If India opens its legal market, what entry strategies will foreign law firms pursue? George W Russell reports from Bangalore

India’s stringent regulations continue to prohibit international law firms from practising in the country. However, a flurry of recent activity suggests a number of leading legal players are positioning themselves for a change in existing policies.

Foreign firms have a number of reasons for wanting to establish physical offices in India, including access to clients, proximity to stakeholders such as banks and regulators, and holding down costs. “The current system involves long flights, which aren’t good for our carbon footprint or for the cost to clients,” says Allen & Overy partner Alex Pease, who, until recently, chaired the firm’s India practice and represented the legal profession on the India-UK Joint Economic Trade Committee.

Alex Pease Partner Allen & Overy

Until they are allowed to move in, foreign firms will continue to tie up with local Indian firms, establish back-office functions in India, or form outsourcing units to handle international work. A number of such links have been forged recently, such as the “best friends” relationship announced in January by Clifford Chance and AZB & Partners. The move follows similar tie-ups between Allen & Overy and Trilegal, and Linklaters and Talwar Thakore & Associates.

Pioneering moves

For international law firms, having some physical presence in India is not new: Ashurst has a liaison office in Delhi that dates back to the mid-1990s. Allen & Overy has outsourced some non-legal back-office functions to Chennai-based Office Tiger since 2003. Clifford Chance moved its IT and accounting units to Gurgaon, near Delhi, in 2007, hoping to save £30 million (US$40 million) by 2010. Linklaters and Eversheds also outsource functions to India.

However, there’s a big difference between having a few office staff and an actual law practice in India. Washington firm Howrey took the idea a step further in 2008 by announcing that it would outsource document management – including litigation, intellectual property and international arbitration documentation – to a new office in Pune staffed by Indian paralegals and law graduates. However, the firm appears to have put the idea on hold for now. “Howrey does not currently have an operation in India,” concedes Amit Saluja, the firm’s deputy general counsel.

The most extreme example is probably New York media law firm SmithDehn, which has 40 Indian lawyers at an outsourcing subsidiary, SDD Global Solutions, in Mysore. SmithDehn has a roster of film and television clients such as HBO, Sony Pictures and British actor Sacha Baron Cohen. SDD Global undertakes legal research, drafts contracts, pleadings and memoranda, and works on commercial transactions. The company describes its operation as “a step beyond legal process outsourcing”.

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