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Advocates Act unfit for purpose after Lawyers Collective HC judgment

dead-end-sign_by_Andrew-Mason
dead-end-sign_by_Andrew-Mason

"It's a very important milestone in the evolving debate," says Amarchand Mangaldas Mumbai managing partner Cyril Shroff about the Bombay High Court judgment in the Lawyers Collective case. "Its ramifications will be analysed over the coming weeks by all concerned."

But so far the analysis has yielded little in the way of certainty and the sparse judgment has become a reflection of individuals' hopes and desires, as well as an ill-fitting receptacle for the status quo.

History
In the 1990s Ashurst Morris Crisp, as it was then known, Chadbourne & Parke and White & Case were granted licences by the Reserve Bank of India (RBI) to set up liaison offices in India.

In 1995 the Mumbai-based non-governmental organisation the Lawyers Collective challenged this in the Bombay High Court and argued that the foreign firms were practising law in contravention of the 1961 Advocates Act.

The Lawyers Collective co-founder Anand Grover explains that the action was born out of the inherent unfairness that Indian qualified lawyers were not allowed to appear in English or US courts while international firms set up offices in India and were free from local regulation – in short, the reciprocity argument, which is also enshrined in the Advocates Act.

"We travelled abroad and we have seen how we are not allowed to practice," recounts Grover, "and then we saw this amazing situation that [foreign firms] are coming and setting up a practice, and lo-and-behold they were practicing law."

On 9 October 1995, the Bombay High Court gave an interim order in the Lawyers Collective favour.

"Indian advocates are the only people entitled to practise the profession of law," it read, "by giving legal advice as attorney and Counsel-at-Law or by drafting or drawing legal documents or advising clients on the international standards and customary practice relating to client's transactions, broadly referred to as non-contentious business."

Click here to download the 1995 judgment

The foreign firms appealed to the Supreme Court of India but in March 1996 the apex court sent the matter back down to the Bombay High Court for a quick decision but instead the case has languished there amidst delays and occasional half-hearted hearings until last Wednesday (16 December).

In effect the latest judgment reaffirms the original 1995 decision by declaring the RBI's original grant of licences to the foreign firms illegal and ruling that the foreign firms were practising law and should therefore be bound by and enrolled under the Advocates Act.

Good bench
Whether for or against liberalisation, almost everyone agrees that the court's reasoning has been logical. "I think it's a very well-written judgment," says the Society of Indian Law Firms (SILF) chairman Lalit Bhasin.

While SILF, according to Bhasin, has been supporting the Lawyers Collective on the case, his view is echoed by others on both sides of the liberalisation debate.

The letter of the law is almost straightforward: section 29 of the Advocates Act states that the only class of persons allowed to "practise law" are advocates who are entered on the roll of the Indian Bar Councils.

The foreign firms argued that the "practise of law" under the Act only includes court-based legal work in India and that transactional work was not subject to the Act.

The Court rejected the view. And in fact a contrary finding would be counter-intuitive: if the Advocates' Act applied only to lawyers in Indian courts, Indian transactional lawyers would be free from any professional regulation.

"It is very important that the preventative practice which is done by corporate law firms remains under some regulated guidelines or the quality of legal advice will go down," approves a Mumbai international bank in-house lawyer. "You would be opening a Pandora's box in legal services regulation."

Law wherever

However, neither the judgment nor the Act directly address whether the "practice of law" also includes non-Indian law transactional work, although the implication certainly exists.

In a worst-case scenario for foreign firms, this prohibition could then reach beyond just applying to firms with liaison offices.

An internal 2007 memo by an international firm with links to India predicted that if the 1995 case were upheld "consequences could include":
  • "Indian and foreign businesses would be obliged to obtain advice in India only from Indian advocates regardless of whether their query related to UK law, US law or other foreign law;
  • Companies will be prevented from engaging lawyers from foreign law firms to go to India to work on specific matters or projects for however short or long a period;
  • Foreign lawyers could not represent their clients in arbitrations and before other dispute resolution tribunals in India even though the dispute was subject to foreign law;
  • A substantial number of people who are not advocates but who advise on matters of law would have to cease to do so - e.g. tax consultants, planning consultants, rating consultants etc."

