Liberalization Of Legal Services

SC Verdict:
  • Keeping India’s legal market exclusively for Indians, the Supreme Court ruled that foreign law firms or foreign lawyers cannot practice law in the country either on the litigation or non-litigation side.
  • This means overseas lawyers or firms cannot open offices in the country, appear in courts or before any authority or render other legal services, such as giving opinions or drafting documents.
  • Any dispute in this issue would be decided by the Bar Council of India.
Arbitration Proceedings
  • The court also ruled that foreign law firms and lawyers did not have an “absolute right” to conduct arbitration proceedings and disputes arising out of contracts relating to international commercial arbitration.
  • Though they might not be debarred from conducting arbitration in India arising out of international commercial arbitration, they would be governed by the code of conduct applicable to the legal profession in India.
  • The court said Business Process Outsourcing (BPO) companies providing a range of services to customers like word processing, secretarial support, transcription and proof reading services, travel desk support services and others would not come under the Advocates Act.
Practice in other countries
  • Sections of the legal fraternity have been opposing their entry, contending that Indian advocates are not allowed to practise in the U.K., the U.S., Australia and other nations, except on fulfilling onerous restrictions like qualifying tests, experience and work permit.
  • It was also argued that foreign lawyers cannot be allowed to practise in India without reciprocity.
What did Bar Council of India say?
  • It contended that even non-litigious practice came under the term ‘practice of law’, and that could be done only by those enrolled under the Advocates Act in the country.
  • They should follow the Advocate ACT 1961 and the rules laid down by BCI. If any foreign lawyer commits a professional misconduct, then under BCI rules, we can hold them accountable and initiate disciplinary action,
What was the objection of Indian law firms?
  • Indian law firms would not be able to compete with foreign firms and that the latter had greater money power and may control the legal market.
What was the stand of Political Parties?
  • Both the NDA and the UPA government were considering a proposal to permit foreign law firms in the country to practice law in matters not involving litigation and on a reciprocal basis.
  • As a result of SC verdict Centre may not be able to throw open the legal services sector to overseas players.
  • The parties felt barring them in the arbitration sector would scupper India’s ambition to be a global arbitration hub, and only help Singapore, London or Paris take over these arbitration opportunities.
Do you think liberalization of legal services should be allowed in India? Discuss the issue examining merits and demerits of the same. (200 Words)
The Indian government is considering opening up its legal services sector for foreign firms to practice in India. Both the Bar Council of India and Society of Indian Law Firms, bodies that represent the legal sector in India, have agreed to the proposal on certain conditions. First there should be a level playing field and second there should be mutual recognition agreements on qualification and licensing in reciprocity. The proposal has many merits as well as some reservations.
  1. This will induce competition in the sector and overall the efficiency of legal services delivery will be enhanced.
  2. The standard of legal education as well as educational institutions providing legal education will be raised.
  3. As India is a growing economy, many MNCs operate in India and are planning to come to India. Also, many Indian MNCs operate abroad. This will create provision of the MNCs to work with legal firms that they are comfortable with. If TATA sets up a company in UK then TATA will prefer legal counsel from India. Same applies for Apple.
  4. The foreign legal firms will engage local talent. This means more employment as well as positive interaction of local talent with these firms.
  1. Some factions of the lawyer community are opposing the provision as they site the example of Indian accounting firms which have gone into oblivion. However, unlike accounting, law has a local flavor. These firms will provide services for corporate and mergers and acquisitions rather than arguing a case in supreme court
  2. There may not be level playing field between Indian and foreign law firms. This issue can be taken care of by opening up the sector in a phased manner and involving initially only corporate services and transactions.
  3. Will subject Indian law firms to undue competition and disadvantages because they are not financially strong as large international law firms and have no sufficient requisite experience to compete against them.
In a globalized world, the above proposal is not out of place and in fact beneficial for the legal fraternity in the long run. If the foreign firms confirm to the same rules and regulations as Indian law firms there is no strong reason why the sector should not be opened up. This is in line with the Prime Minister’s vision to transform India into a legal services powerhouse

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