Liberalisation: Stop or go?Liberalisation: Stop or go?

Legal services in India grew by an average of 8.2 per cent each year between 2005 and 2012, according to the 2012-13 economic survey that was prepared by the finance ministry. It also noted that “liaison offices” by foreign law firms were permitted under Indian law and recommended “exploring” greater access for foreign law firms, which would “improve the competitiveness of the Indian market”.

The survey stated on page 226 in the services section:

In India the practice of law is governed by the Advocates Act of 1961. Under this Act, foreign law firms are not allowed to engage in practice of law in India. Many foreign legal firms have set up liaison offices (currently permitted under the law), while a few have established referral relationships with Indian firms.

Given that India has benefited from opening up to foreign competition in many other areas, and given that Indian lawyers are offering services across the world (see below), India should explore allowing foreign law firms greater access to the Indian market.

The survey did not elaborate on which foreign law firms had set up liaison offices in India, or under what law liaison offices were legal.

However, the Bombay high court in the so-called Lawyers Collective case against three foreign law firms in late 2009 ruled that foreign law firms were not allowed to operate offices in India. This resulted in foreign firm Ashurst shutting down its Delhi liaison office in February 2010.

The Madras high court’s 2012 decision in a writ petition against 31 foreign law firms and a legal process outsourcing (LPO) company, did not disagree with the Bombay high court. In its ruling it primarily restricted foreign lawyers to “fly-in-fly-out” missions to India in order to advise domestic clients, while clarifying that LPOs should not be giving any legal advice.

LPO boom

The survey also noted that Indian lawyers, who were 50 to 80 per cent more “cost-competitive” than US and UK lawyers, had created a round-the-clock working time zone for legal work. Coupled with their language proficiency, the survey claimed that it made India one of the most preferred Legal Process Outsourcing (LPO) destinations in the world.

Efficient & independent

According to the survey, which the finance minister presented in parliament yesterday, India was the 45th most judicially independent country globally and the 59th most efficient at settling disputes. This was an upwards adjustment of six and five place respectively against last year and better than most South Asian countries, claimed the survey, though it required further improvement, particularly in terms of increasing the speed of case disposals.

Free legal aid services in India reportedly benefitted more than 7.82 lakh persons between April and October last year, while Lok Adalat settled more than 54,000 cases in the same period. The National Legal Services Authority has trained 73,555 paralegal volunteers in India to date, to impart legal awareness to various social groups about the functioning of legal service institutions.

How many lawyers, again?

Finally, the survey also noted that there were 1.2 million registered advocates in India, and around 950 law schools. Legally India revealed this month that in 2011 there were 1.3 million lawyers in India, relying on a right to information (RTI) response from the Bar Council of India (BCI). The BCI chairman Manan Kumar Mishra had claimed in interviews that there were 1.7 million registered advocates in India.

Slow accountants

According to the survey, accounting services have grown more slowly than legal, at around 6 to 7 per cent since 2005-6, accelerating to 7.1 per cent growth in 2011-12. The finance ministry survey notes: “As with legal services, FDI in accounting services will help improve the competitiveness of the Indian market, and link it better to global markets.”

The survey did not publish figures or sources about the total size of the legal or accountancy markets.

Photo by OliBac

Photo by OliBac

Click here to read services section of survey

Excerpts:

Legal services have been growing at a steady rate of 8.2 per cent in each of the years from 2005-6 to 2011-12. The Indian legal profession today consists of approximately 1.2 million registered advocates, around 950 law schools, and approximately 4 to 5 lakh law students across the country. Every year, approximately 60,000–70,000 law graduates join the legal profession in India. India is ranked 45, with a score of 4.5, in terms of judicial independence by the Global Competitiveness Report 2012-13, an improvement from 51 st rank in 2011-12. As regards efficiency of the legal framework in settling disputes, India is ranked 59, with a score of 3.8, an improvement from 64 th rank a year before. India is ranked at 52nd position when it comes to the efficiency of the legal framework in challenging regulations, with a score of 3.9, a marginal declined from 51st position in the previous year. Though India's rankings are better than most of the South Asian and some South East Asian countries in all the three parameters, there is a need for further improvement particularly in speeding up disposal of cases. The economic growth in our country has inevitably led to complex laws and regulations and it is important that lawyers across India have access to the necessary tools to keep pace with the change.

