Liberalising Legal Services in India through the GATS

A Preliminary Analysis of Issues at Stake

EQUATIONS
July 2006

Legal Services is one of the services that can be opened to trade under the General Agreement on Trade in Services
(GATS). There is continuing apprehension that with the World Trade Organisation’s (WTO) commitments coming into
force at a future date (earlier slated for end 2006), the Government of India will be under obligation to liberalise legal
services, thereby allowing foreign law firms to practice in India. So far, India has not included legal services in its
schedule of commitments under the (GATS). However, this situation might change in the near future and analysing
its implications is crucial. This paper analyses the role of legal services in a globalised economy, the current Indian
legal services sector, domestic regulation and legal services in India, domestic regulations in the countries that are
targeting the Indian market, the liberalisation debate in India, public interest argument of the debate, the current
state of global negotiations on trade in legal services, and the paper concludes with policy recommendations.

Introduction
The issue of opening up of the legal services regime has been a point of considerable debate, confusion and concern
for quite some time now in India. The debate commenced in 1999 when the Law Commission of India, under the
leadership of the then Law Minister Mr. Ram Jethmelani and the Bar Council of India prepared a review paper
suggesting a series of radical measures and accompanying amendments of the Advocates Act to introduce a legal
consultancy regime for foreign law firms in India. The debate has once again gained momentum since last year.
There is continuing apprehension that with the World Trade Organisation’s (WTO) commitments coming into force at
a future date (earlier slated for end 2006), the Government of India will be under obligation to liberalise legal
services, thereby allowing foreign law firms to practice in India. There is no statutory obligation under any
international treaty or convention, which imposes an obligation on the country to open-up, its sectors. Under the
WTO, with a view to achieving progressively higher levels of liberalisation, member states are expected to enter into
successive rounds of negotiations to broaden the range of sectors for investment. However, the WTO is a political
process as well where pressure and pull tactics sometimes rule more than economic considerations. For India, the
legal services sector is such an example with the government being under immense pressure from the developed
countries to do away with most restrictions regarding the entry of foreign law firms in the country. So far, India has
not included legal services in its schedule of commitments under the General Agreement on Trade in Services (GATS).
Therefore the domestic regulations and restrictions in relation to legal services still remain. But this situation might
change in the near future and analysing its implications is crucial.

India tops the list of developing countries being pushed to open their legal services sectors under the GATS. A
burgeoning corporate business sector, dominated by multinational corporations (MNCs) has made the country a
target for foreign law firms seeking to establish base on Indian soil. The implications of such a move are now being
seriously considered by domestic interest groups including small and medium law firms, individual litigating lawyers
and institutions like the Bar Council of India.

The question then arises, is the country ready to open up the legal services sector? If India, in future, decides to open
up the sector, will the available domestic legal regime protect the interest of Indian law firms? Is GATS the right
mode for seeking such liberalisation? Which restrictions would be interpreted, as constituting unnecessary barriers to
trade and will the process require significant amendment to domestic legislation? And finally, how will this stand to
impact the public at large and the country’s legal system itself. The dilemma is how to find the right equilibrium
between consumer protection, public interest and improved level of efficiency in service delivery. An understanding of
these aspects requires collating facts regarding present domestic regulations and analyzing them in the context of
globalisation, liberalisation and privatisation drives in the country and growing external pressures from interested
parties through international institutions like the WTO.

Towards seeking some answers to the above questions, this research study presents a preliminary understanding of
the different issues at stake.

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The Role of Legal Services in a Globalised Economy
The debate for liberalising trade in legal services is not a new one. Nonetheless there are factors of relevance that
have emerged in the context of an increasingly globalised world that have propelled the discussion forward in recent
years. The prospect of expanding businesses and associated legal transactions have led to growing international
pressure on nations seeking to promote business interests, to open-up legal services sector for foreign firms.
Resultantly, legal services is one of the fastest growing business sectors in the world today1, making its liberalisation
a one-point agenda for some of the world’s leading law firms2 One of the modes being considered to achieve this is
the World Trade Organisation’s GATS by influencing countries to commit to opening up their legal services3 sector
under the GATS.

The WTO background note on legal services4, a document issued by the Secretariat to facilitate the discussion on the
sector, admits that trade in legal services has grown as a result of internationalisation of the economy. The paper
goes on to elucidate that the demand for legal expertise in fields of international law, cross border mergers and
acquisitions, intellectual property rights, competition law and other aspects of business law comes from businesses
and organisations involved in transnational transactions. This then places a demand on law firms catering to the
requirements of their corporate clientele to be able to provide legal advice and expertise in other countries as well. A
naturally arising question is why corporations operating in foreign countries cannot depend on locally available service
providers? The researchers respond by arguing that the demand for lawyers to be involved in foreign jurisdiction
often comes from their corporate clients. Institutional actors like MNCs, who do business across borders, choose to
rely on legal service providers/ services of professionals who are already familiar with the firm’s business and
according to them guarantee high quality service5. The pith of the argument emerges to be that liberalisation of legal
services is primarily being sought to support the burgeoning activities of transnational corporations An important
caveat deserves mention – there is no statistical or empirical evidence to support the fact that if foreign law firms are
given rights of establishment in domestic markets, their primary clientele will be MNCs. These firms could as well
expand their business by providing legal advice to domestic corporate houses and raises questions against the WTO’s
argument of ostensibly opening up the sector to support activities of transnational corporations. But the WTO itself
acknowledges that the argument holds the other way round as well - where the establishment of foreign lawyers is
perceived as a sign of stability, security and predictability and can thus act as a catalyst for ushering in foreign
investment in other sectors. Therefore – depending on which direction it is viewed from - opening up trade in legal
services can be both a cause for (by attracting foreign investment) and effect of (by the increasing spread of cross
border business transactions) increasing internationalisation of domestic economies.

The above argument in no way disguises the aggressive pursuit of liberalisation by many dominant international law
firms (and consequently their home countries) having strong export interests in the sector6. Their important areas of
work include corporate restructuring, cross border mergers and acquisitions, privatisation, intellectual property rights
and competition law – all of significance to transnational corporations. In fact, strong views have been expressed on
the need to de-link the legal services liberalisation debate from its apparent role as facilitator of a larger globalisation
agenda and analyse its pros and cons independently7. In a discussion on legal services and attitude towards
globalisation, one can assert that the role of global law firms as facilitators of globalisation should be carefully
differentiated from that of their clients – who are the main drivers of this globalised economy. One could further add
that a failure to make this distinction often results in disguising the protectionist intent of opposition to liberalising the
sector in an anti-globalisation garb8. Given this, there is little doubt that major law firms are themselves in search for
avenues to establish their foothold in non-traditional markets i.e. developing countries despite the fact that few are
willing to openly state so.

With the onset of the WTO, this task has been simplified as governments are advocating the cause of liberalisation
(on behalf of their domestic firms) with the GATS being an instrument to further this process. The United Kingdom
(UK) Department of Constitutional Affairs in 2002 had stated one of its targets as – ‘securing the removal of
regulatory barriers to the international trade in legal services within the UK, the European Union and further afield,
the latter through active participation in the context of the General Agreement on Trade in Services negotiations
taking place within the World Trade Organisation (WTO)9 .The pre-eminence of a market-access argument in the
debate on opening up legal services through the GATS is evident even when considers the proposals tabled by
Members in the new round of negotiations. Consider Australia (an active proponent of liberalising trade in legal
services and has tabled 5 proposals in the new round), whose entire negotiating proposal for legal services10 is hinged
on eliminating restrictions that its exporters face in entering foreign markets11.

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This position extends to larger constituencies like the Organisation for Economic Cooperation and Development
(OECD). It is a fact that majority of the world’s MNCs are concentrated in OECD countries, the world’s 20 leading law
firms all belong to OECD countries; OECD countries – especially the United States of America (US) and European
Union (EU) are not just the major exporters but also high importers of legal services; and moreover intra-OECD trade
in legal services accounts for a substantial portion of cross-border trade in the sector12. In its discourse on why
opening up international trade in the sector is of critical importance, the OECD vociferously argues that although
developing countries have little export interest in the sector they will stand to benefit from liberalisation through
greater investment gains, knowledge assimilation and exchange of expertise13.

The Indian Legal Services Sector: An Overview

Any assessment of the legal services market in India must necessarily begin with the caveat that reliable statistical
data on the size, composition or even growth rates of this sector are virtually non-existent14. Having said this, it is
widely accepted that the legal services sector – especially corporate legal services – has grown by leaps and bounds
in the last 15 years. The legal market boom in the country is undoubtedly attributable to the liberalisation of the
economy and relaxation of FDI norms in 1991. Legal activities in project finance, intellectual property rights,
competition law, corporate taxation, infra-structure contracts, investment laws, were almost unknown before 1991-92
when the then Congress Government in the Centre decided to open-up the economy to foreign investment. There
were not more than 7-8 leading law firms in 1991-92 in India to deal with conventional corporate legal activities. In
the last 10-15 years, with growth in international trade and investment, about a hundred new law firms have come
into existence in different metropolises and large cities of the country. It naturally means that the need for
professional services in the corporate sector in the country has increased tremendously since 1991.15 Globalisation
has necessarily expanded the internal and external demand for legal professional services.16

Therefore, even before the GATS appeared on the scene, a rapidly opening up economy placed new demands on the
domestic legal profession for advise, expertise and practise on important legal matters for corporate India. And the
general consensus is that domestic firms have risen to the occasion. Today India boasts of a burgeoning legal market
with innumerable firms offering high quality services in banking and finance, company and corporate transactions,
company and anti-trust, corporate real estate, dispute resolution, equity capital markets, intellectual property, IT and
e-commerce, life-sciences, mergers and acquisitions, taxation, media and telecommunication fields. The general
opinion is that there is no shortage of quality law firms in India. As the spectre of foreign entry into the sector looms
large, the larger full service firms are vying for dominance in the market.

Although sparse information is available on the size of top law firms or the range of their profits (on account of the
Bar Council of India’s rule banning law from advertising or marketing, as dealt with in the chapter on Domestic
Regulation), few indicators give a reasonable picture of the money behind India’s corporate law sector. For instance,
one source indicates that with the onset of an hourly-billing norm for corporate and commercial transactions, billing
charges in top firms in Mumbai range from USD 75-100 for an assistant and as much as USD 500 for a top partner.
Where advice or representation of senior counsel is sought, hourly-billing charges would be added to the final bill and
are sometimes as high as USD 400 for a briefing and USD 1000 (plus expenses) for a hearing17.

The primary reasons that emerge as to why the Indian legal market is being targeted by overseas firms and lawyers
are:
• A booming economy with increasing presence of MNCs could be the chief reason bringing with it a demand for
firms with international expertise in legal matters such as corporate transactions and mergers and
acquisitions
• The high professional abilities of Indian lawyers – Indian lawyers have made a mark for themselves in the
international arena and foreign firms which seek to establish presence here are increasingly confident of
recruiting high-quality professionals who can boost the firm’s work in India and understand the nuances of
the legal system.
• Cheap Workforce: One of the primary reasons for the foreign firms to expand their business base in India is
the availability of qualified, capable, high quality English speaking professionals at a much lower rate.

Foreign Law Firms in India: A Subtle Presence

Currently, although India has not officially opened up the legal sector to foreign firms, many have a subtle, yet
conspicuous presence in the Indian market either through liaison offices or other informal means. An analysis of this
is important to understand precisely what activities are undertaken currently and what potential opportunities
liberalising the sector brings in.

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 • Liaison Offices: Ashurst is the only UK law firm to have a liaison office in New Delhi, established in 1994.
Since the firm was involved in a case filed by the Lawyers Collective before the Bombay High Court in 1997
on the issue of foreign law firms practising in India unlawfully/ illegally/ without proper licence, the firm is
very careful to define its current presence in the country as for purely liaison reasons. Their website states –
‘Ashurst has developed good contacts and relationships with the legal, accountancy, banking, finance and
business communities and governmental and regulatory agencies in India. Accordingly, the New Delhi liaison
office is able to provide our other offices with an extensive range of valuable information and knowledge of
the Indian scene.18’ While the firm makes out their role to be as an information gathering and disseminating
centre on developments in India, it does state that they ‘advise’ on mergers and acquisitions, commercial
agreements, joint ventures and so on. Such a descrption of activities is nebulous and does not give the reader
a fair idea of what exactly the liaison office does and more importantly – what it does not do.
• Informal ties with Indian law firms: no details are as yet available of what kind of ‘informal ties’ between
Indian firms and foreign law firms constitute. The Legal 500 directory cites two examples in India – Jones Day
with P&A Law Offices19 (New Delhi) and White & Case LLP with Mumbai’s India Law Services.
• Advisory work: A large number of foreign law firms and individual lawyers currently involve themselves in the
Indian legal market in advisory capacity. Mark Moseley, specialist with CMS Cameron McKenna’s in
restructuring electricity markets is currently advising the Karnataka State government on the state-owned
electricity distribution system while London-based Linklaters India Core Team is currently advising private
sponsors in relation to the development of the Bangalore International Airport – India’s first international
airport to be developed and financed by the private sector.
• Working out of regional offices: Several other foreign law firms interested in working in India but arrested by
the current FDI regime are operating through their regional offices in Singapore, Hong Kong and Dubai. Such
operations largely involve advising Indian firms on commercial and financial transaction, advising the
government on legal aspects of joint-venture initiatives or privatisation moves in infrastructure sectors like
power and transport.
• MOUs: Recently there has been a surge among Indian law firms to enter into Memorandum of Understandings
(MOUs) with foreign law firms. While several firms have referral relationships with their Indian counterparts,
others have entered into informal associations. A survey of these MOUs indicates that:
o Most foreign law firms are from the USA, UK and other major economies like Germany, Hong-Kong and
Singapore. These countries together are lobbying with WTO to create pressure on the Government of
India for liberalisation of this service sector. In this context reciprocity becomes an important factor in
how far liberalised the legal sectors in these countries are to allow practise by Indian firms and lawyers.
o In many instances, it is the central government and several state governments, which hire foreign law
firms for legal work and Indian corporations also rank in the list of clients for most of these law firms.

It is clear that despite a closed FDI regime for the sector, foreign law firms do have an impressive client list that
includes not just domestic corporate houses our governments as well and therefore have a certain sway over the
Indian legal market. The question then is why are foreign firms keen on establishing commercial presence through
the GATS despite such thriving cross border business with India?

