Foreign Law firms and India

In 1994, two New York-based and one London-based law firm had sought permission from the Reserve Bank of India (RBI) to begin liaison office activities in India to advise and assist non-Indian clients in connection with their activities in India and outside India. The three law firms, White & Case (NY), Chadbourne & Parke (NY) and Ashurst Morris Crisp (UK) were granted permission by RBI under the Foreign Exchange Regulation Act (FERA) to start liaison activities . But the entry of foreign law firms was put on hold by an interim order of the Bombay High Court.

In the year 2005 Britain and Australia had approached the Bar Council of India seeking permission to set up their law firms in the country. But the Bar Council of India made it clear to them that it was opposed to the entry of foreign lawyers and foreign law firms in the country. An American law firm had also approached the BCI to open its branch office here to render legal services. But its request was also turned down.

Despite the resistance to their entry, foreign law firms have tie-ups and associate offices in India with whom they continue to work. So, even if they have not set up offices in India, they have liaison offices or India departments that effectively do the work: the London-based Clifford Chance and Baker & McKenzie, both have lawyers for India-related practice. Allen & Overy LLP entered into a referral, training and joint marketing relationship in 2008 with Trilegal. A Washington-based firm set up by a Jones Day partner in 1995, with New Delhi-based P&A Law Offices. London’s Linklaters LLP allied with Mumbai-based Talwar Thakore & Associates in 2007. Clyde & Co. has plans to ener into some kind of an arrangment with ALMT Legal. Certain other law firms in India have alliances with foreign law firms.

Many British and American Law firms have set up Indian Practises based in London, Dubai, Hong Kong or Singapore or forged alliances with leading domestic firms to refer work in and out of India.

There has been a change in the government’s policy. The Government came up with the Limited Liability Partnerships Bill (LLPs) which became an Act in the year 2008. This Act enables such law firms (as well as accounting firms) operate in India by entering into Joint Ventures.

Pending Case: Lawyers’ Collective vs. Bar Council of India & Ors. (Bombay High Court- WP/1526/1995)
In 1995, Lawyers’ Collective, a public interest trust set up by lawyers to provide legal aid, moved Bombay High Court challenging the right of foreign law firms to “practice law” in India. They alleged that these firms were exercising active legal practice in India against the statutory requirements and the permission granted by Reserve Bank of India to merely operate as liaison offices.

The High Court in an interim order had held that the practices engaged by these firms amounted to “practicing the law” and hence were not to be permitted. The Court also said that, in India, since there is no distinction between solicitors and advocates, both counselling and providing legal advice to the clients will be an 'act' of Advocacy and the representatives of these foreign firms will have to be enrolled under the Advocates Act. (The word attorney was removed from the Act by amendments to the Act)

The foreign law firms challenged the HC order in the Supreme Court, which in March 1996, reverted the case back to Bombay HC, asking it to decide the matter expeditiously.

Question which arose in this case: whether the term “practice the profession of law” extends beyond appearing before a court to advising clients and drafting legal documents?

The Court had stated in its interim order that the Advocates Act, 1961, provides that only advocates enrolled in India are entitled to practice the profession of law in India. It argued that the term “practice the profession of law” would include not only appearance before courts and giving legal advice as attorney, but also drafting legal documents, advising clients on international standards and customary practices and transactions. The HC said, “In our view, establishing a firm for rendering legal assistance and/or for executing documents, negotiations and settlements of documents would certainly amount to practice of law.”

The judges held that the RBI licence did not amount to a permission to practice law, but only to establish a branch office to act as a communication channel between the head office and their parties in India. The HC ordered the government to conduct an inquiry into the issue and take appropriate action against the firms.

White & Case pulled out voluntarily after the ruling, as did Chadbourne, though Ashurst remains in New Delhi. No new licenses are being issued. The writ petition in the Bombay High Court is on the ‘Final Hearing’ stage now.