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June 16, 2009 5:13 PM

Still No Passage to India for Foreign Law Firms

Posted by Zach Lowe


After India's voters gave a strong mandate to Prime Minister Manmohan Singh and his moderate Congress party last month, the country's stock market bounced on the expectation that Singh would liberalize the nation's economy.

Somewhere on the list of things to loosen, we thought, might be India's long-standing ban on foreign law firms--a ban backed by key trade groups of Indian lawyers who fear losing top talent and big business to foreign firms. 

Turns out that isn't exactly at the top of the government's priority list, and may not be for several years, according to several experts Bloomberg spoke to for this story on India's foreign law firm ban.

So firms are doing the next best thing to setting up shop in Mumbai: striking alliances with Indian law firms. We've covered many of the alliances before, including in this 2008 story from Legal Week, our U.K.-based sibling publication, which outlines the partnerships struck by Allen & Overy, Linklaters, and others. 

Some new alliances Bloomberg discusses: Clifford Chance's referral relationship, sealed in January, with the Indian firm AZB & Partners, and Clyde & Co.'s similar arrangement, announced this month, with ALMT Legal. 

Jeffrey Maddox, a Hong Kong-based partner at Jones Day who works on India matters, explained the interest in the country like this: "The outlook for India is very promising--more than any other Jones Day market, in my view."

That's a strong prognosis, especially considering foreign law firms have been banned in India since 1995, when the Mumbai High Court ended a brief window in which three firms (White & Case, Chadbourne & Parke,and Ashurst) won licenses to set up liaison offices; only Ashurst remains.

How soon before the Singh government lifts the ban? Reena Sengupta, whose firm, RSG Consulting, recently analyzed the Indian legal market, is cautiously optimistic.

"Liberalization of the legal sector isn't going to be top of the government's priority agenda, but with its strong mandate, we may see it in two years, rather than five," she told Bloomberg.

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