The gloves come off as foreign lawyers face a legal battle in Chennai

Foreign lawyers who thought the worst of the “quit India” campaign against them was over were in for a surprise last month. A young lawyer from south India filed a writ against 30 international law firms and a legal process outsourcing (LPO) firm alleging they were practising law in the country.

This writ petition of 18 March to the Madras High Court comes just as the controversy surrounding the Lawyers Collective case against foreign firms Ashurst, White & Case and Chadbourne & Parke has died down. In the petition a Bangalore University graduate and advocate with the Bar Council of Tamil Nadu, 30-year-old AK Balaji, stresses the need for the Indian courts to clamp down on “foreign law firms or foreign lawyers who are illegally practising the profession of law in India”. Resurrecting the movement against foreign law firms he urges the court to “prohibit them from having any legal practice either on the litigation side or in the field of non-litigation and commercial transactions in any manner within the territory of India”.

This is not the first time Balaji has alerted authorities to apparent contraventions of the Advocates Act, 1961. On 18 January 2010 the Association of Indian Lawyers, of which Balaji is a member, took their case to the Reserve Bank of India (RBI), the Bar Council of India, the Bar Council of Tamil Nadu and a number of government bodies including the law, finance and income tax departments. In the latest petition, Balaji alleges that the authorities failed to take appropriate action against the violating firms, labelling them “mute spectators”. He further states that the absence of an order restraining foreign law firms from practising in India will result in “grave prejudice an irreparable loss and injury” to Indian legal professionals.

“Many of AK Balaji’s claims, one of them being that Indian lawyers face discriminatory rules across various jurisdictions, are questionable or at least require qualification,” argues Rajiv Luthra, managing partner of Luthra & Luthra, saying that liberalization is an issue that requires dialogue and careful consideration. “With all due respect, I do not believe these issues can be fairly resolved by seeking relief under a writ petition,” he adds.

Rajiv Luthra Managing Partner Luthra & Luthra

Obeying the rule of law

According to the Advocates Act, lawyers are only permitted to practise law in India if they have obtained a law degree from a university in India, or an overseas educational institution recognized by the Bar Council of India. Technically, the “practise of law” refers not just to Indian law, but rather law in general. This suggests that any advice rendered by foreign lawyers in India, even that pertaining to non-Indian law, would be a violation of the act.

Interpretations of the act’s provisions remain varied. “As a starting point, I do not think there is anything fundamentally unfair with restricting the right to practise to locally qualified lawyers,” says Luthra. “It gives an opportunity to the professional pool to grow domestically.”

Others believe that the term “practise of law” is ambiguous. “In my view this does not include, for example, a US securities lawyer flying into India and working alongside Indian law firms advising the Indian government on an initial public offering,” notes Richard Gubbins, senior corporate partner and head of the India group at Ashurst. “This is precisely what we have done in advising on the IPOs of Rural Electrification Corporation and Oil India, and we advised on these deals at the invitation of those Indian law firms and the government-owned enterprises concerned who sought our help.”

In December 2009, the Bombay High Court considered the legality of licences granted by the RBI to Ashurst, White & Case and Chadbourne & Parke in the mid 1990s in Lawyers Collective v Bar Council of India. The licences, which were granted under section 29 of the Foreign Exchange Regulation Act, 1973, permitted the firms to establish liaison offices in the country. The petitioner, Lawyers Collective, a group formed to promote social causes, opposed the licences arguing that the Advocates Act governed the practise of law – even for non-litigious work. As the three foreign law firms were not licensed to practice law in India, Lawyers Collective contended that the RBI licences contravened the act. It also argued that under the terms of the act, “practise of law” included both litigation and transactional work, and did not simply apply to those authorized to appear in court. A two-judge bench consisting of Chief Justice Swatanter Kumar and Justice JP Devadhar ruled in favour of Lawyers Collective and held that the RBI licences were unjustified. Their ruling upheld an interim decision by Bombay High Court in 1995, after which no new licences were issued. White & Case and Chadbourne & Parke closed their India offices after the 1995 decision and UK-based Ashurst, after 15 years in Delhi, shut its premises following the December ruling.

Despite closing its doors, Ashurst and White & Case continue to be accused of illegally practising law by the Association of Indian Lawyers. The firms mentioned in Balaji’s petition are Rouse; Ashurst; Kelley Drye & Warren C/O Wakhariya & Wakhariya; Kennedys C/O Tuli & Co; DeHeng Law Office; White & Case; Linklaters; Freshfields Bruckhaus Deringer; Allen & Overy; Clifford Chance; Wilmer Hale; Shearman & Sterling; Herbert Smith; Slaughter and May; Hogan & Hartson; Davis Polk & Wardwell; Eversheds; Akin Gump Strauss Hauer & Feld; Paul Weiss Rifkind Wharton & Garrison; Norton Rose; Pillsbury Winthrop Shaw Pittman; Wilson Sonsini Goodrich Rosati; Arnold & Porter; Covington & Burling; Perkins Coie; Loyens & Loeff; Freehills; Clayton Utz; Mayer Brown; Clyde & Co; and Bird & Bird. Integreon is the only LPO named in the petition.

However, the writ petition is yet to be accepted by the court. And while notices have been issued to the Bar Council of India and the Bar Council of Tamil Nadu, the law firms and LPO named in the case are yet to receive notices.

Pleading innocence

Many of the foreign law firms accused of illegal activities in India appear untroubled by the allegations against them and have little intention to rethink their strategies in the region. “We’re very confident we haven’t done anything that’s outside the Advocates Act or Bar Council regulations,” says Simon Hall, partner at the English magic circle firm Slaughter and May.