No clear answers have emerged yet. However, few conjectures can be made towards explaining this persistent
demand:
• Cross-border trade in legal services is limited to providing advisory services and that firms interested in
representation and litigation in India would require commercial presence
• Commercial presence is essential for foreign firms keen on entering into formal contracts with Indian partners
or even takeovers, mergers and acquisitions
• Commercial presence would vastly improve market access of the firm into newer territories and garner more
clients

More in-depth research would be needed to validate the above conjectures but for the present, services lobbies
abroad don’t seem to want to let the matter rest. The observation by the United States Trade Representative
Agency’s Annual Report of India’s trade openness on legal services clearly gives glimpses of the reason behind the
increasing pressure on the India Government to open-up the sector. The Annual Report had the following to say –
‘The Indian Bar Council has imposed restrictions on the activities of foreign law firms in recent years that has sharply
curtailed US participation in the Indian legal services market.20’

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The Legal Services Outsourcing Boom: is the bubble going to burgeon or burst?
Legal outsourcing to India is an irreversible trend as keen observers of the Indian economy and firms abroad agree.
While the phenomenon is definitely part of the bigger outsourcing wave that the country has been experiencing for
sometime, the special focus on legal services and the rapidity of its growth in India are to be analysed21
As early as 2004, a boom in legal outsourcing to India had been predicted. A report published in the United States
(the Lou Dobbs Report (CNN)) in February 2004 predicted that 8-10% of all associates hired by large law firms in the
US would be offshore hires (as in India) by 201122. Further, a U.S. Department of Labour and Forrester Research
report projected the following shift of legal jobs to offshore sources:

Table 1: Projections of offshoring of legal jobs from the US to India

2000 1,793 offshore
2005 14,200
2010 34,673
2015 74,672

The report noted that offshore hires will take on roughly the same job profile as hires made within the US for as low
as 20% of the cost23. According to a recent industry estimate, India is slated to increase its share from the current 3-
4% to 6-7% in the 250 billion dollar global legal outsourcing market24. The ASSOCHAM report pegs the potential
income from the US alone at 3-4 billion USD in the coming five years. The employment arguments are strong as well.
A study by corporate research firm Valuenotes states that although legal services offshoring currently employs around
1800 people in India, it is estimated to reach 24,000 by 201025. Outsourcing opportunities and the sheer demand for
such talent in India has presented graduating lawyers with diverse options of employment and earning handsome
incomes.

The demand for offshoring legal services to India is driven by many factors:
• British Common Law system: India has a huge historical advantage as our legal system and training draws
heavily from the British common law system. This makes it much easier for our lawyers to provide advise and
support services to law firms and corporations in major developed countries like the US, Canada or the UK, all
of which also follow English common law. English as the medium of education and communication is also an
important advantage.
• Reduced costs: This stands as the biggest reason for the offshoring boom to India – significantly lower costs.
According to a survey, 86 per cent of corporations in the US revealed that what troubled them most is the
inability to budget for their legal expenses. This is because legal fees per hour ranges from $250 charged by a
fresher to $1,000 charged by a partner of a law firm. In comparison, firms in India can provide the same
services for approximately 50-75$ an hour26. Not surprisingly, most US corporations now acknowledge the
fact that outsourcing significant portions of their back office work to places like India can save them precious
time, money and energy27. Gradually, American law firms are discovering the worth of outsourcing work to
firms in Mumbai, Delhi, Bangalore and Hyderabad. Leading firms like Pangea3, LegalEase and Evalueserve are
employing a battery of lawyers in India. Law firms here are found eminently suitable in handling documents
pertaining to scrutiny of contracts, sale deeds, patent registration etc. Even in civil matters, lawyers can
execute divorce suits, property related litigation, write business contracts, prepare pleadings28.
• High Response time: this is another factor that has been a huge advantage for India and of particular
significance in the legal profession. Firms abroad have said that offshoring legal services helps them save on
precious time as not only is the response time of Indian professionals high and efficient but the difference in
time zones making it possible for data to be collected and researched overnight in India for a case in the US
in the morning29.

The emerging models of legal outsourcing to India takes the following forms:
• Captive vendors: Captives include dedicated centres of international law firms like Lexadigm, and in-house
legal departments of companies such as GE, Cisco, Oracle, DuPont. A new breed of law firms, being set up in
the US or UK with offshoring (a captive India office) as an integral part of their business model are now
visible, such as Intellevate and NewGalexy30. Estimates indicate that captives currently earn the most in the
Indian legal outsourcing scene.
• Third party vendors: Third party vendors consist of "niche" BPOs that focus on providing only legal services,
as well as multi-service BPOs that offer offshore legal services along with other services. Some of the niche

5
 players are IP PRO, Patent Metrix, Pangea3, Mindcrest and Quislex. Prominent BPO players include the likes of
Evalueserve, Datamatics, WNS and Manthan31.
• Joint ventures by US-based firms with firms in India for specific outsourcing components.

According to industry quotes and analysis, the main problems faced by the legal outsourcing industry in India are32:
• Over-reliance on the US market and moreover on known and established firms
• Data and document confidentiality requirements of foreign firms that might be jeopardised while outsourcing
• Demand by US firms of setting up base permanently in India

The last of the three requires attention as it goes to indicate the fear that exists among a certain portion of the
currently booming outsourcing industry that enabling foreign law firms to be established in India would take away the
share of the services pie they now enjoy through outsourcing. This is another perspective that requires consideration
in the larger debate on opening up the sector.

With regard to GATS, outsourcing in general falls under the category of Mode 1 – cross-border supply of services. In
recent years, it has come to be clearly established that India has a significant advantage in outsourcing of services on
account of its proficiency with English, significantly lower labour costs and talented young professionals. It has, at the
WTO, in conjunction with other developing countries, demanded developed countries to open their markets in Modes
1 and 4 so that this advantage can be benefited from, However, thus far, developed countries have not been
forthcoming in this respect and key services markets of the EU and the US continue to be highly protected33. India,
for its part, could choose to open up its legal services sector in Mode 1 but this is unlikely to affect the domestic
market significantly as the advantage lies within the country. The other important requirement that outsourcing firms
highlight is the increased need for regulation of the sector itself – a dire need to ensure that data confidentiality,
contract fulfilment and increased security are ensured. This is a clear area for the government to step in. However,
the bigger issue in relation to the debate on opening up the legal sector is that even if foreign corporations are able to
fulfill their legal services requirements through outsourcing and Indian legal and outsourcing firms are reaping the
benefits of their comparative advantage in this field, it is intriguing to find that foreign law firms still keen on setting
up permanent base in India.

Domestic Regulation and the Legal Profession in India

At present, according to the domestic policy regime, the preconditions to practise the legal profession34 in India are
the following:

Only natural persons who are citizens of India can provide the service only in individual capacity.35 However, a foreign
national may be allowed, provided an Indian national is permitted similar opportunity in that foreign national’s
country. This conditionality is referred to as the rule of reciprocity under international law. This condition of
citizenship is further supported by the fact that under the Constitution of India, only citizens of the country have the
fundamental right to freedom of trade, profession and occupation. 36. Moreover only natural persons, i.e., a human
being37 have the right to practise law under the present regulation. No artificial body including a body corporate can
undertake this responsibility.

The person must possess a Bachelors Degree in Law from any University (within or outside the territory of India),
which is recognised by the University Grants Commission and the Bar Council of India38.

According to Section 33 of the Advocates Act, advocates alone are entitled to practise- no person shall be entitled to
practise in any court or before any authority or person unless enrolled as an Advocate under this Act.39

According to Article 19 of the Indian Constitution, a law laying down professional or technical qualifications necessary
for practising any specific profession or carrying on any occupation, trade or business, which requires specialised
knowledge is not against fundamental rights to freedom of trade and occupation, provided such restrictions are
attached to safeguard the interest of the general public. It follows that the courts will have no power to decide if
technical or professional qualifications laid down by law in respect of any trade or business are reasonable or not.
However, in practice ‘counselling’ and ‘advice’ as professional activities have not been made the monopoly of the
professional right of advocates. Section 33 of the Advocates Act itself allows ‘any other law’ to authorize such
practice. Under Section 288 of the Income Tax Act, accounting professionals have been authorized to practise Tax law
in any court or before any authority in India.

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The Residency Requirement in the regulation imposes that the service provider must be commercially present in the
place where service is required within the jurisdiction of the country. This means that, the lawyer must be on the local
Rolls of Advocates or if registered elsewhere, have taken permission from the local State Bar Association where the
person is required to provide service.

The Service provider can either be of her/his own (sole proprietor) or be a partner of a partnership firm, where all
other partners are natural persons with professional qualification in law. No advocates in India can enter into a
partnership or any other arrangement with a non-advocate.40 Multidisciplinary partnerships are considered against
the essence of professional dignity.41

The Indian law firms can employ foreign lawyers (only natural persons) as employees or consultants only. However,
these lawyers cannot be appointed as a partner to the law firms42 and also cannot sign any legal document or argue
in the court of law. Their liability is strictly restricted within the terms of employment between the owners of the law
firm and the person concerned as an employee only.

Any foreigner who is allowed to practise law in India has to secure permission from the Reserve Bank of India, if the
person desires to acquire foreign exchange and remit the same outside India.43

Other regulations (in the form of restrictions) in the country are:

• There cannot be more than 20 partners in any partnership firm in India. Though the Partnership Act, 1932,
which defines and regulates partnership businesses in India, does not provide any restriction on the number
of partners in a partnership firm, Section 11 of the Companies Act, 1956 provides that a partnership in India
with more than 20 partners has to be registered as a company. Partnership with more than 20 persons is not
authorised by Law in India.
• In India, the liability of the partners in a partnership firm is unlimited. It means that if the firm closes down
due to business losses, the asset of each partner will be used to pay off the debts and bear all the expenses
of closure.
• Joint ventures involving revenue sharing between foreign law firms and local law firms are still not possible.
According to the Advocates Act, 1961, no joint venture is possible with a foreign lawyer who is not registered
as an Advocate in India, under the Advocates Act of 1961. It is a mandatory requirement that all members in
a Joint Venture, who agree to share the revenue earned from the business of the law firm, have to be
registered members of the Bar Council under the Advocates Act.
• Indian law firms and advocates are not allowed to advertise.

Implications of the Preconditions:

Limitation in the number of partners has grave implication for the domestic law firms.
In most countries, law firms can have any number of partners. Most foreign law firms gain advantage over their
Indian counterparts in organizing, functioning, controlling and regulating on account of their strength and size. In
India, many of the domestic firms that are doing good business are still family oriented firms. 44 A decade ago, the
growth prospect for young lawyers, not from the family, working in these firms, were bleak. They had very little
scope to reach the position of partners. . However, in recent years, the trends have changed. Merit and efficiency are
being sought after. Promising lawyers, having no family lineage, are getting accepted as partners. Some lawyers feel
that even if the cap on partners is lifted, there would be little enthusiasm to increase the number of partners by
much, given the inherent risk of sharing liability between such a large number of people. According to reliable
sources, in Indian partnerships it is not uncommon for partners to retain their assets in their wives' names in order to
mitigate the risk of unlimited liability.

It would be interesting to note here that there was a similar restriction on the number of partners in the English
Companies Act, 1948. Thirty-eight years ago, by the English Companies Act, 1967 the limit was withdrawn as far as
firms of solicitors 45 were concerned in England. This resulted in the expansion of English law firms in size and
capacity. Without the stated amendment it is doubtful whether the English law firms could have had the large global
organizational structures that they have at present. 46

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The rule on Unlimited Liability of partners is another major growth constraint for the domestic law firms.
Big law firms of United States and European Union (especially the English and German Law Firms) provide limited
liability to the member partners, requiring only one or more equity holders to be bearing unlimited liability. Indian law
firms to the contrary cannot have partners with limited liability. This is another hindrance to the growth of Indian law
firms as organizations.47According to many in the profession, this has resulted in the Indian firms being handicapped
and not being able to operate on a level playing field with international firms. Most of India's law firms opt to organize
as sole proprietorships or partnerships. Sole proprietorships are common among smaller Indian law firms, but the
growth of this type of business is severely restricted due to the unlimited liability placed upon the sole proprietor for
the acts and debts of the business.

In recent months, the Government of India is planning to introduce limited liability partnerships. A concept paper on
limited liability partnerships (LLPs), which proposes to introduce a new law that will allow businesses to limit their
liabilities, was recently discussed.48 According to the business analysts, the existing law of unlimited liability of
partners’ has proved excessively restrictive to the growth and development of India's professional services sector, like
the legal services sector. At present they are forced to choose between one-man operations, unlimited partnerships
and complex company structures. Most professionals in the country, especially the law firms have widely welcomed
the new proposal.

Limitation on professional cooperation has also affected the growth of law firms in India.
No Indian law firm or an advocate can enter into a partnership with any other person who is not a licensed lawyer
(with a non-advocate) in India.49 Therefore ‘One Stop Shop’ or ‘One Window Service Centre’ cannot be organized in
India. Similar to shopping in large departmental stores where several commodities are available under one roof, most
corporate clients favor firms that can provide them professional services in every aspect of their business. That
requires firms to have partners from multiple disciplines like accounting, economics, taxation and other branches. It is
common in western countries for law firms to have related professionals as partners. Since that intermingling is not
allowed under domestic regulation, Indian law firms fail to grow and expand at the same magnitude as foreign law
firms. As a result, the international law firms that draw expertise from diverse professions50, capture major business
shares.

Ban on advertisement on Indian law firms is a contentious issue even within the professional community.
Presently two diverse ideological arguments are happening in relation to the debate over the domestic legal
restrictions on advertising by Indian law firms.

According to the supporters of the existing rule against advertising, in India advocacy is considered a profession, not
a business, where soliciting work and giving advertisements is considered improper and below the dignity of the Bar.
This is derogatory to the dignity of the profession in India.51 Advertising the profession is against the ethos of
lawyering profession in the country.52 The Bar Council of India supporting the above line of thinking ratifies that
lawyering is a noble profession, a social service to fight social causes and strongly objects to describing legal services
as a business.

The opponents of the present law on advertising say that the present rule if analysed historically will show a colonial
linkage.53 Though it is true that legal service is a profession, which is considered to be novel and meant to serve social
causes, the equations are changing. With the expansion of industries and businesses in the country, legal services
have increased in leaps and bounds in the last decade. The noble profession is getting a new dimension of becoming
an important, expanding business sector throughout the world. Like other business sectors, advertisements in this
sector can play an important role in showcasing India law firms against their foreign counterparts. More importantly,
inflow of information on fee structures will make the issue transparent. In the present context, this matter is
completely shrouded in secrecy. This allows the lawyers to exploit their clients massively. Scarce information also
means that people have fewer options to choose from.

