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SILF vs BCI – Indian Law Firms Raise Alarms Over BCI’s Foreign Entry Rules, Citing ‘Backdoor’ Concerns and Legal Loopholes: New Delhi, India – A simmering dispute between the Bar Council of India (BCI) and the Society of Indian Law Firms (SILF) has intensified, with SILF submitting a comprehensive representation to the BCI, sharply critiquing the recently amended Rules that permit the entry of foreign lawyers and law firms into India. While SILF maintains its support for the liberalization of the legal services sector, it has expressed grave concerns over the “unclear drafting, scope of backdoor entries and more,” asserting that the current framework is fraught with “conceptual issues apart from pure drafting issues, ranging from grammatical errors to repetition, vagueness, and lacunae.”
The representation, signed by SILF President Lalit Bhasin on July 9, follows the formation of a SILF committee, chaired by Shardul Amarchand Mangaldas Chairman Shardul Shroff, tasked with suggesting amendments to the BCI Rules. At the heart of SILF’s apprehension is the potential for these rules to inadvertently facilitate the “backdoor practice of foreign lawyers,” thereby undermining the interests of their Indian counterparts.
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A Qualified Welcome: Support for Liberalization, But With Caveats
Before launching into its detailed critique, SILF extended congratulations to the BCI for its initiative to open the legal services sector, reiterating its long-standing support for market liberalization, albeit advocating for a phased implementation. However, this congratulatory note quickly gave way to a meticulous breakdown of what SILF perceives as fundamental flaws.
Key definitional ambiguities were highlighted, including those for “Foreign Lawyers,” “Indian Advocate/Lawyer,” “Foreign Law Firm,” “Indian Law Firm,” and “Indian-Foreign Law Firm,” which SILF argues contribute to the overall vagueness and potential for misinterpretation.
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Ultra Vires Concerns: Challenging the BCI’s Authority
A primary contention raised by SILF is that the BCI Rules may be deemed “ultra vires” (beyond the powers) of the Advocates Act, 1961. SILF asserts that the Advocates Act itself requires amendment before the new rules can legally take effect.
Referencing the Supreme Court’s judgment in AK Balaji, SILF emphasized that the Court had granted liberty to the BCI and the Government to formulate rules only for specific matters concerning foreign lawyers – namely, “fly-in fly-out practice and participation in arbitration matters.” The judgment, SILF argues, did not confer general authority for rules permitting the broad entry of foreign lawyers and firms.
Furthermore, SILF points out that Section 16(1) of the Advocates Act recognizes only two classes of “Advocates,” whereas the BCI Rules introduce several new classifications. Adding to the legal precariousness, SILF notes that rules made under Section 49 (1)(c) and (e) of the Act, under which the BCI Rules purportedly fall, necessitate prior approval from the Chief Justice of India and the Central government. “Absent such approval, there would be a serious ultra vires exposure to the Rules,” the representation states.
The Specter of Backdoor Entry and Surrogacy
Perhaps the most significant concern for SILF revolves around what it describes as rules “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.”
SILF cites several examples
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Rule 2(v) Dilution: The last paragraph of Rule 2(v) is criticized for omitting “foreign law” and granting the BCI discretion to permit other areas, potentially diluting the concept of permissible domain for foreign firms.
Non-Litigious Loophole: While Rule 8(2)(b) prohibits litigious practice, SILF highlights the absence of a similar prohibition on “non-litigious” practice of Indian law, creating a potential loophole.
Rule 8(3) Conflict: SILF argues that Rule 8(3) allows foreign law firms registered under the Rules to practice law (including Indian law, both litigious and non-litigious) through Indian advocates who are partners or associates in such foreign law firms. This, SILF contends, creates a significant contradiction: “So, the door to Indian law practice is closed under Rule 2 (c) and Rule 8 (1), but a very large window is opened by Rule 8(3)…Rule 8(3) conflicts 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).”
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Ambiguous Engagement: Rule 9(ii), which allows registered foreign lawyers or firms to “Engage and procure legal expertise/advise of one or more Indian Advocates Registered as foreign lawyers and/ or Indian-Foreign Law Firm/s registered as Foreign Law Firm,” uses vague terms like “engage” and “procure” without defining the nature of the arrangement (e.g., employment, independent third-party).