The practice of law has however changed drastically in the past few decades due to liberalization and associated economic growth in India. With industrialization and FDI inflows, the corporate legal sector in India has been witnessing tremendous growth, as also legal process outsourcing (LPO). In India the practice of law is governed by the Advocates Act of 1961. Under this Act, foreign law firms are not allowed to engage in practice of law in India. Many foreign legal firms have set up liaison offices (currently permitted under the law), while a few have established referral relationships with Indian firms. Given that India has benefited from opening up to foreign competition in many other areas, and given that Indian lawyers are offering services across the world (see below), India should explore allowing foreign law firms greater access to the Indian market.

The global financial crisis has not only increased recession-related litigations in developed countries but also encouraged legal outsourcing to cut down costs. India is regarded as one of the best LPO destinations in view of the low cost of legal professionals (50 per cent to 80 per cent more cost competitive than that of the USA and UK), geographical advantage (Indian time zone is distinct from that of the USA and Britain, allowing it to offer legal services round the clock), language proficiency (emphasis on English education), and the legal system (which is inspired by the legal systems of the USA and UK). Technologically too, the Indian LPO industry has made rapid strides as Indian service providers can make use of advanced means of communication technology. Indian legal service providers offer legal support in the form of research document reviews, drafting of documents, making applications for patents, and various paralegal and administrative tasks.

The National Legal Services Authority (NALSA) has been constituted under the Legal Services Authorities Act 1987 to monitor and evaluate implementation of legal aid programmes and to lay down policies and principles for making legal services available under the Act. Free legal services include payment of court fee, process fees and other charges incurred in legal proceedings, services of lawyers, obtaining and supply of certified copies of orders and other documents in legal proceedings and preparation of appeal, paper book, etc. During the period from 1 April 2012 to 31 October 2012, more than 7.82 lakh persons have benefited through legal aid services in the country. Of them, there were more than 23,000 persons belonging to the scheduled castes and about 20,000 persons from the scheduled tribes. More than 37,000 women and about 5900 children also benefited. During this period more than 54 thousand Lok Adalats have been organized and these Lok Adalats settled more than 17.30 lakh cases. A Para-Legal Volunteers (PLVs) project has been developed by NALSA for the purpose of imparting legal awareness to various target groups. As on 31 December 2012, 73,555 PLVs have been trained in the country and have started functioning, bridging the gap between common people and legal services institutions.

Photo by OliBac
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Like +1 Object -1 bhola 01 Mar 13, 11:01
whats the status of the appeal against the mad hc case pending in the SC? No reports seen in LI for a long time.
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Like +1 Object -1 Om Cheaterjee 01 Mar 13, 12:14
I am setting up a huge LPO in NOIDA with a great future. Pleople willing to invest in this venture may leave their contact details here.
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Like +1 Object -0 Andhra-preneur 01 Mar 13, 17:57
Hello Om. What IRR would you promise and what would you think you can deliver? Do you accept all-cash investments? I have some suitcases left from the last raid....In fact, I think you should set up this LPO in Hyderabad. Cheaper, government is more friendly to work with and you will find many like minded individuals and entrepreneurs. Entrpreneurial ecosystem is the best.
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Like +1 Object -1 Om Cheaterjee 04 Mar 13, 13:22
Dear Andhra-Preneur, I am ready to do and deliver anything if you give me money. Money in any form, whether in cash, banknotes, precisous metals and stones etc, is accepted. Please give me you address and let me know when can I lift those bags to help in reducing your weight. I have already helped people based in Andhra, Indus River, Delhi and London in reducing considerable weights. They all know about the world class facility created by me and headed by a top-notch CEO! You can check and verify.
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