In this regard it is interesting to note that the philosophy behind the embargo on advertisement has undergone a
complete transformation in the country of its origin. English Law firms are now free to advertise. In 1977, the US
Supreme Court held that freedom of expression extended to advertising as well.54 However, the issue continues to be
contentious till date in the US. According to Mart R. Vogel, a veteran and much-respected lawyer in USA, when in
Bates v. The State Bar of Arizona, the U.S. Supreme Court precluded a state from prohibiting a lawyer from
publishing in a newspaper a truthful advertisement concerning the availability and fees for routine legal services he
can offer, the door was opened with a vengeance.55According to him, practice of law has changed over the years. In

8
many respects, it had become less a profession and more a business. The excessive amount of advertising also
makes it more akin to a business than to a profession.56

According to the domestic regulation on the Rule of Reciprocity no foreign lawyer has the right of practice in any court
of law in India unless the same reciprocal right is available to Indian lawyers in the country of the lawyer’s origin.57

As far as GATS is concerned this can be interpreted to be an unreasonable restriction on the free flow of professionals
in the country. Moreover it can be interpreted to be against the principle of Most Favoured Nation (MNF) as it gives
preference to the citizens of few nations and does not extend the same provision or facility to professionals from all
member nations of the WTO. Article II, Part II58, enables a member nation to deviate from the MFN treatment
obligation to a limited extent provided the State while becoming a member of the WTO had had specified measures
inconsistent with the MFN treatment or thereafter by waiver under Article IX59 of GATS. Any such exception can last
for a maximum period of 10 years. India, at the time of becoming an original member of WTO in 1995 had not
specified any exception to Article II. Therefore, it can be argued that India has to abide by the MFN rule.

It is, however, important to remember that India is yet to make commitments in the Legal services sector. Even
when India chooses to make commitments, it should be possible for India to bring into the element of reciprocity
under Article VII. Under this article, India can maintain that it would recognise the foreign qualification, provided
there is reciprocal recognition of Indian qualification by the other party. This can go on, till there emerges a
multilaterally –agreed standard. In such an eventuality, Rule 3 of Bar Council of India Rules should be suitably recast
to bring in the reciprocity element as a part of recognition of qualifications.60

Domestic Regulations in Countries that are Targeting the Indian Market:

In the United States of America:

A recent analysis of the U.S. balance of trade regarding legal services showed that for every country listed, the U.S.
exported more in legal services than it imported legal services.

Table 2: U.S. cross-border exports and trade balance, by major trading partners, 1999

Further research shows that in US, the exports of legal services have grown from US$1358 million in 1992 to US$
3270 million in 2002, while the US import of legal services has grown from US$ 311 million in 1992 to US$ 768
million in 2002. US balance-of payments data for private legal services, which captures cross-border trade and
temporary establishment of natural persons, shows that in 2002, India received 9 million dollars of legal services
from US and supplied 4 million dollars of legal services to the US. Indian exports and imports of US legal services
have increased several times, from around 1 million dollars in 1992 to 4 million dollars in 2002.61

9
The 2001 Annual Report on Recent Trends in U.S. Services Trade noted that many lawyers believe that the value of
U.S. cross-border exports of legal services is substantially understated and that the actual value may be closer to
twice the $2.6 billion. U.S. firms have advised the Department of Commerce that they expect that opportunities in
Europe will continue to grow. In short, these government statistics show why it is that many U.S. lawyers feel that it
is increasingly likely that clients in the United States—and thus U.S. lawyers—will encounter foreign lawyers in the
United States and why U.S. clients—and thus U.S. lawyers—will be involved in matters outside of the United States.
62

With respect to domestic regulation, the US’s federal regime provides every state in US the right to enact their own
rules and regulations and Court rules governing the practice in the respective state courts. There is restriction by
State Bar Associations in US with respect to practice of local laws. The same limitation holds true even for the
members of the Bar from other states.63 Federal Courts usually admit lawyers authorized to practice in other states
but disqualifies the same when the issue under dispute involves both federal and state matters. According to the
observations of Debjani Ganguly in her working paper for ICRIER64, the process of certification for lawyers seeking
entry into the US indicates that there are several barriers. She presents that the conditions of licensure mentioned in
the GATS sector specific commitments are similar in 16 states of the US where licensure is subject to meeting
multiple requirements such as an experience requirement (5 of the 7 years preceding registration must have been
spent practicing law), meeting the professional liability insurance requirement, certification of registration and good
standing with home-country bar, and a commitment to observe the rules of Professional Responsibility and
Disciplinary Rules applicable to members of the respective State Bar. Some states have more strict requirements than
others, for instance, California, Florida and Georgia allows foreign lawyers to only practice international law, not 3rd
country and host- country law while Alaska, Connecticut and District of Columbia allows practice of international, 3rd
country and host- country law, when certain conditions are met.65 Like in the accountancy sector, recognition of
foreign qualifications is necessary for any substantial Mode 4-related movements in the legal services sector. The
overwhelming number and variety of state regulations for foreign lawyers in the US makes Mode-4 related movement
of professionals complicated and confusing.

As the paper argues and we observe, with such complexity in cross-border reciprocity, the position related to foreign
lawyers is jumbled with different US States according different status to foreign lawyers from different countries.

In European Union:
The EU treaty abolishes all restrictions on freedom to provide services within the community. In this respect
“Community” denotes European Community. EU countries have distinctly separate rules as far as foreign lawyers
from member states and non-member states are concerned.

As far as lawyers from member states are concerned, host countries within the EU have a right to reserve certain
categories of legal services for prescribed categories of lawyers only. In particular cross border litigation practice may
be restricted. Under such circumstances, foreign lawyers in some member states are allowed to work in conjunction
with local lawyers. There is no restriction or ban on lawyers from member states to provide consultancy services.

A lawyer from a non-member country is required to either obtain requisite qualification from the recognised
institutions or clear the local bar exams. Lawyers from both categories have to abide by the rules and regulations on
professional conduct and secrecy requirements of the host country.

The position of the Council of Bars and Law Societies of the European Union (CCBE)66 is that globalisation has led to
lawyers crossing borders to a far greater extent than before, and to carrying out more work in jurisdictions in which
they are not qualified. This has inevitably thrown up issues relating to regulation. However, the CCBE does not
believe that these issues are best solved by individual countries that are trying to regulate beyond their borders. If all
countries tried to do that, it would lead to bewildering layers of regulation, often conflicting. Instead, the CCBE
prefers to see an international response, where countries come together to agree at the international level on how
best to regulate lawyers who carry out work outside their own jurisdictions.

In relation to inbound position of the CCBE vis-à-vis requests for liberalisation from third countries (outside the EU),
CCBE thinks that Cross-border legal services were a very important and rather controversial issue in the GATS
negotiations. At the centre of the controversy was Mode 3, i.e., the delivery of legal services by a lawyer from a home
country through commercial presence in the host country. In many states the particular role of an independent
lawyer either as advisor or as defender of the legal rights of citizens in the system of justice is recognised and the

10
function of a lawyer and the core values and rules governing the legal profession have strong historic roots and are
embedded in the legal and social system of many states. These distinguishing features of the legal profession from
other professional services made the liberalisation of cross border legal services under GATS 1994 quite difficult. The
CCBE in the context of GATS 1994 was not able to express a uniform inbound position, largely due to afore described
functions and specificities of a lawyer in society.67

Today, in the new round of GATS negotiations, CCBE member organisations are prepared to apply the Foreign Legal
Practitioner (FLP) concept to lawyers from states outside the EU as follows, with the term "home country" standing for
a EU Non-member State and the term "host country" standing for a EU Member State.68
1. The FLP is recognised by the host country on the basis of Art. VII GATS 1994, provided he is a member of a
comparable independent regulated bar with a code of conduct in line with the code of conduct of the CCBE
and its member organisations and has a sufficient and comparable education or experience obtained,
requirements met or licenses or certifications granted in his home country.
2. The FLP registers as such with the bar and/or competent authorities of the host country.
3. The professional conduct of the FLP in the host country is regulated under the ethical rules of the bar and/or
competent authorities of the host country.
4. The FLP may practice in the host country under his home title.
5. The FLP may give legal advice under his home country law.
6. The FLP is not permitted to represent in court.

In United Kingdom:
Though it is part of the EU, the UK has a very unique status and culture in relation to foreign lawyers. Moreover, as
far as legal practitioners are concerned, influx to and fro from the UK is most in comparison to any other member
nations of EU. Thus it makes it important to discuss this case separately.

England and Wales, and London in particular, has one of the world's most cosmopolitan legal environments and is
home to lawyers from at least 50 countries. Lawyers in England and Wales do not have a monopoly of legal services.
Subject to the restricted (reserved) areas of work, foreign lawyers in England and Wales are free to practice the law
of their choice. They practice English law, European law, public and private international law, and the law of their
state/jurisdiction of origin to provide a local and global service for their clients. Foreign lawyers can do so, as nobody
needs to be a solicitor, barrister or other recognised professional to practice law in England and Wales. Nor do legal
practitioners have to be British nationals. Anyone is free to offer legal advice and services in England and Wales, with
the following restrictions:
• Only those duly qualified and certificated as solicitors or barristers in England and Wales can call themselves
by those titles.
• Certain limited areas are reserved to nationally qualified solicitors and barristers (and, in some cases,
European lawyers registered under the Establishment of Lawyers Directive 98/5/EC). These areas include
conducting litigation, drawing up court documents, right of audience, property transfers and succession.
Special rules also apply for all persons seeking to offer financial advice.
• Immigration advice and immigration services are reserved for nationally qualified solicitors (and their partners
and employees), barristers and legal executives, European lawyers registered in the UK under the
Establishment Directive, other EU lawyers, and persons (including foreign lawyers) who are registered with
the Office of the Immigration Services Commissioner.

There are a number of ways in which foreign lawyers can practise law in England and Wales on the basis of their
overseas qualification:
• As a sole practitioner.
• In a partnership of foreign lawyers,
• As an assistant or consultant with a firm of foreign lawyers
• In partnership with English solicitors (but only if registered with the Law Society as a “registered foreign
lawyer” or a “registered European lawyer”)
• Employed by English solicitors
• In employment as an in-house lawyer (e.g. in the legal department of a commercial company).

Alternatively, a foreign lawyer may re-qualify as an English solicitor or barrister. Persons who are not EU, EEA or
Swiss nationals and who wish to practise, work or train in England and Wales are subject to immigration procedures.
These are the responsibility of the Home Office’s Immigration and Nationality Directorate and not the Law Society.69

11
In relation to Court and other hearings, a foreign lawyer does not have rights of audience unless he or she is an EU,
EEA or a Swiss lawyer exercising rights under the Lawyers’ Services Directive 77/249/EEC or the Establishment of
Lawyers Directive 98/54/EC. In county and magistrates' courts, rights of audience are usually restricted to the
parties, heir barrister or solicitor, though any person may be heard at the discretion of the court. In most tribunals
(such as employment tribunals) and public enquiries there are no restrictions on rights of audience. However, this
does not apply to the Employment Appeals Tribunal or the Solicitors’ Disciplinary Tribunal, which are equivalent to
courts. Nor does it apply to Adjudicators or the Immigration Appeals Tribunal, where rights of audience are restricted
to nationally qualified solicitors (and their partners and employees), barristers, legal executives, European lawyers
registered in the UK under the Establishment Directive (and their partners and employees), other EU lawyers, persons
(including foreign lawyers) who are registered with the Office of the Immigration Services Commissioner, and the
employees of registered persons. There is no restriction on rights to represent parties at arbitration proceedings
conducted in England and Wales. Foreign lawyers wishing to set up a new practice in the UK are expected to provide
evidence to the Law Society that the firm has sufficient funds to establish the new practice and that the practitioner/s
have sufficient means to maintain themselves and their dependants without recourse to public funds.

According to the rules of professional conduct, foreign lawyers establishing offices or providing legal services in
England and Wales are expected to observe the standards, which apply to the legal profession in England and Wales.
This is so whether or not the rules of conduct and disciplinary procedures of the foreign lawyer’s home bar apply to
practice. Observing ethical standards means acting as befits a lawyer, rather than complying with all local rules. No
lawyer should undertake work unless it can be handled promptly and with due competence.

Unless the foreign lawyers wish to enter a multi-national partnership, or multi-national corporate practice, together
with solicitors, or unless they are EU, EEA or Swiss lawyers of EU, EEA or Swiss nationality established in the UK,
foreign lawyers practicing in England and Wales do not have to register with the Law Society or notify the Law Society
of their presence. However, the Law Society welcomes contact with foreign lawyers in England and Wales and
cordially invites them to notify their presence and apply for affiliate status on payment of an annual fee.

In Singapore:
Singapore allows foreign lawyers to practice in the country except in the area of host country laws. Any foreign
lawyer should have at least five years of experience and can employ lawyers from Singapore. However, they are not
allowed to enter into partnership with the local law firms. The new legislation Legal Profession Act and Rules, 2000
has paved way for the foreign lawyers to enter into joint ventures and other formal alliances within certain
limitations.

As far as joint ventures are concerned, the foreign law firm must have equal or less partners than the firm of the host
country. Moreover, these firms will be allowed to practice only specified areas of domestic legislations as assigned to
the foreign firms. Foreign firms are essentially restricted to international legal matters and finance. They do not have
the permission to advise and are not permitted to advise on domestic laws or represent clients in relation to the same
even through locally licensed lawyers.70

In Hong Kong:
Before 1994, a foreign legal professional having attained qualification from a commonwealth country like UK,
Australia, Canada New Zealand and Singapore was admitted as solicitor. In this respect, an undertaking to the Law
Society was required to be given by the professional.

In July 1994 the Legal Practitioners (Amendment) Act was passed. This required lawyers to register with the Law
Society and to comply with Foreign Lawyers Practice Rules. Partnership with 1:1 ratio of local lawyers with that of
foreign lawyers is permitted. The ratio needs to be maintained. Lawyers from countries other than the Commonwealth
countries are required to pass the Bar exams. 400 foreign lawyers and 50 law firms were registered between 1994
and reunification with China.

12
Contours of the Liberalisation Debate in India: Opinions of Major Players
There have been several arguments tabled by different interest groups with respect to the debate on liberalisation of
legal services in the country. The opposition lobby in this debate has been fairly vehement and vocal. According to
Mr. K.C. Mittal, the Ex Chairman of the Bar Council of India and a senior advocate of the Supreme Court of India,
“The conspiracy is to concentrate and monopolize the entire legal profession in India or as a consequence of the
globalization, in the hands a of a few mega establishments controlling the legal profession.”71 The promises of more
employment opportunities, according to him, would actually confine such employment opportunities to a few
resourceful families and even at the cost of exploitation and harassment of the younger members of the Bar. In line
with the position taken by the Bar Council, hectic campaign and lobbying are on by the large Indian law firms to
thwart the process of inclusion of the subject in the GATS negotiation. They are seriously concerned that entry of
foreign law firms is likely to grab a major share of the pie of the affluent law firms. Some law firms have got together
to form a Society of Indian Law Firms as a platform for collective opposition to the entry of foreign law firms in the
country.72 They are working as a pressure group on the Bar Council of India to resist any intervention by the
Government of India to liberalize this sector.73

An interesting find of this research, from a reliable source, has been that the Cabinet Committee in the Centre is in
the process of drafting a proposal which will place the proposal to Law Firms in the country to allow 26% Foreign
Direct Investment (FDI) in the sector. Since the Bar Council of India and the leading law firms in the country are so
vehemently opposing the idea of opening up of Legal Services in the country, the Government is trying to moot the
idea through the indirect process of 26% FDI. According to the Cabinet Committee this might in the coming years
attract the law firms to go in for joint venture with foreign firms and thereby change their position about the opening
up of legal services in the country.

