Foreign law firms are allowed to register and offer consultation services in India

[sandra]

Foreign Law Firms Can now Register in India

Feb. 10, 2009 (Asia Briefing Media) - Under the newly released Limited Liability Partnership Act 2008, foreign law firms are allowed to register and offer consultation services in India but not practice law. The new enactment was enforced as multinational companies needed international law firms to represent them across borders in complex international deals. The law ministry also felt the introduction of foreign firms would infuse professionalism creating global law firms of Indian origin.

"Foreign law firms can register in India under Section 59 of the LLP Act, for which rules are being framed, and offer consultation. But they can't practice law as right to legal practice is controlled by the Advocates Act which permits only an Indian lawyer enrolled in Bar Council here to do so,'' Union law minister H R Bhardwaj told the Times of India.

The Limited Liability Partnership Bill, 2008 seeks to give companies the best of a partnership and corporation set up. Incorporated under the Indian Companies Act 1956, a partner of an LLP firm is not liable for another partner's misconduct or negligence – each partner’s liability is limited to their agreed contribution in the LLP. Further the partners have the right to manage the business directly, allowing businesses where all investors wish to take an active role in management to flourish. An LLP is seen to be best suited for the services industry and for small scale industries which do require flexibility in legal set up procedures.

The salient features of the LLP Act, 2008 are as under:-

1. The LLP has an alternative corporate business vehicle that would give the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on an agreement.

2. The LLP Act allows the benefit of LLP structure to certain classes of professionals only and would be available for use by any enterprise which fulfills the requirements of the Act.

3. While the LLP has a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or un-authorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

4. LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike an ordinary partnership firm where the maximum number of partners can not exceed 20.

5. The taxation of LLPs shall be addressed in the Income Tax Act, 1961 which regulates taxation of all form of entities.

6. Provisions have been made for corporate actions like mergers, amalgamations etc.

7. While enabling provisions in respect of winding up and dissolutions of LLPs have been made, detailed provisions in this regard would be provided by way of rules under the Act.

8. The Act also provides for conversion of existing partnership firm, private limited company and unlisted public company into a LLP.

9. Nothing Contained in the Partnership Act 1932 shall effect an LLP.

10. The Registrar of Companies (Roc) shall register and control LLPs also.

11. The governance of LLPs shall be in electronic mode in the successful model of the present Ministry of Corporate Affairs Portal.

Source:
Foreign Law Firms Can now Register in India | India Briefing - Foreign Direct Investment in India



Finally, for Foreign Law Firms, a Passage to India?

February 13, 2009, Posted by Dan Slater, WSJ.com

Last April, we blogged a story from the Economist, entitled “Legally Barred,” about how the Indian Advocates Act of 1961 prevents foreign law firms from doing business in India, the most populous democracy in the world.

That could be changing. Last month, the Times of India reported that the newly-enacted Limited Liability Partnership Act could mean that foreign firms can set up shop in India.

Union law minister H R Bhardwaj, who’s been advocating the entry of overseas law firms into India, asked top India law firms to “stop opposing” the opening up of the legal sector and to instead “benefit from it”. He said: “Whether you like it or not the legal services will only go global and if you (the Indian law firms) do not allow overseas law firms to come in, you will be looked upon with suspicion.”

Read more:
Law Blog - WSJ.com : Finally, for Foreign Law Firms, a Passage to India?



India - now open to foreign law firms

Posted: February 19, 2009, by Mitch Kowalski

Asian firm Dezan Shira & Associates have posted an India briefing note that indicates that India's Limited Liability Partnership Act 2008 has now come into force and that as a result, "foreign law firms are allowed to register and offer consultation services in India but not practice law. The new enactment was enforced as multinational companies needed international law firms to represent them across borders in complex international deals. The law ministry also felt the introduction of foreign firms would infuse professionalism creating global law firms of Indian origin."

This now allows foreign law firms to have a formal presence in India and create an office of trained and supervised associates to do routine and repetitive work, perhaps even legal research - at a fraction of the salaries paid to associates in North America. All with the proviso that the firm doesn't practice Indian law. This is not dissimilar to how the legal market opened up in China in the early 1990's - foreign firms were "consultants."

The biggest impediment to a law firm setting up an office in another jurisdiction is the cost of doing so and the fact that it often takes years to obtain any return on its investment. However, because India has a long history of lawyers trained in the Common Law, a foreign firm is able see an immediate return on investment because it can use the Indian office (and its low-salaried associates) to reduce its global costs - while sending the rainmakers out to drum up more lucrative work.

Read more:
India - now open to foreign law firms - FP Legal Post



Bar councils to discuss global law firms’ rush to India

January 27th, 2009 by IANS

New Delhi, Jan 27 (IANS) Amid reports of global law firms forging alliances with Indian counterparts, the Bar Council of India (BCI) has called a meeting of lawyers’ bodies to assess the impact of the trend and work out modalities to regulate the operation of such alliances.The BCI, which is the statutory body for regulation of legal services and education in India, has convened the meeting amidst a growing realisation in the legal fraternity that the entry of foreign law firms in India is now an established fact.

The meeting of state bar councils and associations has also come in the wake of notification of a new law, the Limited Liability Partnership Act, enacted by parliament last December and notified Jan 9, which provides for alliances between an Indian firm with a foreign firm in any sector.

The only condition is that the two firms are liable to pay only limited damages in case of violation of a country’s rules by the other firm.

This law, which also seeks to raise the numbers of the two partnering firms to 100 from 20, is generally being feared by lawyers as an entry ticket for foreign law firms and legal professionals to India.

“The BCI has taken note of the reports on rush of foreign firms to India and notification of the LLP Act, 2008,” BCI chairman Suraj Narayan Prasad Sinha told IANS.

