India is one of the strong strategic and business alliance partner for many countries in the world. Promising business ties of India with other nations, transformation of Indian entities into global MNCs and foreign entities and investors interest to collaborate and work with Indian entities all paved the way for the rise of the nation to global level.
As a result, central government and Indian based MNCs are being part of multiple global business and transaction deals day in and day out. However, one thing is missing in India for business partners and investors to seek expertise of foreign lawyers on matters of global significance which requires expertise of foreign lawyers as well to get the ball rolling.
In a move to provide business partners and investors the flexibility to engage or seek advise of foreign lawyers on foreign and international matters - The Bar Council of India (BCI) has introduced a new set of rules permitting foreign lawyers to work on transactional and arbitration matters subject to prescribed rules and regulations. This move could have its own implications on different set of stakeholders involved.
Impact on Indian professionals:
First from professionally perspective, these new rules will definitely open new avenues for Indian lawyers and students to get international exposure and to work with foreign lawyers on variety of matters covered under practices opened to foreign lawyers. Accordingly, lawyers predominantly work in the areas of transaction and arbitration matters could get a significant exposure to work directly in tandem with foreign lawyers.
This opportunity to work closely with foreign lawyers will have Indian Lawyers and students to up their legal and professional skills to the next level. Currently, corporate and transactional lawyers are one of highest paid segment of legal profession. The entry of foreign law firms and lawyers could see further jump in the pay scales of corporate and transactional lawyers. However, it will be challenging for Indian law firms to retain the top talent in this segment. However, negative aspect of this could be competitive pressure to perform well on par with foreign counterparts could daunt professional prospects of Indian professionals.
Most danger risk of this rule could be that Indian lawyers pockets will be filled with coffers only to the extent foreign lawyers or law firms could sustain their business in India - If foreign law firms are not unable to sustain their business model in India then the first scape goat could be Indian lawyers who got recruited on a rush while incorporation of foreign law firms with hefty packages and the so recruited Indian Lawyers could be victims to take the first bait in case of business of foreign law firms in India goes down.
Indian lawyers has to be mindful of their choices as after entering into the new business model ring as long as business is flourishing monetary scale will go up the movement business is collapsed there may be a dead end for lawyers even if they manage to get a job with Indian law firms, then may have to get ready to receive a significant pay cut.
Since litigation is not opened to foreign lawyers and law firms, and litigation services covers significant part of court practice in India courts and Indian judicial system, the impact could be nothing or minimal on litigation side of judiciary. Further majority of legal professionals in India are dependent on litigation practice, these new rules will not going to effect lawyers in the litigation practice and fraternity as a whole, except to some extent in transactional or arbitration work that too only with matters of high stake as not all clients could afford to engage foreign lawyers for their transactional work and arbitration works.
Impact on Indian law firms:
New rules to permit foreign law firms and lawyers to practice in India may open new avenues for Indian law firms to forge new alliances with foreign law firms to scale up their global operations. Currently, many Indian law firms have their own collaboration with foreign law firms in different countries to cater the legal and business needs of their clients. New rules will significantly benefit Indian law firms who are ready to embrace the new changes and make required adjustments to their strategic alliance with global partners will emerge as a big winner.
Downside of these new rules could be that Indian law firms could no longer have the referrals from foreign counterparties who are until now are dependent on Indian law firms to cater needs of their clients in Indian market as foreign law firms now are eligible to handle their transactional or arbitration work in India on their own subject to applicable rules and regulations.
No more referrals mean a dent to earnings of Indian law firms from transactional or arbitration work outsourced or referred to them unless Indian law firms collaborate with foreign law firms and embrace the shift in the legal paradigm in transactional work space.
Another big challenge for Indian law firms will be retention of top legal talent if foreign law firms start their legal operations on Indian soil they do need top class attorneys to flourish their operations in India. To run their legal operations in India, there is a good chance foreign lawyers could lure top legal talent from top Indian law firms in corporate law practice area this could force Indian law firms either to ready get to lose some top talent or up their packages to meet the stiff competition posed by foreign law firms pay scales.
Impact on Clients:
Certainly, the clients in the corporate sector will be the big gainers of these new rules permitting foreign law firms and lawyers to practice in India. Especially, foreign investors will have more leverage to engage foreign lawyers on certain typical subject matters covering foreign or international laws who could serve the clients well as engagement of foreign lawyers with more exposure to issues covered under foreign or international laws will enable foreign investors to ensure they are in compliance with Indian laws on one hand at the same time they are also in compliance with applicable foreign and international laws.
If this move worked out as predicted, there could be more inflow of investment from foreign investors which could mean more work for Indian lawyers and foreign counterparties as well. Especially, Indian MNCs with global operations and foreign investors will have more leverage and options to engage services of foreign law firms and lawyers. However, this could serve against small and medium entities and startups who could not afford to engage such foreign law firms and lawyers as a result their legal positions could be compromised in one way or other in negotiating, entering and executing contracts and due diligence process.
Some measures may be required to ensure legal, business and economic interests of small and medium players are not compromised in the league of big players (giant MNCs and foreign lawyers and law firms). Further, it could also force such small and medium firms to shoot their legal budget many folds to engage experienced legal professionals to match the force of legal expertise the counterparties bring to the table.
Impact on central government:
One big advantage to central government is that if central government plays its cards right and create a friendly and positive environment to foreign players to operate in India, then it may pave way for foreign law firms (especially big brands with turn over in million or billion dollars) to launch and pursue successful business operations in India, the more successful the business of foreign law firms the more revenue to government coffers and a chance for India to cement its place on international platform as a global player.
However, if appropriate measures are not taken (i) to ensure right administration system is setup to monitor the progress of implementation of these rules; and (ii) to make a sincere efforts on part of Indian authorities to make foreign law firms feel welcomed to India, then (a) the whole excitement these rules brought will go up in the air, (b) foreign law firms instead of getting excited to finally start their operation in India may feel operations in India a burden instead of an opportunity, and (c) such an image of burden could do no good in international business space and could say an opportunity to show the world as a global player in legal fraternity is lost.
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