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The Bar Council of India (BCI) last week allowed foreign firms and lawyers to practice non-litigious foreign law, international law, and participate in international arbitration, provided reciprocity is guaranteed. The catch: they still can’t appear before Indian courts, draft pleadings, or engage in property conveyancing. While overseas firms can apply to open offices, they must register with the BCI.
As a result, global law firms say they are open to mergers and acquisitions and see the latest move as apossible way ofattracting talent in India. The conditions will, however, prevent many from taking an immediate plunge.
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“We would be continuing to operate under the informal arrangements we have in place,” saidDhruv Chhatralia, BEMpartnerat UK-based firm DWFLaw LLP, in an emailed response to Mint. “Providing details of matters they are working on to the BCImay put overseas lawyers in a difficult position when it comes to confidentiality and data protection.”
FIFO hurdle
Chhatralia was referring to the BCI’s decision to carve out a narrowly defined advisory-only space with a tightly regulated regime. It has directed foreign lawyers to disclose each ‘fly in, fly out’ or FIFO visit to India, specifying the duration, purpose and the nature of legal work every time they visit the country.
While Chhatralia said that BCI’s decision will benefit clients looking for advisers to seamlessly manage complex cross-border matters, many legal companies are still studying the fine print.
“Too early to say,” said Mini Menon vandePol,Baker McKenzie’s Global India Practice chair. “But we are interested in attracting the best talent to support our clients, so will consider all options.”
US-based Baker McKenzie, with a focus on international arbitration, will continue to rely on existing models. “If a dispute is required to be litigated in court, we will work with Indian counsel in the manner required by the BCI rules,” said Ashish Chugh, a principal in Baker McKenzie Wong & Leow’s Dispute Resolution Practice in Singapore.
So far, interest has centered more on interpreting the rules than rushing in. Legal consulting firm Vahura has received a wave of queries, mostly about the FIFO model, which allows foreign lawyers to operate in India for up to 60 days in a 12-month period.
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“The majority of queries are in relation to how the number of days is calculated and whether it applies to business development or non-work travel undertaken by lawyers in their personal capacity,” said Ritvik Lukose, Vahura’s co-founder and chief executive officer.
Client confidentiality worry
The BCI’s requirement to disclose client and matter details ahead of visits has also raised red flags. “There is a serious concern around the information that has to be filled in forms… that would result in the firm being in violation of securities law-related regulations and home country professional ethics rules,” said Lukose.
Lukose, however, anticipates increased demand for dual-qualified professionals and rising pay scales across top law firms. Such lawyers who are licensed to practice in two jurisdictions could see demand rise for their cross-border legal expertise and ability to navigate complex international matters.
“This will result in a significant increase in remuneration levels at the premium law firms… including in-house legal teams,” Lukose said. Over the last couple of years, domestic law firms have guzzled talent, with top Indian law firms poaching senior partners along with their teams.
Russell Strong of UK-based law firm Greenwoods Legal LLP said the BCI seems to trying to strike a balance to “promote trade” and “safeguard the interest of domestic legal professionals”.
However, some of the India-headquartered law firms are skeptical about the reforms. “Even with BCI’s green light, it is unlikely for most foreign law firms to set up shop overnight,” said Shweta Sahu, leader atIndian firmNishith Desai Associates. Sahu expects collaboration as the dominant model.
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How legal services are priced and charged to clients or the billing model is another area that will come under the spotlight. And then there are costs incurred to set up shop in India.
“The BCI amendment permitting foreign law firms to set up Indian presence for advisory purposes does not mean a change in macroeconomic consideration and will make India attractive all of a sudden,”Akash Karmakar, partner at Indian firmPanag & Babu. “The other considerations include cost sensitivities of the Indian market and limitations in being able to appear before courts, etc.”
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