Indian Lawyers Group Seeks to Prohibit Activities of Foreign Law Firms

A group of lawyers in the southern Indian state of Tamil Nadu is seeking government action against 31 foreign law firms and a legal process outsourcing (LPO) company for illegally practicing law “out of five-star hotels and business centers.

According to Indian legal blog Bar and Bench, a petition for a writ compelling the government to act against foreign lawyers was filed in the Madras High Court by lawyer A. K. Balaji on behalf of a group called the Association of Indian Lawyers. Although international law firms are already barred from having offices in India–a restriction strengthened by a Bombay High Court decision in December–a member of the group behind the writ told Bar and Bench that other means by which foreign firms operate in India should also be targeted.

The association member, Karthikeyan, told the blog, “the issue is no longer about the entry of foreign law firms, it is also about the manner in which these foreign law firms continue to do business in India despite a ban on them. These firms have already entered India indirectly and are operating out of five-star hotels and business centers.”

According to a copy of the writ posted on Bar and Bench, the association is largely targeting corporate practice, which is less clearly proscribed than litigation. Though foreign firms focus mainly on cross-border transactions, the group seems to take the position that any work by foreign firms physically taking place in India should be prohibited. The writ also takes aim at foreign lawyers taking part in conferences and seminars in India. “Moreover, the advocates from various foreign law firms are often visiting India and conducting seminars in various parts of our country,” the writ alleges. “They are entering in to India through visitors’ visas but the actual intention of their visit is to indirectly market and earn money out of clients from India by way of seminars.

The writ also criticizes how some firms have opened offices in “neighboring countries.”  The reference is likely to Singapore, which has become the preferred base for India practices of global law firms. Foreign lawyers should only be allowed to work in India, the writ argues, if there is strict reciprocity for Indian lawyers to practice in the U.S. or U.K.

Among the 30 firms named in the writ are leading global firms like Shearman & Sterling, Allen & Overy, Clifford Chance, and White & Case. But the list is far from exhaustive and many major international firms with active India practices were not included. Edward Bradley, a Singapore-based partner in the India practice of Clifford Chance, says he expects the firms named in the action to meet and consider the matter in the coming weeks. He is confident, all were complying with Indian law.

My impression is it doesn’t reflect on what it is international lawyers do,” said Bradley of the writ, though he cautioned that he had yet to study its allegations closely. He noted there is some support in Indian legal circles for blanket restrictions on visiting foreign lawyers. Such views, if more widely adopted, would likely hurt India by driving away foreign investment, he said.

Perhaps the most surprising inclusion in the writ was Integreon, a leading LPO company. Such companies hire Indian lawyers to provide support on overseas legal matters, most commonly document review for U.S. litigations. Integreon has also been a leader in providing outsourced back-office services like word-processing to law firms and has in the past signed contracts to perform such work for Clifford Chance, DLA Piper, and others.
The writ accuses LPOs of basically being illegal foreign law offices. In a statement, Integreon said the accusations were without merit.
It is unfortunate that our size and clear leadership position in the LPO market has made us the LPO target for the petitioner,” said Liam Brown, CEO of Integreon, in the statement.” We were surprised to hear that our range of LPO services, such as document review, e-discovery, contract management, and other legal support services could be confused with the practice of law.”

It is unclear how much foreign firms or LPOs need to worry about the case, as the wheels of Indian justice turn extremely slowly. December’s Bombay High Court decision, which ruled that three foreign firms’ Indian “liaison” offices were barred along with other foreign law offices, came 14 years after initial filings.

Rules restricting recruitment of overseas workers are to be eased after City law firms lobbied to simplify the system.
From next week (6 April), the Government is set to reverse tougher immigration rules introduced in March 2009, which made a master’s degree an effective requirement for bringing highly-skilled workers into the UK from overseas.

A number of law firms and other parties had raised concerns that the points-based system introduced last year would be overly restrictive with regards to their overseas recruitment processes.

The new system will now see bachelor degrees count towards the overall points under tier 1 of the points system and will aid law firms that recruit from jurisdictions such as the Americas, Australia and India.

The amendments come as a result of a review launched last year into how the system could be improved. The Law Society submitted a list of points for consideration on behalf of City law firms, with the key issue concerning the master’s degree requirement.

The society also requested that qualification as a solicitor should count towards the points under tier 1, as is the case with an accountancy qualification, but this was rejected.

The move comes as part of a number of changes to the points system, with applicants now able to qualify under tier 1 without a degree if they earn over £150,000 a year.

Allen & Overy managing partner Wim Dejonghe commented: “We’re pleased the Government listened to the concerns raised by the City as a whole. The cross-border nature of our business relies on attracting the best talent from around the world. The changes mean we can continue to attract the most talented lawyers to our London office either to work for long or short-term periods to help with the integration of our global network.
Sarah Langton, recruitment manager at Clifford Chance (CC) – which was involved in the lobbying – said: “Because the new regulations coincided with the credit crunch they have posed less of a problem than they would have otherwise. It would have been more of a problem if we had needed to recruit extensively during this period. The amendments mean that it will be easier to have a flow of strong talent coming into the UK.
Norton Rose chief executive Peter Martyr added: “We are actively pursuing a reciprocal talent exchange with our Australian offices and we very much hope that the change in Australian entry requirements will help facilitate this exchange – as such it could be a welcome development for us“. The never-ending debate about entry of foreign law firms in India is again in news.