According to the protagonists of opening of legal services in the country, it is true that Indian law firms are at present
not ready to face the competition from their foreign counterparts but that cannot withhold the process indefinitely.
The necessary amendments to domestic regulations should be brought forth with a sense of urgency. According to
them while international trade, commerce and industry are bringing legal services closer; too much traditionalistic
rules of the Bar Council of India, as explained in the previous section, hinders internationalization of the profession.

In the view of small and medium law firms in the country, they are not yet prepared to face the competition from
their foreign counterparts. There is a latent concern that local law firms and lawyers are going to suffer on account of
inroads made by the foreign firms. They are going to be left jobless if foreign firms are allowed to establish bases in
India. According to Rajiv Luthra, Managing Partner of Luthra and Luthra,74 “The Indian law firms are still at a nascent
stage of growth and are not in a position to face the stiff competition from the foreign law firms, most of whom are
established large multinational firms.”

The problem according to the Indian law firms lie with the limitations arising out of the domestic regulatory measures,
as discussed earlier, in relation to the size of the partnership,75liability partners,76 rule on advertising,77rule on
charging of contingent fees,78and prohibition on partnership with non-advocates.79 Therefore, the factor constantly
under consideration is evolving measures that would best serve and safeguard public interest of the people of this
land.

Most legal academicians from the country, working on the issue debate that in the present world order, where the
leading economies in the world are focusing and forcing/ imposing free movement of goods80, unrestricted flow of
trade related investments81, global protection of intellectual property rights82, and prohibition of tariff and non-tariff
barriers that restrict trade in goods83 and services,84 it would inevitably lead to and require free movement of legal
services.

Technological revolutions and revolution in communications have led to globalisation. This has resulted in a new world
order which has experienced clashes of cultures, recognition of new dimensions of human rights and given rise to
concepts like corporate social responsibility. Like many other professional services, the legal services profession has
experienced unprecedented changes in terms of the domestic legal environment, methods of work, work culture and
reforms in practices and ethics. The integration of economies would naturally require gradual globalisation of the
legal profession.85 It is a myth to think that foreign law firms have not moved into India to extend services to their
clients. As for example, in any joint venture or bilateral/ multilateral contract, the foreign firm brings their own
lawyers as a member of the team to provide legal advice instantly, draft contracts and prepare legal papers. The
associated local law firm is required only to sign on the dotted line. Also, foreign legal professionals have been coming

13
at the invitation of their clients, primarily Governments and Public Sector and Private Sector enterprises including law
firms on advisory capacity since economic liberalization process commenced in the country in 1990-91. However, the
issue turned into a major debate only when these foreign lawyers proposed to move in an organized manner and
widen their activities. It would be unwise for the legal profession in India not to agree to this because the legal
profession has already lost quite a portion of it’s pie in matters relating to taxation and tariff to the Chartered
Accountancy Firms. 86The time has come for the domestic law firms to protect their bastion and boost their
infrastructure to loop in maximum benefit out of the presently expanding global businesses. The time has come for
the domestic law firms to protect their ground and boost their infrastructure to derive maximum benefit from the
presently expanding global businesses.

Legal luminaries and eminent academicians throughout the world are of the opinion that as law is a cultural process
and its evolution depends upon the society and culture in which it develops, law can never be separated from the
social processes.

With greater economic integration it is anticipated that

• More Indian lawyers, both junior and senior, would be required by foreign firms to work in India,
• More Indian lawyers will be hired by the foreign law firms as associates and partners to work from the
location of the law firm which will require temporary or even semi-permanent migration of service providers,
• More foreign law firms will open their Indian offices where more Indian lawyers would be required to work,
• Indian law firms will also have similar need to appoint legal associates and partners from foreign countries.

Bar Council of India, was established by the Advocates Act 1961 to regulate and maintain the standard of legal
professional education and professional conduct in India and therefore holds an important position with respect to all
new ventures and proposal with respect to the legal profession in India. In the present context this professional body
is completely against the proposal of allowing foreign law firms to operate in the country. According to a senior
member of the Bar and an ex-official of the Bar Council of India, Advocate K C Mittal, India will not benefit from the
presence of the foreign law firms, as these foreign firms bring no investment. Moreover, their presence is not
required on Indian soil for outsourcing their work, which can be done from their home countries itself without
commercial presence in India. Even if through the GATS, this can be done under Mode 1, which competent India
lawyers would cater to. He further reiterated that entry of foreign law firms in India would have a direct effect on the
existing structures of justice delivery system, where the foreign law firms will have more dominance and interference.
According to him, in the last five years, various statutes have been amended under pressure from such powerful
lobbies. There is a strong apprehension amongst many that gradual penetration by foreign firms might have adverse
implications for the judiciary system and the structure of the legal services sector in India.87

It was an interesting finding that the position taken by Bar Council of India is a stand supported by other Bar
Associations around the world also. When the Council of Bar and Law Societies of the European Union first learnt, in
the early 1990s, that legal services were included as business services for the purposes of the GATS, and there was
commotion within.88Traditionally, the legal profession has been conceived as a special one, as cooperating alongside
judges in the public function of administration of justice, with lawyers as co-officers to the court. This is why, on
learning of the news about legal services, the president of a prominent European Bar exclaimed: “Does that mean,
from now on we lawyers will be bartered with tins of baked bins?”

It is interesting to note that while the Bar Council of India has taken a no-no position on the matter, there are many
within the Bar who are unconvinced as to why this position is being taken. Confidential sources have also revealed
that the Bar has consistently turned down requests of bureaucrats from the Ministry of Commerce89 for consultation
on the issue of opening up legal services. Despite these indications, the Bar seems unwilling to comprise on its
position or even undertake research on what the implications would be.

The debate on foreign legal participation in India took a highly confrontational approach with court proceedings in the
Bombay High Court by "Lawyers' Collective" against Ashurst of the UK and White & Case of the US, the former based
in New Delhi and the latter in Mumbai in 1996. It was alleged that instead of merely operating as liaison offices as
permitted by the Reserve Bank of India, these firms were indulging in active legal practice, in breach of the statutory
requirements.90

These firms admitted that while not actively practicing in courts, they were advising and assisting non-Indian clients
and Indian clients by drafting documents, conducting negotiations, reviewing and providing comments on documents,

14
advising clients on international standards and customary practices relating to clients' transactions - the Bombay High
Court at the interlocutory stage has expressed the view that "practice of the profession of the law" would include legal
practice outside the court (as done by these firms) - if confirmed, it would mean that representatives of these firms
would have to enroll under the Advocates Act. Even the Reserve Bank of India has issued show cause notices alleging
breach of the "liaison office" licenses.

The proposals of the Law Commission91 further antagonized a large part of the "city" lawyers, generating public
debate
• The Law Minister was expelled by the Supreme Court Bar Association from its membership.
• The Bar Council of Maharashtra & Goa unanimously resolved that "the right to practice the profession of law
in India not be conferred on foreign law consultants.”
• The congregation went one step further and resolved that the existing basis of reciprocity also be deleted. It
also resolved that the basic feature of the Advocates Act that legal practice is a profession should not be
altered in any way.92

But from these days of pure opposition, the debate has moved on in the country. Among domestic law firms, different
opinions seem to be emerging on whether to resist or negotiate the entry of foreign law firms. Essentially, these
positions are determined by the simple fact of whether an entering foreign firm is going to eat into the pie of any
domestic firm or not. Few domestic law firms firmly believe that this will be the case and are set to thwart the process
of inclusion of the subject in the GATS negotiation. Others are giving thought to the points of negotiation by which
the process might be allowed without affecting them adversely.

Analysing the Public Interest Arguments of the Debate

The overall litigation prices will become expensive/ Cost elevation in litigation:
The common perception about the immediate effect of the opening up of the legal services is that it would spirally
escalate the litigation expenses in the country thereby making it completely out of the reach of the common man. At
present in India, individual legal practitioners and law firms cater to the legal services sector. Individual legal
practitioners are mainly engaged in litigation. Law firms provide both advisory as well as litigation services and
primarily deal with corporate matters. Since corporate legal services sector has seen tremendous growth in the last
decade and a half, the interest of the foreign law firms lies here93. Even if the sector is opened up and the Bar Council
Rules are modified, it will not directly mean that entry of foreign law firms will raise the financial burden of the
plaintiffs and make the entire legal system costlier for the common man94. It is however assumed that corporate legal
services will become dearer. However, practically speaking, if tomorrow the foreign law firms ask for exorbitant prices
for rendering legal services, which many premier Indian law firms can provide in half the expenses, corporate houses
would think twice before they bear the expenses.

The target of all the foreign law firms like the Indian law firms is corporate businesses. The main competition will be
between Indian corporate law firms, which have expanded their business empire in the last 15-20 years, and the
foreign law firms in matters of corporate advocacy. According to a leading Indian law firm based in Delhi, Bombay,
Chennai and Bangalore 90-95% of their work is corporate matter. As far as profiles of the clients are considered, the
same firm estimated that nearly 80% of the national average is that of foreign corporate entities95.

In all civil and criminal matters in India, except those, which relate to companies, the Client –Advocate relationship is
a direct relationship. It is mostly an agreement between an individual litigation lawyer and the client. The litigation
cost in general includes the Court Fees + Stamp Fees + consultancy fees of the lawyer for the opinion given + Filing
charges in the court + application fees for each application filed during the tenure of the case + appearance charge
for each appearances before the Court by the lawyer. While the Court fees, Stamp fees and application fees are very
nominal in most civil and criminal cases, the consultancy fees and the appearance fees charged by the lawyers
depend upon their profile and standing. For most senior lawyers in Supreme Court the Consultancy charges are not
less than Rs. 1,00,000 for an hour. Their appearance fee varies from Rs 90,000 to even few lakhs. It has nothing to
do with the presence or absence of foreign law firms in the country.

Indian Lawyers would lose their jobs:

Looking into the size of the foreign law firms and the capital investment undertaken by them, it is but natural to feel
threatened. However the actual fact is that most foreign law firms lack knowledge and expertise in domestic
legislation. With the inflow of foreign investment in various sectors in the country, foreign law firms are in need of

15
Indian lawyers to advise and assist them on Indian Law. If these law firms are permitted to open Indian offices there
will be demand to employ lawyers from India to provide legal services. In relation to US law firms, Carole Silver,
Senior Lecturer, Northwestern University School of Law, specifies that “The provision of advice on foreign law is new
for US law firms…. as rules of practice liberalized, firms most likely decided to add local law expertise to their offshore
office offerings in order to generate revenues. This has important implications for the roles of foreign lawyers in these
offices, because the easiest way to acquire local law expertise is to acquire local lawyers. Moreover, as firms move
from focusing primarily on US clients to including local clients in their vision, local lawyers are valuable because of
their relationships with local clients… The local character of law argues in favour of locally trained and licensed
lawyers. Unlike non-law services firms, where US employees can do the same job as foreign employees, lawyers who
are not locally licensed may be unable to develop a meaningful and economically sound practice in an offshore office
because of their unfamiliarity with local law.”96

The other significant reason for employing local lawyers in the offshore offices is cost reduction in maintaining the
office. Foreign firms do not compensate the local lawyers in the offshore offices equally to their US counterparts.
Policies differ between lawyers in the US office and those employed in the offshore offices.97 Salaries generally are
lower, opportunities to participate in formal training programs are limited due to distance and the expense (in terms
of time, disruption and direct cost) of travel for such programs, and the type of work expected of offshore lawyers
often is routine rather than cutting edge.98

Even under such constraints, Indian lawyers will have larger and wider market options. The British legal legacy,
command over English and the adversarial legal procedure in India, is likely to place Indian lawyers in a relatively
more advantageous position than lawyers from other countries.

In this respect it is interesting to note that a recent research conducted by Prof. Carole Silver shows that those local
lawyers who obtain LLM degrees (Masters in Law) from US Universities, are not very keen about working in US
offshore offices. The main reason is that the LLM graduates expect the same training, compensation, cutting edge
work and opportunities for promotion as the JD graduates (those who obtain Bachelors Degree in Law from US
universities). Another research finding by Prof Carole Silver indicates that regardless of internationalisation of the
legal profession, US firms have not reciprocated by openly welcoming foreign lawyers in their league.99 Foreign
lawyers represent a small fraction of the lawyers hired by US law firms each year, and they are present in US offices
in very limited numbers. According to Prof Silver, this is explained in part by the position of strength enjoyed by US
law firms in the international market for legal services: these firms have been so successful in capitalizing on their US
expertise that there has been no obvious need to complicate their approach. Moreover the business of many US firms
that participate in the international market continues to be dominated by domestic matters, where the benefit of a
foreign approach is ambiguous. According to another critic the US legal profession generally is not characterized in
analogous terms as that of lawyers from most other countries, because US Law and lawyers play a hegemonic role in
the global economy. At present, foreign lawyers are mainly and increasingly hired to staff the growing foreign offices
of US corporations and law firms.

Indian Law Firms might close down: If foreign law firms are allowed to establish their Indian offices without any
limitation, it is feared that Indian Law firms might lose work. Besides, there is also a fear that big multinational law
firms might acquire or merge with small Indian law firms easily. This is not a myth but a fear that is justified.100

The Quality of Legal Services will improve: It is not clear what is exactly meant by improvement in the quality of legal
services. It is too early to comment if the court procedures will undergo any change or not by this move to open up
legal services. However, it can be said that the presence of foreign lawyers will enhance sector specific expertise
thereby making services more professional. There is also the point of view that western legal culture of alternative
dispute resolution through arbitration and out of court settlements through negotiations might in the long run reduce
the burden on the judiciary.

