India’s new PM – A fresh chance for firms?
After winning a clear majority with 282 seats in India’s parliament, Narendra Modi and the BJP have been given a golden opportunity to force through their program of economic development and market liberalisation. Although the topic of opening the country’s legal market to foreign firms has never specifically been named by Modi, it is an idea that is consistent with his policies.
According to the co-founder and managing partner of the Indian firm Trilegal, Anand Prasad, there is a ‘good chance’ that the legal market will be opened to international firms in the next two to three years. “However, if Modi misses that window, we might have to wait for the next government since most governments will want to avoid such a decision close to the next election,” Prasad told NZ Lawyer sister publication, Australasian Lawyer.
Under current Indian regulations, foreign law firms cannot practice law in India, but many firms still manage to undertake work in India through informal alliances. Trilegal previously had a relationship with Allen & Overy, however it was abandoned when it became clear that the anticipated liberalisation would not eventuate.
Even if foreign firms do remain in a holding pattern for the time being, Australian lawyers are still likely to benefit from the change in government. Vishal Ahuja, partner at King & Wood Mallesons, believes that Modi’s election will jump-start India’s underperforming economy. “I think Modi’s election is going to be a step-change. With 282 seats he’s going to be able to really push through some exciting reforms such as his promise of 'electricity for everyone.'”
“There could be fair bit of Australian action in that space,” Ahuja said. Ahuja predicted that there will be opportunities around energy and resources (particularly coal and uranium), infrastructure development and logistics. “We don’t know precisely where Modi is going to focus first, but those areas will be a real opportunity in terms of things which Australia can provide. I’m hoping that the new government is really going to open things up.”
"If they do open India up to foreign firms, the foreign firms will get in there pretty quickly. It’s just too big a market to ignore,” Ahuja said. “The interesting question has to do with how the big Indian firms will respond, in terms of joining up with other firms.”
Prasad believes that opening India’s legal market to foreign firms would be a positive move overall. “There will be an all-round improvement in the quality of legal services available in India, hence clients will benefit, associates and junior partners will get paid better and Indian firms will be able to hire foreign associates and partners and be able to expand outside India to become international,” Prasad said.
King & Wood Mallesons and other firms currently undertake work in India through ‘virtual practice groups’ which are usually comprised of partners who are based in other Asian hubs such as Hong Kong or Singapore.
In 2010, Freehills and Clayton Utz were amongst international firms facing legal action in India aimed at preventing them from working there. Parties opposed to allowing foreign firms to operate in India believed that it was unfair that there was no reciprocal arrangement that allowed Indian firms to open in other countries. Other opponents of liberalisation were concerned that younger partners and associates would defect to international organisations, and that firms would stop getting referral work from international firms already present in the country.
Top ten foreign law firm India practices
Despite not being allowed to practice on the ground, foreign law firms have been able to build up India-related legal businesses.
1. Allen & Overy
3. Clifford Chance
4. Herbert Smith Freehills
5. Freshfields Bruckhaus Deringer
6. Baker & McKenzie
7. Jones Day
8. Slaughter and May
9. White & Case
10. Skadden, Arps, Slate, Meagher & Flom
Ashurst ranked 11th and Minter Ellison 17th.
Top ten Indian firms
1. Amarchand & Mangaldas & Suresh A Shroff & Co
2. AZB & Partners
3. Khaitan & Co
4. J Sagar
5. Luthra & Luthra Law
7. Lakshmikumaran & Sridharan
8. Nishith Desai Associates
9. S&R Associates
10.Talwar Thakore & Associates
Source: RSG 2013 Indian Firms Report