In a petition filed by the Lawyers Collective it was argued that since the foreign law firms were not enrolled as advocates under the Advocates Act, they could not be allowed to practice even in non-litigious matters, such as drafting documents, reviewing and providing comments on documents, conducting negotiations and advising clients on international standards and customary practice relating to the client’s transaction. Agreeing with this view, the Bombay High Court had in December last year held that the practice of the profession of law included litigious as well as non-litigious matters. There were various differing views on the implications of the Bombay High Court judgment.

A writ petition has been filed before the Madras High Court by the Association of Indian Lawyers (Association), a Calcutta based organization having its branch offices in Chennai. The writ petition not only deals with the issue of entry of foreign law firms, but also on the modus operandi currently adopted by these firms to provide legal services in India. A.K. Balaji, one of the representatives of the Association has filed this writ petition alleging violations under the Advocates Act, Immigration Act and a number of other issues.

Speaking to Bar & Bench, one of the members of the Association, Karthikeyan, said “the issue is no longer about the entry of foreign law firms, it is also about the manner in which these foreign law firms continue to do business in India despite a ban on them. These firms have already entered India indirectly and are operating out of five star hotels and business centers”. “The lawyers working at these foreign law firms enter India using visitor visa thereby violating immigration norms. Also, the work is done in India but billed in foreign countries, and thereby the foreign firms avoid paying taxes to the Indian Government”, he said.

The Bar Council of India, Union Law Ministry, External Affairs Ministry and the RBI are amongst the Government respondents. There are 31 foreign law firms in the dock including UK’s Allen & Overy, Clifford Chance, Linklaters, Freshfields and US law firms, WilmerHale and Shearman & Sterling. Integreon, one of the largest LPO’s in India has also been dragged in this dispute. Several law firms including Allen & Overy and Simmons & Simmons have outsourced legal work to Integreon.

The writ petition does raise the issue of entry of foreign law firms, however, interestingly it also stresses on other aspects such as the manner in which these foreign law firms currently provide legal services in India. Here are some of the issues:

Entry of Foreign Law Firms – Immigration Law violations

The Association has not only questioned the entry of foreign law firms, it has also challenged the mode of entry of the foreign lawyers into India, as it has alleged immigration law violations by foreign lawyers. Most lawyers working at these foreign law firms, especially in the Capital market space visit India using tourist visas. A Magic circle firm associate who didn’t want to be named said “procuring tourist visas to India is the easiest way to visit India. Therefore, most lawyers opt for it, since our visits do not last more than two weeks at a stretch.”
Law Firms in the guise of LPO’s The writ petition also alleges that most foreign law firms exist in India through the Legal Process Outsourcing (LPO) outfits. The petition states that most foreign law firms have their back end offices in India, which not only does their back end activities, but also provides legal services in India. Clifford Chance is one such law firm, which has a back office in India. The Clifford Chance back office is supposed to undertake only office billing and technology related work for Clifford Chance and its best friend in Saudi Arabia, Al-Jadaan & Partners.

Law as a business as opposed to ‘Noble Profession’

Bar Council has imposed various restrictions on the practice of law in India including restrictions on advertisement of legal services by lawyers. The practice of law is treated as a noble profession in India, but the foreign law firms are treating it as a trade or business and a ‘money spinner’. The Association has annexed the pages from the websites of the foreign law firms and newspaper clippings about these foreign law firms claiming to have an India practice. It is alleged that these instances tantamount to ‘advertisement’ of legal services by the foreign law firms in India.

Suggestions on Reciprocity

The writ petition also gives a host of suggestions on reciprocity. It suggests that if foreign law firms are allowed to ‘exploit’ 5% of the Indian legal market, then Indian lawyers should be allowed to exploit 5% of the respective legal market. The United States legal market is estimated at $300 billion (Rs. 1,50,000 crore) and the Indian Legal market as per RSG Consulting is estimated at $800 million (Rs. 3,200 crore). This may not be practical, as questions such as – What is the size of the Indian legal market that is being ‘exploited’ by these foreign law firms? Do Indian corporations need foreign law firms? Since most law firms or lawyers are tight lipped about their revenues and fees, fixing these percentages seem far-fetched.

ARL Sundaresan, Senior Advocate is arguing on behalf of the Association. ARL Sundaresan is the son of former Supreme Court Judge AR Lakshmanan. The case came up before Chief Justice HL Gokhale and V Dhanapalan who have issued notices to all the respondents. The matter is scheduled to come up for hearing on April 8, 2010.

It will be interesting to see the defense of these foreign law firms especially on issue of immigration law violations and the Indian government’s stand on reciprocity. The Bar Council has been vocal against the entry of foreign law firms, while the Law Minister has always claimed that the entry will only be after consulting all necessary stakeholders. Several law firms including Linklaters declined to comment at this stage.

Reciprocal or one-sided – the disputed question.

The whole controversy with foreign law firms establishing presence in India is an issue I have been hearing since the time I was in my college as an undergrad almost 14 years ago. The issue has never been resolved till date. Sooner or later I would have to write something on this issue at some point of time as I am a lawyer from India working in UK.

This issue, I think I ought to comment on this at some point. I write this piece further to an article that came in the last issue of law gazette. My colleague showed me the article – the latest filing of a writ by a group of lawyers in Tamil Nadu against foreign lawfirms. He asked me the question which makes me most uncomfortable these days. “As an Indian lawyer in UK, what is your view on foreign lawyers practising in India?” I hate to answer this question, let alone think about it. And in the last two years my opinion has changed three times –from neutral to strongly opposed in foreign law firms opening the office to supportive one.