16
State of Global Negotiations on Trade in Legal Services
Definitional troubles
It is interesting and very important to note that the discussion on legal services in the GATS began with little clarity
on fundamental definitional points of what these ‘services’; constitute. The WTO Secretariat’s note states that broadly
legal services can be understood as advisory and representations services, including activities related to the
administration of justice - but that the latter are excluded from GATS’ purview on account of being a “service supplied
in exercise of government authority”. This assertion requires serious consideration while considering not only what
the current scope of ‘legal services’ in the GATS includes but also what it could possibly include in the future. Several
services, hitherto considered government responsibilities have not been brought under the purview of the GATS and
being opened up for negotiations on trade – so much so that the issue of ‘government procurement’ and ‘subsidies’ in
services are being heatedly debated in the Working Party on Domestic Regulation. Considering this, it would be naïve
to reject the possibility of discussions on legal services extending to judicial services as well.

Further, the WTO Secretariat’s note acknowledges why the initially adopted United Nations Central Product
Classification (UN CPC) system is unsuited to legal services as while undertaking commitments – the distinction
between advisory and representation services in criminal law, other field of law and statutory procedures (as in the
UN CPC) is not as relevant as the distinction between host country, home country and international law101. This is also
the reason why countries, which chose to undertake commitments on legal services in the Uruguay Round, have done
so by adopting their own systems of classification that broadly relate to the home country-host country (in some
cases third-country)-international law mode of distinction, but are albeit sufficiently non-standardised to cause
confusion in interpretation.

As a result of this historical ambiguity on definitional aspects, considerable focus has been devoted in the new round
on seeking clarity and consensus among Members on what ‘legal services’ in the GATS constitute. Some of the
proposals submitted on this topic require elaboration –
• Proposal from India (November 24th, 2000, S/CCS/W/12) stated that legal services be divided into sub-
sectors that focus on individual professionals.
• Proposal from Australia (11th March 2002, S/CSS/W/67/Suppl.2) which recommended that legal services be
expanded to include 12 subcategories broadly divided into advisory and representation services on home
country law, third-country law, host-country law, international law and four additional sub-categories on
commercial arbitration, alternative dispute resolution, preparation and certification of legal documents and
other legal advisory or consultancy services102. Importantly, the Australian proposal highlighted the need for
clarity to emerge on two aspects of the discussion on definition – areas of law and types of service, as these
were more relevant to trade issues than a focus on the service provider.
• Proposal from informal Friends Group on Legal Services103 (24th February 2005, TN/S/W/37, S/CSC/W/46)
which takes off from the Australian proposal and suggests Members to adopt the following terminology to
identify specific legal services –
o On the nature of service – ‘legal advisory services’, ‘legal representation services’, ‘legal arbitration
and conciliation/mediation services’; and ‘legal services’ that includes the former three and legal
advisory, documentation and certification services performed by service suppliers entrusted with
public functions, such as notary services.
o On the area of law – domestic law (host country law), foreign law and international law.

While the most recent proposal from the informal friends group makes a brave attempt at suggesting a broadly
acceptable definitional premise, ambiguity and uncertainty still looms large over ongoing negotiations in the request-
offer phase. The International Bar Association (IBA) admits to have not adopted any resolution on the classification
system for legal services in this round but maintains an optimistic note in being able to facilitate reaching a common
ground on the issue104. Despite these statements, there is an undisputable lack of consensus on classification issues
although countries continue to be under pressure to undertake commitments in the sector.

Directions in Domestic Regulation

As is with most other service sectors, implications of GATS Article VI on domestic regulatory measures pertaining to
services, has seen a considerable amount of debate and dissent in the context of legal services. While regulatory
measures like licensing and professional qualification requirements are generally applied to most service sectors in a
country, there are a few others that assume specific relevance in the context of legal services. These the WTO has
categorised separately into those that are considered barriers to market access and those to national treatment.

17
A) Market Access Barriers
1. Nationality requirements: the most common sectors subject to nationality requirements in many countries
(including 11 OECD countries) are notarial services, representation services and the practise of domestic law
on account of the public nature of these functions. The WTO contends that advisory services have been by-
and-large excluded from nationality requirements.
2. Restrictions on legal form (for eg. prohibiting incorporation, restrictions on number of partners in a law firm)
3. Restriction on movement of natural persons – either through stringent visa rules or by limiting the sheer
number of temporary professionals permitted entry. This is very significant for legal services considering that
most top law firms have more than 50% of their lawyers stationed in foreign countries and that consequently
free movement under Mode 4 cannot be overstated for legal services.

B) National Treatment Barriers

1. Qualification requirements: have been identified by the WTO as an ‘insurmountable barrier to trade in legal
services’. The nature of qualification requirements differs greatly between countries and can pertain to legal
education, passing state/ national bar examinations and even specific requirements based on the field of law
intended to practise (whether home country, host-country or international law). The criticality of addressing
qualification requirements that may be barriers to legal services trade has fostered a keen discussion on
Mutual Recognition Agreements (MRAs) between countries to resolve the issue105. This however opens a
floodgate of questions on feasibility of MRAs, their links to the ongoing multilateral system (as MRAs are
usually negotiated on a bilateral level) and concerns on the MRA process being hijacked by developed
countries leaving no scope for gains to developing countries seeking movement of their professionals106.
2. Restrictions on partnership with locally licensed professionals: Also referred to as the “association barrier”, it
is considered by few authors as an unduly strict application of the traditional professional norm of service
professionals, in this case – lawyers, of not sharing their fee income with non-lawyers107. The WTO argues
that this restriction defeats the efficiency argument of a foreign legal consultant (interested in practising only
international and foreign law) from venturing into court representation and expanding into host-country law.
Permitting them to do so would save the trouble of having to train local lawyers in this field of law and may
present an easy solution to legal qualification requirements.
3. Licensing requirements: another much talked about regulatory measure regarding legal services is on
licensing requirements – an issue closely linked to the question of whether or not to integrate foreign legal
consultants (FLCs) into the domestic profession and its regulatory jurisdiction. The WTO recognises measures
impeding practise by FLCs in host countries to include having to abide by rules and professionals codes of the
host country, non-recognition of FLCs as ‘lawyers’ or the requirement to present themselves under a different
name. In order to foster liberalisation and reduce the arbitrariness prevalent in many countries on granting
FLCs license to practise, the WTO promotes the concept of ‘limited licensing’ that could ease the entry of FLCs
into new markets and establish their rights to practise. The idea of limited licensing was first mooted by the
International Bar Association (IBA) as part of its ‘General Principles for the Establishment and Regulation of
Foreign Lawyers’ adopted in 1998. In suggesting alternative approaches to its Member countries on designing
regulatory regimes for foreign lawyers, the IBA put forward the ‘full licensing’ and ‘limited licensing’
proposals.

Full Licensing vs. Limited Licensing

The full licensing approach permits the integration of foreign lawyers as full members of the local profession with no
restrictions on scope of practice, subject to few conditions –a) licensing in their home-country b) minimum period of
practice c) good character and repute d) submission to local code of ethics and to all rules and regulations applicable
to local lawyers in the host country and lastly e) reasonable qualification requirements108. As against this, the ‘limited
licensing’ approach limit the scope of practice of FLCs to advice on home-country law and exclude all court work,
host-country law and any other jurisdictional area. The conditions the IBA places on lawyers entering under this
approach are the same as those entering under full licensing with the exception of qualification requirements and
limits the point on “submission to local codes of ethics” to only “abiding by ethical standards”.

In the current Doha Round of negotiations, Australia has emerged as an ardent supporter of the ‘limited licensing;
approach for liberalising entry of FLCs into host country markets. The Australian proposal109 argues that legal
practitioners keen on providing services internationally, mainly concentrate on ‘producer’ or intermediate services in
business transactions rather than ‘consumer services’ that are final in nature (e.g.: personal matters like matrimonial,
estate, personal accident). They are, in most cases, also not interested in obtaining a right of audience in host-
country courts except on matters of international arbitration. Given this truncated interest, subjecting them to a full

18
licensing regime is unfair and unduly burdensome which a limited license would overcome. Two specific outcomes
stated in the proposal on what a limited licensing approach should aim for are –
• Formal recognition under a transparent regime of the right of a foreign legal practitioner to practice home-
country law, international law and where applicable third-country law
• The right to practise the above areas of law in partnership or other forms of voluntary commercial association
with other FLCs or host-country lawyers, with no limitations on the number and type of such associations
(emphasis added).

Disciplines for Accountancy Services as a base for Legal Services

Negotiations on domestic regulations in legal services have for a while now, considered the proposal of using the
disciplines developed for the accountancy sector as a starting point on this matter. This proposal requires serious
thought as it moves beyond the scope of the WTO itself to look at the historical link between the two sectors.

Although traditionally, the scope and ambit of different professional services has been reasonably well demarcated, in
recent years, the lines have blurred. Today, several professional firms in the accountancy, banking and even IT
sectors provide legal advice on a range of matters related to international business and financial transactions, in
active competition with law firms. While majority of their operations are for in-house assistance with the firm’s main
area of work, many do specialise in the provision of legal advice for external parties as well. This is particularly true of
accountancy firms whose capacity to aid transnational corporations in matters of taxation systems, auditing and even
‘intellectual property audit’ are being seen as equally good and sometimes better than those of law firms. Some also
contend that there is a visible global trend of law firms being replaced by accountancy firms as the major providers of
legal services thereby pushing the argument for permitting Multi-Discipline Practises (MDPs) that are currently
prohibited in several countries.110 Thus, engaging in any debate on opening up international trade in legal services
must be in cognisance of intrinsic linkages with other professional sectors – especially accountancy services.

The debate in the WTO-GATS circle on legal services has not been divorced from this reality and has even tried to
cash-in on it. In 1998, when the Council for Trade in Services approved the Disciplines for the Accountancy Sector
that had been developed by the Working Party on Professional Services [now the Working Party on Domestic
Regulation (WPDR)], commitments were made to Bar Associations that similar clear guidelines would be developed
for the legal profession. But as this is yet to materialise, negotiators raised the possibility of considering if the
accountancy sector disciplines can be applied to the legal profession as well. Although countries have responded
varyingly to this proposal, the general drift seems to be one of non-acceptance. The Canadian Bar Association in a
succinct submission as to why accountancy disciplines cannot be an adequate framework for the legal profession
highlights the need to understand the peculiarities and role of the legal profession in society - one that cannot be
equated to that of the accountancy profession and consequently should not be governed by disciplines developed
primarily to facilitate trade111. This assertion is despite the fact that Canadian firms are known to have aggressive
interests in the GATS and account for 2 out of the current top 50 law firms of the world.

Whatever be the course of discussion on developing sector-specific disciplines, it only goes to amplify the close
linkages between the two sectors and the need to acknowledge accountancy firms as a strong stakeholder and
influencer in the debate on liberalising legal services.

In summary, there is a complex range of regulations pertaining to legal services that negotiators need to address in
the GATS. Commitments undertaken in the Uruguay Round are ample evidence of this complexity as Members’
scheduled commitments on the sector run into several pages on account of detailed regulatory caveats inscribed by
many of them. This is particularly true of federal regimes (like the United States and Canada) where regulatory
measures differ greatly from state to state, thereby making it very difficult to assess the actual extent to which the
sector has been opened up.

In addition to the above, few other issues on domestic regulation that are on the table of the Council for Trade in
Services (CTS) and WPDR to discuss are concerning:
• Transparency – that includes both transparency in developing and administering host-country regulations and
transparency in clearly indicating extent of liberalisation in the schedule of specific commitments
• Whether the legal profession should be subject to disciplines developed horizontally for all service sectors or if
separate disciplines need to be developed for it

19
Despite these persistent efforts to find a way out of the existing labyrinth of regulatory measures in diverse national
legal regimes, one cannot but help ask why ten years’ worth of negotiations have yielded little or no concrete results
in liberalising legal services internationally. Experts and the WTO itself has offered many theories in defense of this
‘progressive liberalisation’ process but there are others who are adamant that on matters of domestic regulation –
negotiators have simply missed the point!

Legal regimes are divided across national lines essentially because they have been developed in response to national,
regional and local needs and are entrenched in the historical and cultural context of societies in which they operate
(WTO, 1998 Consequently, measures devised to regulate activities of this profession have much more to do with the
jurisprudence of justice and equity - with social and ethical objectives rather than address questions of market access
or national treatment. The IBA admits that the debate on regulatory measures in the GATS has been abstracted in
trade terms with negligible attention being given to discussing regulation that is ‘ “necessary to ensure the quality of
the service” and to protect the public interest.’112 It further affirms that as the service is liberalised under the GATS,
generally-recognised standards and criteria for qualification and conduct applicable to lawyers universally, must not
be sacrificed but well-articulated and preserved. These statements leave the reader with the impression that the lack
of movement in the GATS on legal services can be attributed to the failure of negotiators to understand and address
the fundamental premise of regulation in the sector. In referring to the preoccupation of negotiators largely with
taxonomy and terminology issues, Sydney. M. Cone eloquently makes the point with these words113…

Local issues are rarely expressed in abstracted GATS-speak. Being, at bottom, issues arising under local rules whose
language is that of the relevant locality and whose meaning is to be found in large part in local history and
jurisprudence, they require an exercise altogether different from that of formalistic reference to abstract categories.
Rather than create the artifice of a universal menu of regulatory terminology, the legal-service negotiators would be
well advised to undertake the painstaking task of looking at the regulation of legal services one jurisdiction at a time,
in the actual, individual, historical and jurisprudential framework of each jurisdiction. Only in this manner can the
negotiators obtain an understanding of how the regulation of legal services actually operates.

Trade in Legal Services: the bilateral and regional path

Although commitment to the multilateral trading system persists, it is undeniable that a more significant proportion of
India’s external trade takes places through regional and bilateral modes. This has in fact, been the cause for
reasonable debate and speculation by trade negotiators who are assessing the strength of the multilateral WTO
system against the proliferation of regional and bilateral trade agreements114. Recently, within days of the WTO talks
amongst the G-6 collapsing in Geneva, Union Minister for Commerce and Industry issued a public statement that
trade will continue and India will pursue its own bilateral and regional trade agreements115. The above is sufficient
evidence of the role that bilateral and regional economic treaties will play in the country’s external trade circuit.

With legal services, bilateral trade is seen to take two forms – either a corporate agreement on an inter-
company/firm basis (as happens in the case of most outsourcing contracts) or as part of broader inter-governmental
bilateral and regional trade treaties. Movement in the former has been detailed in the previous section of this paper;
this section will concentrate on bilateral and regional inter-governmental trade agreements pertaining to legal
services.

At the inter-governmental level, while several trading partners have expressed interest to liberalise legal services
trade bilaterally, very little of this has been formalised. This could be due to the ongoing debate within the country on
whether the legal sector should be opened at all to a formal foreign presence. In fact, in some bilateral agreements,
legal services is conspicuous by its absence or exclusion from the commitments schedule. For example in the Indo-
Singapore CECA that has made ambitious bilateral commitments in services, India’s schedule on Management
Consulting Services (under the other Business Services sub-section) categorically excludes legal consultancy
services116. This is even more surprising considering that Singapore has not excluded legal consultancy from its
commitments schedule for Indian firms, although it has been left unbound.

