Liberalisation of legal services in India

The story of India’s reversed economic fortunes since it instituted liberalization of its regulatory systems in 1991 is famous, and one that can be used to illustrate the extent to which a growth oriented policy approach can turn around the circumstances of developing countries. Amongst the industries that have grown exponentially since the reforms were initiated is the service sector, which now constitutes a cornerstone of India’s GDP; in the wake of these developments, it is interesting to note that the legal services market in India remains extremely reluctant to adapt to the changing world.

The intransigent attitude of regulating authorities about opening the legal sector to foreign investment is particularly inscrutable and ironic because of the demand for India’s legal services growing as rapidly as it is. An increasing number of foreign and multinational companies are entering the market here, with many Indian companies entering into cross-border transactions with them. Consequently, the pressure on the Indian government to open its lucrative legal services market to foreign law firms has mounted, but no significant changes to the rules for the latter’s entry have as yet been attempted.

Paramount among the barriers to entry of foreign practice establishments in the country is the Advocates Act of 1961, a statute that governs the practice of law in India. The key provision of the Act is Section 29, which states that only “advocates” are entitled to practice law in India. To be an advocate, one must also be an Indian citizen. This is subject to two narrow exceptions:

if another country permits Indian lawyers to practice in its jurisdiction, then lawyers from that country will be granted reciprocal privileges in India;

otherwise by special permission of the Bar Council of India which is the supreme regulatory and representing body of the profession in the country.

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