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December 16, 2009 11:30 AM

India Shuts Its Doors on Foreign Firms

Posted by Zach Lowe

One of India's highest courts has banned foreign law firms from all forms of practice in India, a major victory for a trade group of Indian lawyers and a defeat for firms that opened liaison offices in India during a brief window in the 1990s, according to the blog Legally India.

Representatives of the three firms immediately affected by the ruling--Ashurst, White & Case, and Chadbourne & Parke--have confirmed the nature of the decision and said they are reviewing its implications, according to Legally India and media contacts at two firms that we contacted early Wednesday. Only Ashurst still has an open liaison office in India, and the firm's Web site specifies that the office does not provide legal advice. White & Case conducts much of its India practice from offices in Singapore, a spokesman tells us.

The Bombay High Court's ruling quashes the optimism some legal observers felt in May, when India's voters reelected Prime Minister Manmohan Singh, a proponent of liberalizing the country's economy. Foreign law firms have been banned in India since a 1995 high court ruling that closed the brief window during which the three firms named above opened their liaison offices. 

As we reported in June, several major firms have gotten around the ban by striking alliances with Indian firms under which they refer business to each other. Linklaters, Allen & Overy, and Clifford Chance are among the firms who have struck such deals. 

One interesting note from today's ruling: According to Legally India, the high court ruled that the practice of law encompasses just about everything a law firm might do. Lawyers arguing for the international firms said the ban on the practice of law should apply only to litigation and not to M&A advice and other out-of-court work. 

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Is it slightly ironic that our ABA allows for the outsourcing of legal work to say countries like India, but India is closing off the door to foreign legal firms?

Some of the media has over hyped this judgment. What the Court said is simple. One, Lawyers who are not enrolled as Advocates with the State Bar are not allowed to practice law in India. Second, the liaison office of these law firms, who were essentially carrying on legal functions are not permissible in India. Almost everywhere in the world, enrolling to the Bar is the first requirement.

It is a separate issue whether foreign lawyers can enrol to the state bar. The decision on that has been pending. If you are foreign law firm and want to start a law firm in India with only advocates who are registered at the Bar in India, i dont see anything wrong there. Thats what all the magic circle firms are doing. lets read the fine print before we start commenting on whether INdia has blocked liberalization, etc etc

The judgement is based on the present statues in the country. The court has ruled that issuance of liaison office licence to White & Case, Ashurst and Chadbourne & Parke by the RBI was bad and it has ruled that ‘practice of law’ includes litigious and non litigious matters, a foreign law firms cannot practice in India unles they comply with Advocates Act. Now it is left to the Indian government to make appropriate amendmends to the statutes to allow foreign law firms in India . India may make such amendments only on the reciprocal basis where the other country allows Indian Lawyers to practice in such country. Even in USA, a lawyer registered in one state cannot practice in another state unless he passes the bar exam and enrolles as an attorney in such state.

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