Some of the important trading partners who have expressed interest in bilateral trade in legal services with India are
Australia, the United States, the United Kingdom and ASEAN as a bloc.

The United Kingdom has been a trading partner with longstanding interest in the legal services sector. The UK
Department of Constitutional Affairs is the premier body negotiating with the Indian government and has consistently
made special visits for this purpose. In a visit made in 2004, the Constitutional Affairs Minister David Lamy met with

20
Commerce Ministry officials as well as representatives of the legal fraternity to push for liberalising the Indian legal
services market to UK firms117. Even more recently, a joint meeting of the UK-India Joint Economic Trade Committee
(JETCO) said that the Expert Group on Legal Services had prepared position papers on boosting bilateral trade in the
sector and that similar efforts are on in the Accountancy Sector as well118. These documents are currently confidential
but suffice it to say that with an aggressive lobby of UK law firms and a persistent government effort, formalised
bilateral trade with the UK in legal services might materialise soon.

Australia has been the other interested trading partner in the sector given the potent export interests of its law firms.
The Australian Legal Services Export Development Strategy 2003-06 specifically mentions India under the aim of
improving market access and “removing barriers to the practise of foreign law119”. In a delegation visit by the
Australian Attorney General’s Department to India in 2004, interest was expressed in deepening partnership with
India in areas of corporate law, alternate dispute resolution mechanisms and legal education between the two
countries120. Given that Australia is a major player on legal services within the GATS, it is quite likely that its attempts
at expanding the trade bilaterally will be aggressive. In fact, legal services has featured prominently in many other
FTAs concluded by Australia namely the SAFTA (Singapore-Australia Free Trade Agreement) and AUSFTA (Australia-
US Free Trade Agreements)121 where commitments have been GATS-plus.

The other interested party in the legal services trade has been Southeast Asian countries through the ASEAN. A
research study analysing Indo-ASEAN trade opportunities in services has indicated that a definite interest exists in
opening up legal services between the two blocs122. This could be a result of the fact that several foreign law firms
(especially based in the UK and US) already have strong functioning Asian offices in either Hong Kong or Singapore
and an ASEAN-India FTA might allow their operations an extension into India. But within the current suspension of
bilateral talks between ASEAN and India, one has to wait and see what the future has in store.

In summary, although several interested trading partners exist, not much has been formalised on legal services
within India’s current bilateral and regional trading engagements. However, with relatively slow movement expected
on the WTO-front and the proliferation of RTAs continuing, it is likely that wide-ranging services liberalisation in many
sectors may be expected outside of the GATS. Some of the issues that might have to be borne in mind while
engaging in RTAs on the legal sector are:
• Current trends indicate that the absence of a clear stand within the country on liberalising the legal sector is
reflected in India’s bilateral and regional engagements as well. Hoping for any progress through this medium
will have to be preceded by clarity domestically first.
• A survey of India’s bilateral and regional engagements reveals that much less movement has been made in
the services sector than goods and manufacturing although a lot of interest has been expressed. Of currently
functional FTAs, only the Indo-Singapore CECA and Indo-Thai FTA (although to a lesser degree) have
substantial services components. Talks have been on with both the US and EU for concluding services-specific
bilateral agreements but neither has seen the light of day so far. The idea of an Indo-US services FTA
received a setback when a top US bureaucrat indicated in February 2005 that the US was not keen on a
truncated sector-specific FTA as the gains might possibly me more in favour of India123. Similarly, the dream
of Indian corporations of the government concluding a services FTA with the EU might face serious stumbling
blocks on the issue of movements of professionals into EU even though India has liberalised its own services
market considerably124. With these trends, even if legal services features in any bilateral or regional
agreement, the pressure and trade-offs asked for are going to be high – even higher than through the GATS.
• Inter-corporation arrangements to promote cross-border trade in legal services, which are currently being
resorted by Indian, and foreign firms are far more difficult to monitor and regulate. However this trend will
persist, as there are strong business interests fuelling such agreements on both sides. In such situations to
avoid the complications and possible errors, the government and industry will be better off to conclude formal
inter-governmental agreements that provide a regulatory framework to this subtle trade.

21
Policy Recommendations and Conclusion
India’s legal services market is currently being seriously targeted by major international law firms to whom, the
current Bar Council rules and policy prohibiting foreign investment are definite barriers to growth. The GATS is being
viewed as an opportunity to intensify efforts of law firms and their governments to change this regime. But the
response to this demand is far from easily given. The dilemma is how to find the right equilibrium between consumer
protection, public interest and improved level of efficiency of the legal system itself. The government must ensure
that a level playing field is maintained as far as the interest of both the Indian and foreign law firms are concerned.
The process should be a multi-stakeholder negotiated process and the government should not be allowed to enter
into any negotiation hastily without giving significant consideration to the following issues:

1. Liberalisation of the legal services sector through GATS will entail considerable change to the current Bar
Council of India rules and several pertinent legislations affecting the sector. These changes will be needed not
just for the domestic regime to be consistent will the rules of the GATS game but also to enable domestic
firms to face stiff competition that will emerge with opening up. As elucidated in the section on Domestic
regulation, most large law firms in India are still family firms with limited capacities. Therefore, for creation of
a favorable competitive environment there is a need to amend domestic regulations so as to enable Indian
law firms to build up their capacities and provide sufficient time for them to expand. Otherwise, it is a reality
that, international law firms will put Indian law firms out of market with their massive organizational and
financial strength. Examples can be adduced to the experience of Accountancy Services once it was opened
up without giving enough preparatory time to the domestic players.125 An analysis of the changes required
indicates that if not executed carefully and judiciously, the changes in rules might be significant cause for
concern. Amendments to regulatory regimes are needed as economies and societies evolve. However, such
changes must be determined by internal forces and requirements rather than the demands of an international
regime. This point of caution must be borne by negotiators who are pursuing the debate in the country.
2. Given the current ambiguity in definitional aspects of legal services both within the WTO and in India, any
negotiation must begin by clarifying the scope and ambit of legal services that the GATS will cover. In
particular, the exclusion of judicial services must be clear as most stakeholders stress that the powers and
functions of the judiciary must not be dictated and as far as possible, least influenced by external forces.
3. It is possible that opening up the sector results in more employment opportunities for local lawyers. But
careful analysis is needed to determine the exact scope and nature of job opportunities that would be created.
It would be a tragedy, as current trends suggest, if entry of foreign firms improves the prospects of a
marginal few while the majority are resigned to low-end and secondary jobs. In practise, liberalized markets
require more supervision than a market in a controlled regime. To ensure that if being liberalised, the move
ensures benefit for Indian lawyers, the following are important negotiating points:
I. That the Foreign law firms should be allowed to practise only “Home Country Law” and “International
Law”. They should be barred from practicing the “Host Country Law” on the premise that they under no
condition will be able to appreciate and therefore preserve the doctrines of the domestic regulations.
II. That the services of the Foreign law firms, should be limited to advisory services and alternate dispute
resolutions (arbitration, conciliation and negotiation) that too in conjunction with Indian counterparts who
themselves meet certain threshold of practice requirements in reference to minimum years of practice
and financial capability.
III. That they should not be allowed to have any “Representational Services” in courts and tribunals in India.
Since administration of legal system is part of national culture, it is risky to transport foreign lawyers to
present the case of an Indian client before an Indian court or authority. So for litigation purposes, foreign
law firms should hire services of litigation lawyers in India.
IV. Most important, they should be subjected to the ethics and disciplinary rules of the Bar Council of India
and also adhere to the rules on licensing, qualification as advocates and registration issued by Bar Council
of India before the process commences.

4. Of the many public interest arguments being floated in the debate, the most critical is the question of
accessibility of the general public to good quality and affordable legal expertise. Research indicates that
several local firms, academicians and lawyers believe that foreign firms’ would not get involved in civil or
criminal matters but concentrate on the needs of their corporate clientele. While this might mean that the
general public remains largely unaffected in terms of how much litigation would cost them it still raises the
concerns of sheer physical accessibility of lawyers who would take up their cases if they’re all absorbed by the
corporate law sector.

22
 5. Finally, the country’s negotiating team to the WTO is under immense pressure from developed country
governments seeking liberalising commitments under the GATS. An important reason for this is the barter
game that is played within the WTO where sectors and areas of interest are exchanged as –‘If you want
something, you must give something up.’ In the context of India, government and industry are seeking
commitments from developed countries (especially the US and EU) in Mode 1 (cross-border supply of
services) and Mode 4 (movement of natural persons) of GATS to ease the flow of skilled professionals like
software technicians, doctors, nurses and teachers into US and EU markets. It is obvious that the country will
be forced to give up something in return if this demand is to be met and the fear is that sectors like legal
services education and distribution are up for this barter. The opening up of every sector must be thoroughly
debated and pursued of its own accord rather than being made a bargaining chip in the negotiations.

Without doubt, the country must engage in the debate on opening up the sector such that all interested and affected
parties can participate. Given that India has entered the WTO and is under significant pressure to open the sector,
negotiations, unless stalled by the WTO itself, will possibly have to continue. But significant lobbying needs to be
undertaken with the Government of India in relation to drawing the parameters within which it should enter into any
negotiation at the WTO in this sector. The Bar Council being the apex body in relation to control and administration of
the legal profession should be more proactive in this debate and also consult with State Bar Councils in the
negotiation process. Indian Law firms, who are likely to be most affected, should also have their representation done
in a concerted and coordinated fashion.

It is extremely important and practical to outline the negotiation strategies before the foreign law firms are allowed to
enter the domestic market. In India, the volume of ‘investment in’ is expected to be much higher in comparison to
the demand for ‘investment out’. Therefore, to sustain the pressure, national competence requires to be developed,
both in the context of epistemology of the evolving legal issues globally and of organizational and management
structures.126Strategies are important because while there is scope for Indian law firms to take advantage of the
expanding global businesses there also lies the danger that if the processes are not judiciously planned and the
necessary structural adjustments are not undertaken, the entire move can prove to be harmful for the domestic
sector. The foreign law firms with their sheer size, organizational structure and capacity, holds the possibility of
takeover of the Indian law firms, specially the small and medium ones. With foreign firms knocking at our doors the
debate within the country must be intensified, as sooner or later the foreign law firms will call for an answer. The
challenge for the country is to give the right one.

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Accountancy Disciplines as a Model for the Legal Profession’, November 2000
• UK Department of Constitutional Affairs: Justice, Rights and Democracy, Report 2002-2003.
• S/CSS/W/76, World Trade Organisation, Communication from Australia – Negotiating Proposal for Legal Services, 28th
March 2001.
• ‘Managing Request-Offer Negotiations under the GATS: the case of Legal Services’, OECD 2004.
• S/C/W43, World Trade Organisation, ‘LEGAL SERVICES: Background Note by the Secretariat’, 6th July 1998.
• S/CCS/W/12, World Trade Organisation, Proposal from India on Legal Services, November 24th, 2000.
• S/CCS/W/28, World Trade Organisation, Proposal from the United States December 18th 2000.
• S/CSS/W/67/Suppl.2, World Trade Organisation, Proposal from Australia, 11th March 2002.
• TN/S/W/37, S/CSC/W/46, World Trade Organisation, Proposal from Informal Friends Group on Legal Services, 24th
February 2005.
• S/CCS/W/67/Suppl.1/Rev.1, Communication from Australia, Negotiating Proposal for Legal Services: Revision, 10th July
2001,
• Advocates Act, 1961
• Constitution of India
• Bar Council of India Rules
• Foreign Exchange Management Act, 1999.
• Companies Act.
• Partnership Act, 1932.
• Income Tax Act.
• General Agreement on Tariffs and Trade 1994 (GATT).
• Trade Related Investment Measures (TRIMs)
• Trade Related Intellectual Property Rights (TRIPs)
• Agreements on Subsidies and Countervailing Measures.
• Agreements on Trade in Services
• Lawyers’ Services Directive 77/249/EEC
• Establishment of Lawyers Directive 98/54/EC
• Overseas lawyers in England & Wales, International Unit of Law Society, January 2003 - briefing produced by the Law
Society’s International Unit to provide a detailed and comprehensive description of the rights of foreign lawyers to practice
in England & Wales.
• ‘General Principles for the Establishment and Regulation of Foreign Lawyers’, proposal of the International Bar Association
(IBA), 1998.
• ‘Managing Request-Offer Negotiations under the GATS; the case of legal services’, Massimo Geloso Grosso, OECD Working
Party on Trade Committee, Working Paper NO. 2, 14th June 2004.
• ‘Moving Professionals Beyond National Borders: Mutual recognition Agreements and the GATS’, United Nations Conference
on Trade and Development, 21st February 2005, UNCTAD/DITC/TNCD/2005/2
• ‘GATS: General Agreement on Trade in Services: A Handbook for International Bar Association Members Bars’ International
Bar Association, May 2002.
• ‘Future of the WTO’ - ‘Sutherland Report’. Journal of International Economic Law, Volume (8), 2005;Pg 623-29.
• ‘Australian Legal Services Export Development Strategy 2003-2006’, International Legal Services Advisory Council,
Attorney General’s Department, Government of Australia, March 2003.
• ‘India-ASEAN Cooperation in Services: an overview’ Suparna Karmakar, ICRIER, Working Paper No 176, November 2005.
• ‘US Opposes limited FTA with India’, The Economic Times, 9th February, Bangalore Edition, 2005.

