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Foreign law firms 'could gain more access to India'

Posted by: Laurence Simons 06/03/13

Exploring the possibility of letting foreign law firms create legal jobs in India could improve competitiveness in the market, with the current system merely allowing them to set up so-called liaison offices in the country, according to a new report from the finance ministry.

The study also revealed that legal services in India grew by an average of 8.2 per cent each year between 2005 and 2012, pointing to a major reason why law firms may wish to establish a foothold in the nation - it is bucking the trend towards economic contraction and could offer big profits in the future.

Legally India reports that the survey stated: "Given that India has benefited from opening up to foreign competition in many other areas, and given that Indian lawyers are offering services across the world, India should explore allowing foreign law firms greater access to the Indian market."

Ultimately, this symbiotic relationship will be central to any changes that take place in the Indian legal system - if both sides are able to benefit, it is possible that liberalisation will move forward quickly.

However, the complicated nature of the current situation and the restrictions placed on foreign lawyers make it difficult to predict how the finance ministry's reports will be received, especially among territorial Indian lawyers who are keen to keep their domestic monopoly in place.

This seems somewhat reasonable, especially given that the report praised Indian lawyers for their cost efficiency and language skills, and suggested that the country is becoming one of the international centres for legal outsourcing.

"The global financial crisis has not only increased recession-related litigations in developed countries but also encouraged legal outsourcing to cut down costs. India is regarded as one of the best destinations in view of the low cost of legal professionals," the study declared.

India is also performing better than the majority of its South Asian counterparts when it comes to judicial independence and settling disputes, although it is still in a relatively low position globally.

A report last year from law firm Allen and Overy suggested that the majority of business leaders and top legal firms in India are pro-liberalisation, with 71 per cent claiming it will make their companies more competitive on an international scale.

Furthermore, some 63 per cent expressed their hope that this would come about within the next two years.

As India embraces its role as one of the major global players, it is likely that liberalisation will remain at the forefront of the country's issues.