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A Breakthrough in India, or Another False Spring?
The Asian Lawyer
Last week, U.K. Justice Secretary Kenneth Clarke spent three days in India in pursuit of what has become the British legal profession's White Whale: the opening of that market to foreign lawyers.
He returned with a glimmer of hope. At a joint appearance last week, Salman Khurshid, India's Minister of Law and Justice, said his government would "fast track" a decision about whether to liberalize its legal sector.
But there have been false hopes before, and Khurshid admitted he has still to address domestic concerns over the issue. It was about as much as the British government could hope for though, given it has not much carrot to dangle, much less stick to brandish.
The U.K. is not the only nation to urge the opening of the Indian legal market, though the issue has particular resonance there. Legal services are seen by the British government as among the U.K.'s most globally competitive industries, and Clarke said in a Sept. 14 speech at Clifford Chance's London headquarters that he was prepared to "wear out much shoe leather promoting the U.K. as lawyer and adviser to the world." Since India's legal system is based on English law, British lawyers feel it is a natural home for selling their expertise.
Clarke is hardly the first British official to wear out some shoe leather on the issue. Prime Minister David Cameron discussed the legal services sector during a trip to India last July. His predecessor, Gordon Brown, did likewise during a 2008 visit. In early 2009, hopes were high for a breakthrough. India's then-law minister Hansraj Bhardwaj called for Indian lawyers to embrace liberalization and the government began circulating draft rules permitting foreign law firms to open Indian offices.
But then the music stopped.
The idea of opening the market engendered a groundswell of opposition from Indian lawyers, from solo practitioners to the biggest firms. Lalit Bhasin, head of the Society of Indian Law Firms, declared in a fiery opinion piece in India's Economic Times that the Indian profession was "not up for sale." Other leading lawyers have expressed concern about competing with foreign firms while they themselves continue to face a barrage of onerous domestic regulations. By the end of 2009, liberalization looked dead in the water again.
These are the domestic concerns Khurshid will still need to address and weigh against British urging. But urge is really all the British government can do, as there is currently no treaty or agreement compelling India to open its market. India definitely has no obligation to do so as part of the World Trade Organization, says Edmund Sim, a Singapore-based partner at Appleton Luff, a trade law and arbitration boutique. As part of the agreements it signed to join the WTO in 1995, India committed to some opening up in industries like telecommunications, banking and tourism, but legal services was not on the list.
T.S. Vishwanath, a partner specializing in international trade law at Delhi's APJ-SLG Law Offices, says lawyers in India currently see little political or economic benefit to them from liberalization. To win them over, he says, Britain will have to offer something up. "It has to be in terms of what we can get as well as what we give," says Vishwanath.
But what can the U.K. offer? Indian lawyers can already qualify in English law and establish law firms there. "From a negotiating standpoint that's not ideal," says Naboth van den Broek, an international trade law specialist in the Washington, D.C., office of Wilmer Cutler Pickering Hale and Dorr. He notes one area where concessions might be compelling to India, though it is perhaps the area most likely to engender opposition in the U.K. itself. "India -- not just in the legal sector -- is very interested in the further opening of immigration," says van den Broek.
Another way forward for the U.K., says van den Broek, is a proposed European Union-India free trade agreement (FTA). The current FTA discussions encompass legal services, among a raft of other business sectors. As part of the FTA negotiations, India has asked that up to 50,000 highly skilled workers -- including lawyers -- be allowed to work in the EU on a temporary basis. That demand is one of several obstacles that will need to be cleared before an FTA can move forward.
Sim says Khurshid's promise of a quick decision could be interpreted as a sign that India is prepared to move towards a commitment under the FTA. Any unilateral decision on the government's part, he says, will no doubt meet with more opposition within India's legal sector. "They've been very aggressive in asserting their position," he says.
Van den Broek says he can understand why some Indian law firms seek to block foreign access to their market. But those benefits, he believes, are only temporary and hinder domestic firms from becoming globally competitive. "The more ambitious law firms see themselves in the future as international law firms," he says. Only by opening up to foreign firms can they achieve the level of quality and efficiency they need to reach that goal, he believes.
Indian companies are set to benefit too, Sim says. Since 2000, Mumbai-headquartered Tata Group has bought up some of the most British of brands, from Jaguar Cars to Tetley Tea. Increasing access to international law advice in India can only benefit such outgoing businesses, believes Sim.
No doubt Kenneth Clarke made many of the same points during a private meeting with Khurshid and the presidents of the Bar Council of India and The Law Society of England and Wales last week, in which they discussed a road map for moving forward.
But the fact remains that the parties are talking of a road map that leads to more dialogue, and not necessarily to liberalization. The fast track may be slower than it sounds.