Reference of Websites:
• http://www.legal500.com/as500/frames/in_fr.htm
• http://www.ashurst.com/office.aspx?id_Content=113
• http://www.ustr.gov/assets/Document_Library/Reports_Publications/2001/2001_NTE_Report/asset_upload_file786_6575.p
df?ht=india%20legal%20services
• http://www.uscsi.org/publications/papers/LetterToAmb.pdf
• UK Department of Constitutional Affairs: Justice, Rights and Democracy, Report 2002-2003.
http://www.dca.gov.uk/dept/report2003/04.htm
• TN/S/W/37 S/CSC/W/46

24
 • http://www.globallawreview.com/outsourcing.html
• http://www.officetiger.com/
• ‘India to pursue own trade deals’, 27th July 2006, BBC News - http://news.bbc.co.uk/2/hi/south_asia/5212932.stm
• UK Lawyers Shift Legal Record Jobs to India’, December 12th 2003, www.rediffmail.com
• http://www.practicesource.com/ale/blog/pivot/entry.php?uid=standard-532
• UK Department of Constitutional Affairs: Justice, Rights and Democracy, Report 2002-2003.
http://www.dca.gov.uk/dept/report2003/04.htm
• ‘Paving the Way for Limited Liability in India’, Darrel Wright, Asia Law, March 2006, www.asialaw.com
• “Professionalism and the practice of law as a trial lawyer”. This article, reprinted with permission from the American Inns of
Court and Mart R. Vogel, was originally published in the March/April 2004 issue of The Bencher, a bi-monthly publication of
the American Inns of Court. http://www.court.state.nd.us/court/news/mart/vogelprof.htm
• Ramon Mullerat, Opening of services, mobility of lawyers here to stay- It’s a new world and will affect the legal profession
intensely. Refer http://www.financialexpress.com/print.php?content-id=70838 of 3/7/2005.
• “Protecting One's Turf?” The Economic Times on 18 may 2002. http://www.globallawreview.com/forlawinin.html
• Carole Silver, “Winners and Losers in the Globalisation of Legal Services: Off-shoring the Market for Foreign Lawyers”
• Carole Silver, “The case of the foreign Lawyer: Internationalizing the US legal profession”. Public Law and Legal Research
Paper Series Research Paper No.01-9; Fordham International Law Journal, Forthcoming. Downloaded from
http://papers.ssrn.com/abstract=287873
• Inbound Position Of The Ccbe Vis-À-Vis Requests For Liberalisation From Third Countries (Outside The Eu) Conseil Des
Barreaux De L'union Europeenne Council Of The Bars And Law Societies Of The European Union, Ccbe – March 1st, 2001.
Refer http://www.ccbe.org/doc/En/lamy_010301_en.pdf
• Singapore Legal profession Act and Legal Profession (International Services) Rules at http://www.agc.gov.sg/lps/02-LPS-
LP(IS)
• India’s Schedule of Services Commitments under the Indo-Singapore CECA at http://www.commerce.nic.in/ceca/anx7a.pdf
• UK urges liberalisation of legal markets’, Britain Today, September – October 2004,
http://www.ukinindia.com/magazines/britaintoday/BTInnerpage.asp?IssueId=77&magzineId=3&SectionId=560&ArticleId=
1624
• ‘India-UK to target doubling of bilateral trade’, The Hindu Business Line, 2nd February 2006,
http://www.thehindubusinessline.com/2006/02/02/stories/2006020202261300.htm
• ‘Senior Australian legal delegation visits India to deepen partnership’, March 2004, Australian High Commission in India.
http://www.ausgovindia.com/ndli/PA_07_2004.html
• Refer Singapore – Australia Free Trade Agreement, Business Sectors, Trade in Goods, fta-gov-au: Online Guide to
Australia’s Free Trade Agreements. http://www.fta.gov.au/default.aspx?ArticleID=223
• ‘India Inc wants FTA in Services with EU: study’, 5th September 2005, www.bilaterals.org

Cases Referred:
• Committee on Professional Ethics v. Humphrey, 377 N.W.2d 643 (Iowa 1985)
• Bates v State Bar of Arizona, "Lawyers' Collective" v Ashurst of the UK & White & Case of the US, SLP No. 2055 of
1996

End Notes

1 For example, in the United States, trade in “services” is a much larger part of our economy than is trade in goods and represents
eighty percent of the gross domestic product. Moreover, legal services are a significant part of this services trade. In 1999, legal
services were the third largest U.S. export in the business services sector. In 1999, $844 million in legal services was imported into
the United States and U.S. lawyers exported $2.56 billion in legal services. During at least five of the last ten years, the export of
U.S. legal services has experienced double-digit growth, increasing at a rate of approximately ten percent per year. GATS’
Applicability to Transnational Lawyering and its Potential Impact on U.S. State Regulation of Lawyers, Laurel S. Terry, 34 Vanderbilt
J. of Transnational Law 989 (2001) as revised 35 Vanderbilt J. of Transnational Law 1387 (2002).
During the last decade, US cross-border exports of legal services more than doubled, reaching $3.4 billion in 2003, which is $2.5
billion more than imports. In 2002, US exports of legal services through foreign affiliates, or commercial presence abroad, were $1
billion. Ref. the letter sent to Peter Allgeier, Acting United States Trade Representative, Office of the United States Trade
Representative (USTR), dated March 18, 2005, by the representatives of a group of law firms to express their concern over the
exclusion of legal services from USTR's list of priority sectors for WTO services negotiations. Given the increasing importance of legal

25
services in the US and global economy, these law firms encouraged USTR to continue pursuing further trade liberalization in this
sector at the WTO Doha Development Round.
2 On 18th March 2005, 14 top US law firms (constituting the legal services Working Group of the US Coalition of Service Industries)
wrote to Peter Allgeier, Acting US Trade Representative, Office of the US trade Representative stating their disappointment over the
exclusion of legal services from the US’s priority list of sectors for WTO’s services negotiations. Making a forceful argument that US’
legal services trade through commercial presence and foreign affiliates was over USD 1 billion in 2002, the letter urged the USTR to
take forward the discussion on legal services in the Doha Round and secure further market access for US law firms globally. Refer :
http://www.uscsi.org/publications/papers/LetterToAmb.pdf (visited 28 April 2006)
3 There is no definition of “Services” in the GATS. But it is generally understood that the term service refers to any activity that adds
value to another economic unit and it may be embodied in transactions relating to production, distribution and consumption of
goods. It may also be reflected in human capital and information. Dr. A. Jayagovind, ‘The GATS and Indian Legal Profession’, Indian
Bar Review (January –June 2004), Volume XXXI (1&2) 2004. Pg 35-44
4 ‘LEGAL SERVICES: Background Note by the Secretariat’, World Trade Organisation, S/C/W43, 6th July 1998
5 Ibid
6 A survey of the world’s top law firms – their composition, areas of interest and spread of activities indicates that the push for
international liberalisation comes from a strong internal market access drive. The world’s top 5 law firms have between 18-37
countries in which they have offices with an average 61% of their lawyers being outside the home country. Id 13
7 Refer Sydney. M. Cone, ‘Legal Services in the Doha Round’, Journal of World Trade, 37(1) (2003), at 29-47.
8 Ibid.
9 UK Department of Constitutional Affairs: Justice, Rights and Democracy, Report 2002-2003.
http://www.dca.gov.uk/dept/report2003/04.htm
10 ‘Communication from Australia – Negotiating Proposal for Legal Services’ World Trade Organisation, S/CSS/W/76’, 28th March
2001.
11 The proposal numerates 10 restrictions that Australian exporters have identified as impediments to further liberalisation of the
legal services sector which are – restrictions/prohibitions on establishment of foreign law firms, restrictions/limitations on joint
ventures between local and foreign firms, restrictions on the practise of home-country law and third country law, restrictions on
employing local lawyers, restrictions on profit-sharing by local and foreign firms, numerical ceilings on foreign lawyers, unreasonable
restrictions on licensing, limited or no recognition of qualifications, lack of transparency in regulatory processes and systems and
onerous visa procedures. Refer TN/S/W/37 and S/CSC/W/46 at www.wto.org (visited 5 May 2006).
12 An often cited reason for this dominance of OECD countries is the concentration of cross border trade in legal services around the
world’s major financial and commercial centers – London, Brussels, Frankfurt, Hong Kong, New York, Paris, Singapore and Tokyo.
13 ‘Managing Request-Offer Negotiations under the GATS: the case of Legal Services’, OECD 2004.
14 In recognising the problem of lack of accurate and reliable data in India’s service sectors, Dr. Ashok Haldia, Secretary of the
Institute of Chartered Accountants of India (ICAI) observes – “Another problem that GATS faces today is the lack of availability of
data to facilitate analysis and proper perspective on offers to be made and an examination to enable well-considered response to the
requests received. In order to evolve a strategy for growth for exports of the accountancy services and to identify measures for
promotion thereof need for a comprehensive database with empirical research is obvious. India, like most other countries, lacks the
same.”
15 Dr. N.L. Mitra, ‘Trade in Legal Services: Opportunities and Constraints’, 10 NLSJ (1998), pg 32-60.
16 Pistor & Wellons (Ed.), ‘The Role of Law and the Legal Institutions’, Oxford, 1998, pg 82-84.
17 The Legal 500 Series, © Legal500.com the official site of The Legal 500™ (editor in chief: John Pritchard),
http://www.legal500.com/as500/frames/in_fr.htm (visited 15 May 2006)
18 Official website of Ashurst. http://www.ashurst.com/office.aspx?id_Content=113 (visited 15 May 2006)
19 On this ‘informal association’ the Legal 500 Series notes that Jones Day has probably the closest links with Indian legal market
benefiting from its close relationship with Delhi-based P&A Law Offices which was itself set up by one of the Los Angeles partners Jai
Patnaik – brother of P7A Law Offices senior partner Anand Patnaik. The Government of India, Bharti Telecom and Reliance are some
of the clients Jay Patnaik has represented. Refer http://www.legal500.com/as500/frames/in_fr.htm (visited 15 May 2006)
20 The United States Trade Representative Agency’s Annual Report of India’s Trade Openness on Legal Services, Report from the
Office of the United States Trade Representative . Refer
http://www.ustr.gov/assets/Document_Library/Reports_Publications/2001/2001 (visited 16 May 2006)
21 The complete range of current outsourcing services offered includes indexing and scanning documents, word processing, legal
transcription, coding, converting physical data into electronic form, digital dictation, to reviewing transactional and litigation
documents, drafting contracts, research memoranda and due diligence reports, prosecuting patents, surveying laws of various
jurisdictions, and collecting debt.

26
22 Charlie Robinson, Legal Services Going Offshore - A Critical Trend! , Law Practice Today, April 2004. Refer
http://www.abanet.org/lpm/lpt/articles/nosearch/mgt04041_print.html (visited 16 May 2006)
23 Ibid.
24Indlaw: Online Legal Journal. Refer http://www.indlawnews.com/2f0bc2749e410fda9814bc13ae299e1a (visited 20 May 2006).
25‘Offshoring Legal Services to India’, Valuenotes, In-house BPO research agency, December 2005. Refer
http://www.valuenotes.biz/bpo/legaloutsourcing.asp (visited 20 May 2006).
26 ‘LPO to create the next large employment wave’, The Deccan Herald, 12 June 2006,.
27 ‘Legal Outsourcing’, The Deccan Herald, 26 April 2006.
28 The Article gives some interesting examples of Indian lawyers working for US firms on range of offshoring services – Roamware
Inc., in San Jose, California, engaged Indian software professionals and lawyers to prepare a database of key terms in nearly 200
legal documents of the company for monitoring contract compliance. The bill was just around $ 5000 while it might have been called
to shell down $ 60,000 by an US based legal/IT firm. DirectoryM, an online marketing firm based in Cambridge, Massachusetts, uses
Indian lawyers for research in litigation. David Kahan, General Counsel for the company says the cost gets reduced by about 90 per
cent. QuisLex employs 12 lawyers in Hyderabad which analysis state to state Insurance regulations. Solan Schwab, a solo
practitioner, feels that by outsourcing the work, he spends merely a third of what he would spend on hiring a full-time legal
attorney. Id. 5
29 Id.5
30 ‘Legal services offshoring may earn $600 million revenue by 2010’, The Hindu Business Line, 1st January 2006.
31 Ibid.
32 Id. 9
33 An article that examines legal services outsourcing of US firms to India in the light of the US Presidential campaign of 2004 and
Senator’s Kerry’s outspokenness on the matter, gave the following take of one such outsourcing firm – Intellavate LLC. According to
Leon Steinberg, Intellevate's CEO, "The political controversy around off-shoring has focused a lot of attention on the issue. That
attention has caused some law firms to take a wait and see attitude -- after all, some law firms are political animals. However, other
law firms are progressive and are keenly interested in reducing costs and increasing responsiveness. For these firms, the political
debate has actually raised awareness of off-shoring as a well entrenched business trend.” Refer
http://www.practicesource.com/ale/blog/pivot/entry.php?uid=standard-532 (visited 22 May 2006)
34 Before Independence under the British Law, separate rules and regulations existed for advocates and solicitors. Lawyers who
stood in the court and argued the case before the judges were referred as Advocates. Lawyers who wrote the arguments and
prepared the briefs that were to be presented in the court by the advocates were called as Solicitors. They did not argue the cases in
the courts. They were also referred as attorneys.
After Independence, this system was abolished. It was deeply felt that the system in India should be changed according to the
needs of the time and there should be same rules and regulations for all lawyers. The Advocates Act, 1961 was passed. The main
features of the Act are, -
The integration of the lawyers into a single class of legal practitioners know as Advocates. It does not divide them into Advocates
and Solicitors. All are termed as Advocates/ Lawyers, irrespective of whether they appear for the client in the court or write the brief
that is presented in the court.
The establishment of an All India Bar Council and a common roll of advocates (commonly referred as Lawyers). All advocate on the
common roll have a right to practice in any part of the country and in any Court, including the Supreme Court;
.
35 Section 24 of the Advocates Act, 1961 provides that only a natural person who is an Indian Citizen has the right to practice and
be enrolled as an Advocate in India.
36 Article 19(1) (g) of the Constitution of India guarantees that all citizens have the right to practise any profession or to carry on
any occupation or trade or business.
37 In law, a natural person is any being whom the law regards as capable of rights and duties. An entity such as a corporations
created by law and given certain legal rights and duties of a human being are not considered as natural persons. They are referred
as fictitious persons, juristic person or as legal person.
38 Rule 3 of Res. No. 6/1997 of Bar Council of India Rules: “ Subject to the Provisions of the Advocates Act, 1961, a foreign national
who has obtained a degree in law from any Institution/ University recognised by the Bar council of India and who is otherwise duly
qualified to practice law in his own country would be allowed to be enrolled and /or allowed to practice law in India provided that a
citizen of India, duly qualified, is permitted to practice law in that country.
Also refer to the list of Universities abroad who’s Bachelors Degrees in Law is recognised by Bar Council of India.
39 According to Section 45 of the Advocates Act 1961, Imprisonment for a term that may extend to six months shall be imposed on
persons for illegally practicing in courts and before other authorities.

