Door's open, yet foreign law companies stay on the fence

Mumbai: Nearly a year after the country's legal professional regulator, the Bar Council of India (BCI), moved to open the market to foreign law firms, the experiment has struggled to take off.

International law firms remain hesitant to launch offices in India due to a raft of issues, including a lack of regulatory clarity from the BCI, ambiguity around tax treatment, and the sector's notoriously thin margins compared to the mature markets in the West.

Last May, the BCI notified amended rules allowing foreign lawyers and law firms to practise international law in India on a reciprocal basis, as part of a drive to make India a hub for international arbitration.


The notification allowed foreign law firms to establish offices in India, provided their home countries extend the same opportunity to Indian lawyers.

Sources say that to date, one UK-based firm and two Japanese firms are believed to have approached the authorities to start operations in India.

"There are a few challenges on which we are seeking clarifications and undergoing discussions with our colleagues at the BCI," said Mark Evans, president of the Law Society of England and Wales. "These include fly-in and fly-out (FIFO) or temporary presence rules, which entail a mandatory requirement for our firms to submit a prior declaration for each visit, as well as a fee."

The Law Society is a professional association representing solicitors in England and Wales.

'Scope of Work'

The BCI’s notification stated that foreign lawyers and law firms may advise clients on transactional and corporate matters, including joint ventures, mergers and acquisitions, intellectual property and contract drafting.

However, they are not permitted to appear before courts, tribunals or other statutory or regulatory authorities. They are also barred from property conveyancing, title investigation and similar work.

Dr Lalit Bhasin, president of the Society of Indian Law Firms (SILF), said the BCI rules lack clarity on key issues such as the disciplinary authority for misconduct by foreign law firms.

“There is also ambiguity about reciprocity. Moreover, there is pending litigation challenging the validity of the rules as being contrary to the provisions of the Advocates Act,” said Bhasin. “Foreign law firms may not want to make significant investments by opening offices in India due to the lack of clarity and uncertainty regarding their status. Moreover, foreign law firms face strong competition from Indian firms at much lower cost to clients,” he added.

An email query to the BCI seeking comment remained unanswered until the time of filing.

Data compiled by ETIG show that companies listed on Indian bourses spent Rs 86,563 crore ($9.23 billion) during FY25, up 13.5% from Rs 76,163 crore ($8.91 billion) in the previous year.

Ashok Lalwani, a shareholder at US-headquartered law firm Greenberg Traurig, said some have challenged the BCI’s authority to notify the liberalisation rules, citing the AK Balaji Supreme Court decision. He added that it would be beneficial for the government to reinforce the BCI’s authority through appropriate legislation.

A Mumbai-based lawyer, speaking on condition of anonymity, said that even with greater clarity, Indian pricing could be a key deterrent. While top-tier Indian partners charge rates comparable to UK or US firms, average Indian partners bill about $200 per hour, roughly half of UK rates and a quarter of US rates.

“Thin margins, along with tech disruption challenging the billable hour model, are factors firms will consider before formally entering India,” he said.

“A few UK law firms are currently considering setting up offices in India, and we also await publication of the BCI committee report examining the entry of foreign law firms,” said Evans.

“Alongside this, the UK’s Ministry of Justice is engaged in an ongoing dialogue on legal services with India through the UK-India Legal Professional Committee. Continued attention and support from both governments will be important, particularly as resources are allocated to implementing the UK-India Free Trade Agreement,” he added.