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Entry of foreign law firms into India will enhance competition, trigger consolidation

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Entry of foreign law firms into India will enhance competition, trigger consolidation

The Bar Council of India (BCI) has allowed the entry of foreign law firms — with certain riders – in India; lawyers are of the view that the move will lead to consolidation especially in the segment catering to cross-border clientele while Indian firms with domestic or mid-market client will largely remain unaffected, at least for the time being.

March 15 will always be remembered as a landmark date for the Indian legal industry as the Bar Council of India (BCI), the apex body regulating legal practice in the country, allowed the entry of foreign law firms in India. 

Though the entry comes with riders in terms of reciprocity and the areas of operations, legal experts are of the view that the move will lead to increased competition and also trigger consolidation especially among law firms that cater to cross-border clientele.

“Opening up of law practice in India to foreign lawyers will create opportunities for tie-ups and partnerships. It is likely to pave the way for potential consolidation, especially for firms dealing in the cross-border M&A practice in particular,” says Vinayak Burman, Founder & Managing Partner, Vertices Partners. 

“This may not immediately impact firms advising mostly Indian clients or who are in the mid-market space. But, over a period of time this would create a significant impact as market matures and the ecosystem on a broad base becomes large enough to require benefits that international firms can bring as well as afford the price points,” he adds.

Lawyers further believe that the scope for foreign law firms is immense in India as an increasing number of Indian companies look overseas for expansion and, at the same time, global companies that are facing demand saturation in most other markets look at increasing their presence in India. 

This, they say, will also lead to innovation and perhaps quick settlement by way or arbitration as well. 

“Increased competition from foreign firms could lead to more specialised and innovative legal services, improved access to justice, and lower costs for clients,” says Sumit Agrawal, Founder, Regstreet Law Advisors and a former SEBI Officer 

“While there are potential risks and challenges associated with opening up the legal profession, such as the dominance of foreign firms, these can be mitigated. Overall, the benefits of opening up the legal profession far outweigh the risks and could lead to a more vibrant and competitive legal industry in India,” adds Agrawal, a former legal officer of the Securities and Exchange Board of India (Sebi). 

In a similar context, Kundan Shahi, CEO, LegalPay, a litigation financing start-up, says that the move by BCI will “boost trade and commerce from India with the help of cross border transactions and globalisation of legal and arbitration practice in India.”

“India is a great market for legal practice and such a move will go a long way in helping the legal profession grow in India. This will also help in increasing opportunities for Indian lawyers, and enabling them to understand, learn and collaborate with the best of talent across the globe. LegalPay has been working with various foreign law firms/lawyers and businesses with respect to financing their legal claims in different parts of the world,” says Shahi. 

Incidentally, the entry of foreign law firms has been a hotly debated issue within the courts of law over the years.  

In 2018, the Supreme Court had upheld earlier orders passed by Madras High Court and the Bombay High Court and stated that “foreign law firms/companies or foreign lawyers cannot practice profession of law in India either in the litigation or in non-litigation side”. 

The apex court had, however, added that “foreign lawyers cannot be debarred from coming to India to conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration.” 

The latest move by the Bar Council of India will pave the way for foreign law firms and lawyers to advise clients on international legal issues and practice in areas such as transactions, joint ventures (JVs), mergers & acquisitions (M&As), intellectual property (IP), contract drafting and all non-contentious matters.