Selective Advice & Extra-Territorial Reach: Under Rule 9(iii), foreign firms are entitled to seek advice from Indian “advocates” but not Indian “law firms,” without clear justification. Furthermore, Rule 9(vi), which deals with Indian “Lawyers” working “abroad,” is seen as a “disjointed provision” that suggests the BCI is attempting to exercise extra-territorial power to regulate Indian lawyers’ activities overseas.
SILF also voiced concerns about foreign law firms establishing “surrogate legal structures/entities” to develop legal-tech intellectual property and AI-based legal-tech products. This, they argue, puts Indian law firms at a disadvantage due to existing restrictions under the Advocates Act and BCI rules that prevent advocates from pursuing active business opportunities. Similar concerns were raised regarding brand-sharing, IP sharing, profit sharing, and royalty fees with Indian law firms, prompting SILF to request that foreign law firms registered with the BCI be subjected to Chapter V (Code of Conduct of Advocates; Disciplinary Proceedings) for investigations into such surrogate structures.
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The Burden of ‘Fly-in Fly-out’ Fees
The fee structure for “fly-in fly-out” arrangements has also drawn SILF’s ire. SILF contends that the BCI lacks the authority to collect such fees, as Section 49(1)(h) of the Advocates Act only empowers the BCI to make rules for “the fees which may be levied in respect of any matter under this Act.” With the Advocates Act unamended, it contains no provisions for the registration of foreign lawyers or firms.
SILF describes the current fee framework as “unfair and onerous for foreign lawyers and foreign law firms,” asserting that “there is no other country in the world which has such a framework for visiting overseas lawyers.” The Society also questions the practicality of implementation, noting the absence of a mechanism for the BCI to monitor the movement of foreign lawyers. The lack of reciprocal fee requirements for Indian lawyers visiting foreign jurisdictions is also highlighted as a “perilous precedent.”
Reciprocity: A Missing Link?
The principle of reciprocity is another area of significant concern for SILF. It argues that the expression “duly qualified” in Section 24 of the Advocates Act should imply possessing “qualifications required to practice law” in a foreign country. This would mean that if an Indian citizen is qualified to practice in Country X, a citizen of Country X with equivalent qualifications under the Advocates Act should be eligible for enrollment in India.
However, SILF states that Rule 4(d) permits the registration of a foreign lawyer based merely on a certificate from their home country’s government or competent authority. This, combined with the unclear definition of “country of primary qualification” for “artificial persons” (foreign firms), could, in SILF’s view, “automatically provide a backdoor entry to lawyers from non-reciprocating territories.”
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Disciplinary Action: A Regulatory Imbalance
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SILF points out that the BCI Rules explicitly exclude the applicability of Chapter V of the Advocates Act to foreign lawyers, effectively placing them outside the purview of disciplinary action by State Bar Councils or the BCI. This creates a perceived imbalance, where “Indian advocates will be disadvantaged as they will be subject to disciplinary action in the foreign jurisdiction,” while foreign lawyers “will escape disciplinary action in India.”
The inability to take action against foreign lawyers or firms that market and advertise their practices in India, given that Indian lawyers are barred from advertising, is also a significant concern for SILF, as the BCI has “ceded its regulatory and disciplinary jurisdiction to the home country’s regulator.”
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SILF’s Demands: A Call for Consultation and Suspension
Given the extensive list of reservations, SILF has put forth several requests to the BCI:
Consultation: Commence consultations with SILF and other stakeholders on “Phase I (domestic reforms)” before any foreign lawyers or firms are allowed to practice in India.
Immediate Phase I Implementation: Implement Phase I domestic reforms in an immediate and time-bound manner.
Meeting with BCI Committee: Facilitate an in-person meeting with the BCI committee, chaired by Mr. Cyril Shroff, for a presentation on the Rules and deliberations on revisions.
Suspension of Rules: Suspend the current Rules pending the aforementioned consultations, review, and revisions.
Abeyance of Applications: Keep any applications received from foreign lawyers or firms seeking registration in abeyance.
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The ongoing friction between SILF and the BCI highlights the complexities of liberalizing India’s legal market. While SILF emphasizes its support for the principle of liberalization, its detailed critique underscores a fundamental disagreement on the implementation strategy. The BCI, in turn, has questioned SILF’s motives, accusing it of protecting the monopoly interests of a select group of law firms and even considering issuing notices for “professional misconduct” due to what it deems “misleading public information.” As both entities remain at loggerheads, the future landscape of legal practice in India hangs in the balance.
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