The Society of Indian Law Firms (SILF) has written a letter to the Bar Council of India, denouncing BCI’s Rules for permitting market liberalisation.
Recently, SILF constituted a committee of lawyers headed by Shardul Amarchand Mangaldas Chairman Shardul Shroff to suggest changes to the amended BCI Rules.
Sent by SILF President Lalit Bhasin on July 9, the letter started by congratulating BCI on its endeavour to open the legal services sector to foreign lawyers, saying that it was always in favour of the move, albeit in a phased manner.
However, as it went further, the law firms body observed that BCI’s amended Rules suffered from unclear drafting and legal lacunae that could facilitate the backdoor practice of foreign lawyers, affecting their Indian counterparts.
It highlighted the instances of conceptual issues apart from pure drafting issues, ranging from grammatical errors to repetition, vagueness and lacunae. It also mentioned the definitions of ‘foreign lawyer,’ ‘Indian advocate/lawyer,’ ‘foreign law firm,’ ‘Indian law firm,’ and ‘Indian-foreign law firm’.
Highlighting the ways by which the BCI Rules may be deemed as ultra vires the Advocates Act, SILF said the Advocates Act, 1961 had to be amended before the new Rules could take effect.
Referring to the Supreme Court ruling in AK Balaji, SILF in that case, the Apex Court gave liberty to BCI and the Government to make suitable rules only in respect of two specific matters concerning foreign lawyers – concerning fly-in fly-out practice and participation in arbitration matters. The verdict did not say that there was legal authority for general rules permitting the entry of foreign lawyers and foreign law firms in India.
Section 16(1) of the Advocates Act provided for only two classes of ‘Advocates,’ whereas the BCI Rules created a number of classes, including ‘foreign lawyer,’ ‘Indian advocate/lawyer,’ ‘foreign law firm,’ ‘Indian law firm,’ and ‘Indian-foreign law firm’.
Made under Section 49 (1)(c) and (e) of the Act, which purportedly included the BCI Rules in question, required prior approval of the Chief Justice of India and the Central government.
In case of no approval, there would be a serious ultra vires exposure to the Rules, it added.
The Society claimed that some of the BCI Rules were designed to allow foreign lawyers and law firms to directly and indirectly engage in the practice of Indian law, both in litigious and non-litigious fields.
For example, last paragraph of Rule 2(v) further diluted the concept of permissible domain by omitting ‘foreign law’ and bringing in discretion for BCI to allow other areas:
It said a foreign law firm referred to entities and individuals practising exclusively in non-litigious areas as defined under Rule 8, unless explicitly allowed by the Bar Council of India to undertake additional activities in accordance with Indian laws.
SILF further cited the example of Rule 8(2)(b). While there was a specific prohibition introduced regarding litigious practice, there was no such prohibition on non-litigious practice of Indian law.
As per Rule 8(3), foreign law firms registered under the Rules could carry on the practice of law (including Indian law) – both litigious and non-litigious – through Indian advocates, who were partners or associates in such a foreign law firm.
The law firms body noted that the door to Indian law practice was closed under Rule 2 (c) and Rule 8 (1). However, a very large window was opened by Rule 8(3), which conflicted with the objects and reasons, as well as several preceding rules, such as Rule 8(2)(c) and the undertaking to be given by the applicant in Rule 4(k).
It further said that Rule 9(ii) permitted a registered foreign lawyer or foreign law firm to ‘engage and procure’ legal expertise/advice of one or more Indian advocates registered as foreign lawyers and/or Indian-foreign law firm/s registered as a foreign law firm.
The letter said this sub-rule used ambiguous words like ‘engage’ and ‘procure,’ without describing the nature of the engagement or procurement. It asked whether this was employment or an independent third-party arrangement.
Under Rule 9(iii), foreign firms and foreign lawyers would be entitled to seek advice from Indian advocates and not Indian law firms, without assigning reasons for the same, it pointed out.
The Society observed that Rule 9(vi) was about the entitlement of Indian ‘lawyers’ (and not Advocates) to work ‘abroad’. Interestingly, this disjointed provision found its way into a Rule that dealt with ‘incidental matters’ in connection with practice of law in India.
This rule suggested that BCI was exercising an extra-territorial power to regulate what Indian lawyers could or could not do abroad, noted SILF.
It highlighted that foreign law firms were creating surrogate legal structures/entities to build legal-tech intellectual property and AI-based legal-tech products since foreign regulations permitted them.
Whereas, law firms in India, including emerging law firms, could not innovate on this front due to the restrictions under the Act and BCI rules, that Advocates were not permitted to pursue any active business opportunities.
The Society further expressed concerns over other surrogate structures, including brand-sharing, intellectual property sharing arrangement, profit sharing, and royalty fees with Indian law firms.
It said BCI must have investigation powers for such surrogate legal structures. It was critical that foreign law firms that obtained registration from BCI were made subject to the Chapter V (Code of Conduct of Advocates; Disciplinary Proceedings) for any such investigations (if required) to be conducted by BCI on the basis of any formal complaints received.
As per SILF, BCI lacked the authority to collect any fees or charges for fly-in fly-out arrangements since Section 49(1)(h) of the Advocates Act only empowered BCI to make rules for the fees that may be levied in respect of any matter under this Act. With the Advocates Act unamended, it did not contain provisions on registration of foreign lawyers or firms.
Terming the framework as unfair and onerous for foreign lawyers and foreign law firms, the law firms body claimed that no other country in the world had such a framework for visiting overseas lawyers. Apart from that, this framework was not implementable in any practical sense. There was no mechanism in place for the BCI to monitor the movement of foreign lawyers in and out of India. Indian lawyers were not required to pay fees to foreign regulators or report their visits. BCI was setting a perilous precedent, it added.