Another UK law firm, Rouse, has offices in Gurgaon, Mumbai and Chennai, but clearly states on its website that these offices do not give legal advice. The firm openly admits that it works closely with the Indian IP boutique Ranjan Narula Associates, but is quick to point out that its Indian offices are strictly for investigative work. “The rest of our India team,” the website says, “which includes lawyers qualified in India, is based in our Dubai office and provides consultancy services in relation to IP protection, exploitation and enforcement from there.”

Rupert Ross-Macdonald, chief executive at Rouse, says he is unsurprised by the proceedings following the decision in favour of the Lawyers Collective in December 2009. However, he maintains that the firm has done nothing to flout Indian regulations. “Rouse is an international intellectual property consultancy and does not practise law in India,” says Ross-Macdonald without hesitation. “Within India, Rouse’s operations have been restricted to market research and investigation services, which support the legal IP work handled by local Indian firms for our clients.”

Ranjan Narula, managing partner at Ranjan Narula Associates, adds, “We are not involved in these proceedings. Rouse is a client of ours and so are many other firms based overseas.”

Firms such as Bird & Bird, Herbert Smith, Allen & Overy, French firm Loyens & Loeff and Australian firm Freehills declined to comment to India Business Law Journal. Sumeet Kachwaha, managing partner at Kachwaha & Partners, is advising one of the accused UK-based law firms.

Gubbins, meanwhile, says Ashurst is assessing the situation, but jokes that India’s lengthy court proceedings will probably see this petition drag on as long as the Lawyers Collective case. “We are obviously taking this seriously in the same way as we treated the petition which was brought against us and others in Bombay High Court,” he says, “but that took 14 years to reach a conclusion!”

Interestingly, a number of international law firms with significant India practices were not named in the petition. Firms such as Lovells, Milbank Tweed Hadley & McCloy, Reed Smith, Skadden, Dorsey & Whitney, Cleary Gottlieb Steen & Hamilton, Jones Day, Berwin Leighton Paisner and Nabarro, among others, all escaped a mention in the petition.

The inclusion of LPO firm Integreon has baffled many observers. Balaji suggests that the company is an international law firm disguised as an LPO and that its activities should be “blacklisted”. Mark Ross, vice-president of legal services at Integreon, believes charges against the firm have been driven by its success in the market. “We believe that Integreon’s inclusion in the writ is without merit,” says Ross, explaining that the LPO does not practise law in any jurisdiction. Rather, he says, the company provides “legal support services to US and UK law firms and corporations to assist them in the delivery of legal services in the US and UK”. The firm employs over 1,200 people in India, in four delivery centres in Mumbai, Noida and Gurgaon, but delivers over half of its LPO services from outside of India.

Ross notes that although the firm is convinced it has complied with Indian regulations, “we are prepared to shift our Indian LPO operations to our other LPO locations if the Indian authorities deemed that was necessary.” Having said that he adds, “the advice that we have received from our external counsel in India reinforces our own internal view that LPO is a legitimate and legal business in India”.

Mark Ross Vice-President of Legal Services Integreon

Ulterior motives

While Balaji seeks to expel foreign lawyers from India, the underlying theme of his petition emphasizes the need for reciprocity with respect to allowing Indian lawyers to practise law in foreign jurisdictions. Filed in the name of public interest, the petition, despite accusing Australian and US firms as well as a Chinese one, specifically attacks professional arrangements in the UK. It says, “the procedure for Indian Lawyers to practise in UK is far more cumbersome as compared to the easy accessibility of the Indian legal market to the law firms of UK”.

Balaji highlights the high costs associated with the procedure, difficulties in obtaining immigration clearances and work permits, the hassle of visa requirements, work experience requirements and the completion of extensive examinations as key issues preventing “free and unhindered access” to enter the UK and practise law in the country. He calls on the UK and Indian governments to discuss fair reciprocal arrangements and encourages consultations with the Law Society and Bar Council of India.

Expressing his personal opinion, a lawyer from a Mumbai firm who wished to remain anonymous said Balaji’s recommendations are fair. “Section 24 of the Advocates Act, 1961, entitles non-citizens to practise law in India,” he says. “The only condition is that the country where the foreign national is from allows citizens of India to practise law in that other country.”

A major grievance for most lawyers appears to be the lack of protection afforded by the Bar Council to India’s lawyers. They argue that Indians are not allowed to practise law in most jurisdictions without doing further courses and tests, such as the qualified lawyers transfer test (QLTT) in the UK or the state bar examinations in the US. In contrast, foreign lawyers wanting to enrol as advocates in India need do no such qualifying examinations or programmes as long as they have a law degree from an Indian university. According to the act, however, in the absence of reciprocal arrangements, foreign lawyers cannot legally practise law in India. Only advocates who are Indian citizens are permitted to practise in the country. “In my view, it is totally unjust that one has to be a citizen of India to practice law in India,” says Bhumesh Verma, a partner at Paras Kuhad Associates. “The Bar Council of India under section 7(1) of the Advocates Act, 1961, should exercise its powers and frame guidelines for the foreign lawyers looking forward to practise in India,” he says.

Bhumesh Verma Partner Paras Kuhad Associates

Despite his support of protectionist policies to encourage and augment local talent, Luthra echoes Verma’s view and admits: “In an ever globalizing world, changing times demand a change in local rules.”

Although the voices of discontent hope to banish foreign law firms from India, foreign lawyers themselves appear cool, calm and collected about the case. Some Indian lawyers, however, worry that Balaji’s petition will leave foreign law firms with a bitter taste in their mouths at a time when India Inc. increasingly requires the assistance of foreign counsel to achieve its global ambitions. “In the interest of clients as well as the global legal community,” says Luthra, “I hope that Madras High Court does not extend the import of ‘practise of law in India’ beyond its natural scope to include temporary or occasional visits for briefings, client meetings or assistance with specific issues requiring a foreign law expert.”