Legal hospitality
International lawyers flying into India and rendering legal advice behind closed doors of five-star hotel rooms has been almost a cliché for years now, although it is rarely mentioned in polite society.

Despite the unlikelihood of being enforced, the current judgment will do little to encourage these room-bound lawyers to openly take their legal work into the hotel lobbies.

Opinions are nowhere near unanimous on what the law actually allows foreign lawyers to do.

"Of course that is also prohibited, because they are working in the jurisdiction of India and are doing law practice," argues SILF's Bhasin about lawyers creating a de-facto full-time legal practice from hotel rooms.

However, he tempers this view for foreign lawyers coming to India to advise clients as part of negotiating teams or to finalise agreements, where those lawyers are representing their own countries.

"That sort of a distinction has to be there, but the judgment does not mean that no foreign lawyer can come to India – it certainly means that he can come and assist his client and the client will pay his fee for his visit to India," explains Bhasin. "But that can not be construed as being involved in a law practice, which means a consistent course of conduct that is a law practice."

"It applies across the bar," argues the Lawyers Collective's Grover. "I am against everybody practicing [in India] without enrolling. [Unlike Indian advocates, foreign firms] can advertise, they can do whatever they want so they must follow our norms when they are here."

The same rules should be followed by both foreign and domestic lawyers, adds Grover, and therefore foreign lawyers practising in India would have to enrol with the Bar Council as required by the Advocates Act.

FoxMandal Little Mumbai partner Guruprasad Pal, who has been advising White & Case on the matter since 1995, also concedes that foreign lawyers regularly advising Indian clients from their local hotel room could "also be illegal, strictly speaking, according to the judgment".

"It's going to cause a lot of confusion because firms that are advising [Indian] clients from abroad are going to be concerned," summarises Stephenson Harwood arbitration partner Kamal Shah.

However, he also adds that times have changed since the case was first brought. "It is a very specific judgment on a very specific situation which happened 15 years ago," he says. "We have to remember that these three foreign firms actually had physical offices and they had people on the ground. And that's a big difference from lawyers from abroad advising Indian clients and flying into India and passing their advice."

Final secondment?
Secondments by UK lawyers in India are another potential pitfall, if the law and judgment is interpreted strictly and enforced.

A large number of Indian firms - and not just those with foreign best friends - regularly take on secondees from US, UK or European firms.

Although openly few will admit that foreign secondees do any real legal work, no one is under any illusions that fully qualified and expensive lawyer secondees will simply sit in the office, passively watch and learn or do photocopying work for six months.

Bhasin says that secondments would be fine if the secondees were not officially practising. "They could come for training purposes – we can send lawyers to US and UK law firms to get them familiarised, so long as those lawyers to do not engage in active practice of law and are not the wage earners."

"The same principle would apply to foreign lawyers," he adds. "Secondment would not be correct if they are being used as wage-earners or fee earners for the firms."

Best friendships over?
The other point that observers have raised, is that this could spell doom for international best friendships. However, this could be more of a red herring, as best friendships are probably relatively untouched by the judgment, subject to the potential restrictions outlined above.

"In my view, apart from the fact that 'best friend' relationships were not in issue, the judgement does not in any way affect them," says Shobhan Thakore who is a founding partner of Linklaters' Indian best friend Talwar Thakore & Associates.

"We have always been an independent firm of solicitors and advocates and all our partners and associates are qualified Indian lawyers and we did not find anything in the judgement to even remotely suggest that we are not entitled to 'practice law in India'," he says.

Shut up shop?
Unsurprisingly, in light of the confusion and the only recently published judgment, none of the three foreign firms in the case are yet able to publicly express a view on exactly what the outcome will mean for them.