“We have convened a meeting of various stakeholders of providers of legal services and bar associations on Feb 7 and 8 to discuss these new developments and their impact on the legal service sector,” he added.

Sinha admitted it may no longer be possible to keep the Indian legal service sector completely closed to foreign lawyers, but said it was necessary to regulate their entry so that the interests of Indian lawyers are not affected.

Read more:
Bar councils to discuss global law firms’ rush to India



Foreign law firms can register in India, says Law minister

24 Jan 2009, Swati Deshpande, TNN

MUMBAI: The newly-enacted Limited Liability Partnership Act could be the way out for foreign law firms to set up shop in India, Union law minister H
R Bhardwaj said on Friday.

The minister, who has been advocating the entry of overseas law firms into India, asked top India law firms to "stop opposing'' the opening up of the legal sector and to instead "benefit from it''.

"Foreign law firms can register in India under Section 59 of the LLP Act, for which rules are being framed, and offer consultation. But they can't practise law as right to legal practice is controlled by the Advocates Act which permits only an Indian lawyer enrolled in Bar Council here to do so,'' he tried to explain to the media after meeting UK business secretary Peter Mandelson in Mumbai on Friday. Mandelson said in UK, law firms "do not shy away from competition.''

He said there were already 200 foreign law firms in London alone and believed that "there is scope for more Indian law firms to work in UK, a global leader in legal services''.

A 1995 order by the Bombay high court restrained foreign law firms from setting up shop in India and since then matter continues to hang fire in court. But while the law minister is keen that the "mist must be cleared'' over the controversial issue, there is still no indication when that would conclusively happen.

"Whether you like it or not the legal services will only go global and if you (the Indian law firms) do not allow overseas law firms to come in, you will be looked upon with suspicion,'' was his advice to leading Indian law firms, several of who were represented through their partners at the one-day launch and seminar on a resource guide for Indian law firms setting up in the UK.

Read more:
Foreign law firms can register in India, says Law minister-India-The Times of India



A Passage to India: Are Foreign Law Firms in the Country’s Future?

Posted by Dan Slater, WSJ.com

Given that India is the most populous democracy in the world, and the second most populous country in the world, we imagine there’s some nice change to be made in legal fees for lawyers willing to make the trip — not to mention a tasty plate of chicken tikka masala. Unfortunately, though, for the world’s mega-firms, the Indian Advocates Act of 1961 prevents foreign firms from doing business in the country. Here’s a story, entitled “Legally Barred,” from The Economist.

It begins: “If you want to find the legal chiefs of big defence companies such as Boeing or BAE Systems, a good place to start looking is the foyer of the Taj Mahal Hotel in Delhi [pictured]. The in-house legal bosses are in town to appoint law firms to support their push into the Indian market, as the government updates its military equipment. They have to go in person, rather than sending their usual lawyers. . . .”

Read more:
Law Blog - WSJ.com : A Passage to India: Are Foreign Law Firms in the Country's Future?



Should foreign law firms get entry into India?

28 Nov 2005, Dhananjay Mahapatra, TNN

The opening of a legal firm by a Nigerian in Delhi has not only lawyers up in arms against the unauthorised practice but has also revived the decade-and-a-half-old debate over the more important question — should foreign lawyers be allowed entry into India?

A law firm went to the extent of registering an FIR against the unauthorised entry of the Nigerian. The ammunition used against the foreigner were the provisions of the Advocates Act, 1961, which clearly bars foreign lawyers from practising in India.

A few years after the Indian economy was opened up in the early 90s, two similar cases came that to limelight were opening of offices by Ashurst of UK and White & Cases of the US.

It was opined then that foreign firms could open liaison offices in India but not start active legal practice.

The Bar Council of India (BCI), which regulates lawyers and enforcement of the Advocates Act, is clearly of the view that no such concession can be made at present.

Read more:
Should foreign law firms get entry into India?-India-The Times of India

[sandra]

Last April, we blogged a story from the Economist, entitled “Legally Barred,” about how the Indian Advocates Act of 1961 prevents foreign law firms from doing business in India, the most populous democracy in the world. That could be changing. Last month, the Times of India reported that the newly-enacted Limited Liability Partnership Act could mean that foreign firms can set up shop in India. Union law minister H R Bhardwaj, who’s been advocating the entry of overseas law firms into India, asked top India law firms to “stop opposing” the opening up of the legal sector and to instead “benefit from it”. He said: “Whether you like it or not the legal services will only go global and if you (the Indian law firms) do not allow overseas law firms to come in, you will be looked upon with suspicion.” Law Blog - WSJ.com : Finally, for Foreign Law Firms, a Passage to India?

Comments from WSJ.com readers...

India should have done this a long time ago. But of course the massive bureaucracy there keeps things from happening in a timely manner.

Now the global economy has gone down so much that I assume direct investment into India is drying up. All the deal making that would have made foreign firms want to be in India isn’t there right now. I really doubt most global firms are going to take advantage of this change in a major way. They will move cautiously.
Comment by laa - February 13, 2009 at 2:10 pm


Why not revoke their right to provide outsource legal services until the elect full reciprocity?

Its ok for Indian lawyers to practice NY law sitting in Mumbai, but its not ok for foreign lawyers to open there.
Comment by Outlaw - February 14, 2009 at 9:49 pm


Look, we need to look at different issues at stake here. The problem is not about opening legal services. The problem is about the level playing field. Indian lawyers were never allowed to advertise (as per the Advocates Act) and hence they have been placed at a disadvantage since long. I fully agree that allowing foreign firms will have a net spillovers in terms of good practices and professionalism.
Comment by India - February 16, 2009 at 3:29 am