in the Indian legal industry. The Supreme Court in Bar Council of India vs. AK Balaji held that if the services offered by LPOs amount to practice of law, they will be subject to the Advocates Act and any rules framed by the Bar Council of India. This means that the new Rules have a conditional application to LPOs. It will be interesting to see if the LPOs expand the scope of their operations in India and get themselves registered as a ‘foreign law firm,’ thereby enabling them to leverage their current market position. Further, since the new Rules permit partnerships between two foreign firms/ lawyers registered in India, other foreign firms might be more inclined to partner with these LPO-turned-law firms.
WANT TO KNOW HOW WILL THE ENTRY OF FOREIGN LAW FIRMS IN INDIA IMPACT YOUR FIRM?
Navigating these unprecedented changes can be tricky. Each law practice is different and has its strengths, weaknesses, and challenges. Want to know where lies room for improvement in your firm/ practice? Contact us for a thorough internal assessment and devise a practice development and marketing strategy for law firms to prepare you for the upcoming tides!
