India: Open for business?

After much debate and anticipation, the liberalization of the legal sector now seems imminent. Gautam Kagalwala speaks to lawyers about the arrival of foreign firms and other key developments affecting the state of play in India’s legal market

The legal community is abuzz about the long-awaited arrival of foreign law firms in India with Commerce Secretary Rita Teaotia conveying to law firms behind closed doors that it was a top priority for Prime Minister Narendra Modi. Several lawyers identified this development as a challenge for the legal sector when we queried them about the areas of concern. “The entry of foreign law firms is seen by many to be the biggest threat to the existing law firms who have miles to go before catching up with the quality and delivery of the better foreign law firms,” says Srinivas Kotni, the managing partner of LEXport. Kotni blamed the inadequacy of the legal education system for producing law graduates who are not able to match the quality of their foreign counterparts. Optimists say the entry of law firms from around the world would bring healthy competition and greater efficiency within the profession.

At the time of writing this article, the government was considering liberalizing the legal sector in a phased manner with foreign firms allowed to set up in special economic zones such as the Gujarat Financial Tech City. Shivpriya Nanda, joint managing partner at J Sagar Associates, supports a phased opening of the sector. “So far, many foreign law firms have been servicing their India-based clients from other locations. Their arrival could be both a threat and a fantastic opportunity for Indian firms. It will depend on how nimble the Indian law firms are in restructuring their governance and strategy to deal with this issue.”

Jaya Bhatnagar, the founder of Sieben IP, says foreign firms possess processes and systems such as risk management systems which would make their journey to India expensive if they brought their operating protocols here. “The cost of upholding such a standard in India would result in them charging much higher fees than expected. Moreover, they would have to sustain heavy losses for a duration that may range from three to five years.”