27
40 Rule2 of Chapter III under Section 49(1)(ah) of the Advocates Act, 1961 reads as: “Advocate shall not enter into a partnership or
any other arrangement for sharing remuneration with any person or legal Practitioner who is not an Advocate.”
41 Jasmeet Singh Wadehra, ‘Foreign Law Firms In India’, The Lawyers Collective, January2002, pg. 23-25
42 Restriction imposed by the Foreign Exchange Management Act, 1999.
43 Foreign Exchange Management Act 1999 requires that a foreign resident and a foreign national (such as a foreign law firm) will
have to take permission from the Reserve Bank of India before carrying on any business in India. This will include establishing a
branch office in India.
Moreover according to the same law even if a foreigner is allowed certificate of practice of law in India, the person has to secure
permission from the Reserve Bank of India if desires to acquire foreign exchange and remit the same outside India.
44 Large Law firms like Amarchand and Mangaldas, Fox and Mandal, Singhania etc. are all family based law firms.
45In England, unlike India, the Law Firms and the Lawyers are still divided based on the kind of service they provide. Solicitors are
those who prepare the brief that is presented in the court of law but do not appear personally before the Judge and argue the case.
It is the Advocates who do the arguing in the court before the Judge.
46 There are more than hundred English Law Firms that are considered among the leading Law firms in the world market.
47Many hesitate and refuse to associate themselves into business associations where their liabilities are unlimited. Under unlimited
liability, if the firm gets liquidated, the asset of each partner will be attached to pay off the debts and bear all the expenses of
closure.
48 The concept paper on LLPs is a small first step on the road to creating an LLP law in India and is intended to "combine the
organizational flexibility and tax status of a partnership with limited liability for its partners," according to the concept paper. The
option to undertake an LLP structure effectively fills the gap between the unregulated forms of sole proprietorships and partnerships
and the highly regulated limited liability companies currently in existence in India. Refer Paving the Way for Limited Liability in India,
Darrel Wright, Asia Law, March 2006, www.asialaw.com (visited 10 May 2006)
49 Rule 2 of Chapter III under Section 49(1) (ah) of the Advocates Act, 1961 reads as: “An Advocate shall not enter into a
partnership or any other arrangement for sharing remuneration with any person or legal Practitioner who is not an Advocate.”
50 Most foreign law firms have partners from multiple disciplines like accounting, economics, taxation and other branches.
51 Goolam E. Vahanavati, ‘Entry of Foreign Lawyers in India’, Indian Bar Review Vol. 27(1) (2000).
52 According to Mr. K.C. Mittal, Ex-Chairman, Bar Council of India, “The Council Rules totally prohibit direct or indirect publicity and
regulates a decent conduct and behavior of an advocate in public. The formulation of these rules is an outcome of vast experience
and past legal history to treat lawyers as a privileged and gentleman class….”
53 Like our legal system itself, these values came from England. For example, Sir Malcom Marshall in his book on advocates said
that the first Commandment that a barrister (advocate) must obey is “Thou shall not advertise or solicit work. This is in the highest
degree improper. It is beneath the dignity of the bar.”
54 In Bates v State Bar of Arizona, it was held that State Bar Rules that prohibited attorneys from advertising the scale of their fees
was unconstitutional. This was done on the basis that the right of speech included the right to inform the public of the availability,
nature of products and services and the cost thereof. This performed the function of proper allocation of resources in a free
enterprise system.
55 One court has described the result as follows: The total legal advertising movement, coupled with the climate created by words
taken out of context in implementing Supreme Court decisions (for example, the Bates statement that "the belief that lawyers are
somehow 'above' trade has become an anachronism"), has resulted in increased unsavory solicitation. The horde of lawyers that
descended on the disaster at Bhopal, India, brought the American judicial system into worldwide disrepute. Committee on
Professional Ethics v. Humphrey, 377 N.W.2d 643 (Iowa 1985).
56“Professionalism and the practice of law as a trial lawyer”. This article, reprinted with permission from the American Inns of Court
and Mart R. Vogel, was originally published in the March/April 2004 issue of The Bencher, a bi-monthly publication of the American
Inns of Court. http://www.court.state.nd.us/court/news/mart/vogelprof.htm (visited 18 May 2006)
57 Rule5 of Res. No. 6/1997 of Bar council of India Rules reads: “ No foreign lawyers shall have right of audience in a court of law in
India unless there is a reciprocal right of the same kind to an Indian lawyer in the country of that lawyer’s origin.
58 Article II of Part II of GATS
59 Article XI of GATS
60 Dr. A. Jayagovind, ‘The GATS and Indian Legal Profession’, Indian Bar Review (January –June 2004), Volume XXXI (1&2) 2004.
Pg 35-44
61 Debjani Ganguly “Barriers to movement of natural persons: A Study of Federal, State and Sector specific restrictions to Mode 4
in United States of America” Working Paper of ICREAR, September 2005. Page 37
62GATS’ Applicability to Transnational Lawyering and its Potential Impact on U.S. State Regulation of Lawyers , ©Laurel S. Terry* ,
34 Vanderbilt J. of Transnational Law 989 (2001)as revised 35 Vanderbilt J. of Transnational Law 1387 (2002)

28
63 In most of the states in US, legal professional from other states are required to re-qualify through Bar Examinations of respective
states as qualified members.
64 Ibid 91 at Pg 38-39.
65 Id. At Pg 38
66 The Council of Bars and Law Societies of the European Union (CCBE) is the representative body of over 500,000 European
lawyers through its member bars and law societies. In addition to membership from EU bars, it has also observer representatives
from a further 13 European countries' bars. The CCBE responds regularly on behalf of its members to policy consultations, which
affect European lawyers.
67 Probably the majority of CCBE member organisations accepted the so-called concept of the Foreign Legal Practitioner (FLP) under
which the foreign lawyer is practicing in the host country under his home title. However, a significant minority at that time rejected
the FLP concept and instead followed the concept of full integration according to which the foreign lawyer can practice in the host
country only after he has become a fully integrated member of the legal profession in the host country.
68Inbound Position Of The Ccbe Vis-À-Vis Requests For Liberalisation From Third Countries (Outside The Eu) Conseil Des Barreaux
De L'union Europeenne Council Of The Bars And Law Societies Of The European Union, Ccbe – March 1st, 2001. Refer
http://www.ccbe.org/doc/En/lamy_010301_en.pdf (visited 13 June2006)
69 ‘Overseas lawyers in England & Wales’, International Unit of Law Society, January 2003. This briefing has been produced by the
Law Society’s International Unit to provide a detailed and comprehensive description of the rights of foreign lawyers to practise in
England & Wales. It also describes in detail how the European Directives on the practice of lawyers, which have created a free well-
regulated market for legal services in the European Union, have been incorporated into the regulatory system of England & Wales.
The Law Society has been instrumental in promoting this European system for the regulation of lawyers and believes it assists the
growth and development of legal services for the benefit of clients everywhere.
70 Refer Singapore Legal profession Act and Legal Profession (International Services) Rules at http://www.agc.gov.sg/lps/02-LPS-
LP(IS) (visited 28 May 2006)
71 K.C. Mittal, ‘ WTO and it’s impact on Legal Profession’, Popular Jurist, May-June 2005, Pg 16-18.
72 Jasmeet Singh Wadehra, ‘Foreign LawFirms in India’, The Lawyers Collective, January 2002, Pg 22-25
73For more on the collective’s position read an article from the Hindu on the subject -
http://www.hindu.com/2005/05/21/stories/2005052103031300.htm (visited 20 May2006)
74 Luthra and Luthra is a leading Indian Corporate Law Firm based in Delhi. Excerpts from his presentation as a Speaker in the
UNCTAD Consultation Meeting on Services, at Delhi on 8th and 9th of August 2005.
75 Section 11 of Companies Act.
76 Partnership Act,1932.
77 Rule 36 of Bar Council of India Rules.
78 Id, Rule 20 and 21.
79 Id, Chapter III.
80 Through General Agreement on Tariffs and Trade 1994 (GATT).
81 Through Trade Related Investment Measures (TRIMs)
82 Through Trade Related Intellectual Property Rights (TRIPs)
83 Through Agreements on Subsidies and countervailing measures.
84 Through Agreements on Trade in Services.
85 Dr. N.L. Mitra, ‘Trade In Legal Services: Opportunities And Constraints’, 10 NLSJ (1998), Pg 32-60.
86 According to Section 288 of the Income Tax Act, accounting professionals have been authorized to practise in any court or before
any authority.
87 Ibid 27.
88 Ramon Mullerat, ‘Opening of services, mobility of lawyers here to stay- It’s a new world and will affect the legal profession
intensely’, http://www.financialexpress.com/print.php?content-id=70838 of 3/7/2005. The writer is a Spanish lawyer and former
president of the Council of Bars and Law Societies of the European Union. ( Visited 26 June 2006)
89 India’s central-level government department mandated with negotiating international trade agreements under the WTO
90 SLP No. 2055 of 1996.
91 In 1999, the Law Commission of India prepared a review paper suggesting a series of radical measures and accompanying
amendments of the Advocates Act, 1961 to introduce legal consultancy regime of foreign law firms in India under the leadership of
the then Law Minister of India Mr. Ram Jethmelani and the then Chairperson of the Bar Council of India.
92 Refer Published as Protecting One's Turf? The Economic Times on 18 may 2002. http://www.globallawreview.com/forlawinin.html
(visited 20 April, 2006)

29
93 According to a recent article in the American Lawyer, “While foreign trade grew fast in the past quarter-century, foreign
investment grew even faster. And the foreign presence of US law firms grew fastest of all. Refer Michael D. Goldhaber and Carlyn
Kolker, Supersonic Lawyers, Am. Law. (5/04)
94 Of the total legal services work in the country, only 10-15% work comes from corporate entity.
95 Those who are a) investing in India i.e., inbound businesses in the country; b) sourcing from India or outsourcing in India; c)
doing business outside India but has an Indian player as party to such business.
96 Carole Silver, Winners and Losers in the Globalisation of Legal Services: Offshoring the Market for Foreign Lawyers,
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=691523 (visited 12 June 2006)
97 Refer Ibid. For home office lawyers, compensation almost always includes cost-of –living adjustment and often includes
subsidization of living and /or travel expenses.. This is unlike the compensation paid to the local lawyers in offshore offices. They
also have little incentive to develop close relationships with firm management.
98 Ibid.
99 Carole Silver, ‘The case of the foreign Lawyer: Internationalizing the US legal profession’. Public Law and Legal Research Paper
Series Research Paper No.01-9; Fordham International Law Journal, Forthcoming. Downloaded from
http://papers.ssrn.com/abstract=287873 (visited 22 May 2006)
100 A similar phenomenon is visible with respect to accounting services. With the opening up of accounting services in the country
many small accounting firms in the country have merged with big multinational accounting firms.
101 The UN CPC, categorises ‘legal services’ as a) legal advisory and representation services concerning criminal law b) legal
advisory and representation services in judicial procedures concerning other fields of law ) c) legal advisory and representation
services in statutory procedures of quasi-judicial tribunals, boards, etc d) legal documentation and certification services and e)
other legal and advisory information .
102 The complete classification list as detailed in the proposal is as follows - Home Country Law (advisory services), Home Country
Law (representation services), Third Country Law (advisory services)¸Third-Country law (representation services)¸Host-Country law
(advisory services)¸Host-country law (representation services)¸International Law (advisory services)¸International Law
(representation services)¸International commercial arbitration services, other alternative dispute resolution services, preparation
and certification of legal documents and other legal advisory or consultancy services.
103 The informal group constitutes Australia, Canada, Chile, the European Communities, Japan, Korea, New Zealand, Singapore,
Switzerland, the Separate Customs Union of Taiwan, Penghu, Kinmen and Matsu, and the United States.
104 ‘GATS: General Agreement on Trade in Services: A Handbook for International Bar Association Members Bars’, May 2002
105 ‘Managing Request-Offer Negotiations under the GATS; the case of legal services’, Massimo Geloso Grosso, OECD Working Party
on Trade Committee, Working Paper NO. 2, 14th June 2004.
106 ‘Moving Professionals Beyond National Borders: Mutual recognition Agreements and the GATS’, United Nations Conference on
Trade and Development, 21st February 2005, UNCTAD/DITC/TNCD/2005/2
107 Ibid.
108 On the matter of qualification requirements, the IBA clearly states that ‘reasonable qualification requirements in the home
country’ should give consideration to a) prior education, experience and training of the lawyer in his/her home-country and b) be no
more burdensome than necessary to fulfil a public policy objective like consumer protection
109 Communication from Australia, Negotiating Proposal for Legal Services: Revision, 10th July 2001, S/CCS/W/67/Suppl.1/Rev.1
110 Updegrove Esq, Andrew ‘United States: Time to Break up the Lawyers’ Monopoly on Legal Services’, The Legal Backgrounder,
Washington Legal Foundation, Volume 14, No. 5, 1999.
111 Canadian Bar Association, ‘Submission on the General Agreement on Trade in Services and the Legal Profession: The
Accountancy Disciplines as a Model for the Legal Profession’, November 2000.
112 ‘GATS: General Agreement on Trade in Services: A Handbook for International Bar Association Members Bars’, May 2002, Page
39.
113 Cone, Sydney. M; ‘Legal Services in the Doha Round’, Journal of World Trade 37(1) 2003, pg 29-47,
114 For a more detailed analysis of the conflicting issues between regional and multilateral trading systems read the report on the
‘Future of the WTO’ commonly referred to as the ‘Sutherland Report’. Journal of International Economic Law, Volume (8), 2005;Pg
623-29.
115 ‘India to pursue own trade deals’, 27th July 2006, BBC News - http://news.bbc.co.uk/2/hi/south_asia/5212932.stm (visited 1st
August2006)
116 Refer India’s Schedule of Services Commitments under the Indo-Singapore CECA at
http://www.commerce.nic.in/ceca/anx7a.pdf (visited 25th July2006)
117 ‘UK urges liberalisation of legal markets’, Britain Today, September – October 2004,
http://www.ukinindia.com/magazines/britaintoday/BTInnerpage.asp?IssueId=77&magzineId=3&SectionId=560&ArticleId=1624
(visited 25th July2006)

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118 ‘India-UK to target doubling of bilateral trade’, The Hindu Business Line, 2nd February 2006,
http://www.thehindubusinessline.com/2006/02/02/stories/2006020202261300.htm (visited 27th July 2006)
119 ‘Australian Legal Services Export Development Strategy 2003-2006’, International Legal Services Advisory Council, March
2003, Attorney General’s Department, Government of Australia.
120 ‘Senior Australian legal delegation visits India to deepen partnership’, March 2004, Australian High Commission in India
http://www.ausgovindia.com/ndli/PA_07_2004.html (visited 1st August 2006)
121 Visit http://www.fta.gov.au/default.aspx?ArticleID=223 for more details. (Visited 29th July2006)
122 ‘India-ASEAN Cooperation in Services: an overview’ Suparna Karmakar, ICRIER, Working Paper No 176, November 2005.
123 ‘US Opposes limited FTA with India’, The Economic Times, 9th February 2005, Bangalore edition.
124 ‘India Inc wants FTA in Services with EU: study’, 5th September 2005, www.bilaterals.org (visited 30thJuly2006).
125 The opening up of Accountancy services has already experienced domination leading to compulsive conditions for merger and
take over. Most small accounting firms closed or merged with large international firms. The size and financial capacity made the
difference.
126Lack of initiative in modernization of the syllabus of the legal education in the country and the limitations of the domestic
regulations have restricted the growth of the Indian law firms.

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