Ashurst is the only one of the three firms that still maintains an Indian liaison office, although it is understood that since 1995 the firm has been bending over backwards to make sure that none of its lawyers ever set foot within the vicinity of its Delhi office.

Ashurst's Delhi office is headed locally by an Indian qualified chartered accountant and is understood to exist primarily to provide value added local knowledge to the firm's clients who want to learn more about India and its political landscape.

"We are pleased that this substantive issue has been directed to the Indian Government for decision as soon as possible," reads a statement from Ashurst. "We continue to believe that opening up the legal market would not only benefit the legal community in India but it would also help to facilitate the continued growth of international business in India.

"In the meantime we will continue to comply with the regulatory requirements in India and any decisions of the RBI in relation to our liaison office."

The other firms have issued similar statements. White & Case says: "We are in the process of reviewing the court's decision in consultation with our counsel. We will of course respect the judgment handed down.

"We do not now and have never practiced law in India. We established a liaison office in India many years ago in full compliance with the regulations established by the Reserve Bank of India and pursuant to the approval granted by the RBI. We no longer have a liaison office in India."

A Chadbourne & Parke spokesperson simply notes: "We are still reviewing the decision and its implications."

Unappealing choices
An appeal in the case to the Supreme Court of India by any of the respondents appears unlikely.

"I think the Government would not like to take it up in appeal, keeping in view what present Law Minister is saying," explains Bhasin. "And even RBI may not be inclined to take it up, which means it is mainly for the law firms but I think they would be ill advised."

"Suppose the Supreme Court throws it out, it would be the end of the road," speculates Bhasin and adds that right now the "window is still open" after the Bombay High Court explicitly noted that the Government should take charge of the matter of foreign lawyers.

And, after almost 15 years of litigation, many at the three foreign firms will have lost any enthusiasm they may once have possessed for the Indian court saga. No doubt at least some partners will be pleased at a modicum of closure that will allow them to continue with their primary business in India, even if the outcome was not altogether favourable.

And will the Lawyers Collective file another case if foreign lawyers violate the judgment? "Only time will tell," sighs Grover. "Hopefully we won't have to file another case."

Unclear solutions

So is it possible to reconcile the judgment with the current activities of foreign law firms in India?

Grover argues that foreign lawyers who want to practice in India and have degrees from qualifying universities should enrol with the Bar Council of India after taking the requisite entrance exam.

Grover claims that enrolment is also available to those who are not Indian nationals or of Indian origins, citing the example of British national Jane Cox, who is admitted as an advocate in Mumbai.

Bhasin takes the conservative interpretation on this point. "I think what the High Court has held and what is the correct position in law, keeping in view the provision of the Advocates Act, is that therefore anyone who is not an Indian citizen can not practice any type of law in India."

FoxMandal Little's Guruprasad Pal agrees to some extent and says that "yes, foreign lawyers would have to enrol as advocates" in order to practice. "That's why there is the direction in the judgment to amend Indian laws if the intention exists [to allow foreigners to practice in India]," he notes.

And take a minute and witness Legally India's vibrant forum discussion on exactly that point, which despite great insight has struggled to come to a satisfactory consensus on whether foreigners can qualify in India under the Advocate Act's reciprocity provisions.

The way forward
To liberalisation proponents this judgment has made it very clear that the letter of the law and the Advocates Act are not on their side.

However, the lack of clarity after the judgment also reveals something much deeper.

The truth of the matter is that the Advocates Act has been pushed near to breaking point since the Indian economy began liberalisation in 1992; the ageing statute is not fit for the purpose of governing the current reality of the Indian legal landscape, in which foreign firms do "practise law" in various forms and guises.

"It needs a very, very clear message now from up above," notes Stephenson Harwood's Shah.

And indeed, irrespective of whether that message will open up the legal market or keep it closed, the least it should do is to bring India's legal regulatory landscape up to scratch with the day-to-day realities of being a law firm lawyer - Indian or otherwise.
Photo by Andrew Mason

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