From Reluctance to Reformation: Reflecting the Need for Opening the Legal Market

Towards ‘democratising access to global legal work’, in May 2025, the Bar Council of India (hereinafter ‘BCI’) introduced the amended rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India (originally notified on March 10, 2023), thereby liberalising the Indian legal market. However, the Society of Indian Law Firms (hereinafter ‘SILF’) vehemently criticised the approach of introducing this reform. SILF, in its official press release, stated that BCI had consulted the Law Society of England and Wales instead of considering Indian law firms (hereinafter ‘ILFs’)/lawyers, consciously ignoring the repercussions of the market where the rules are introduced. BCI responded to these remarks as false and misleading. It expresses it as an undemocratic society, resisting to protect its personal interest, and letting the monopoly of big Indian law firms dominate the market.

The notion that the entrance would threaten legal sovereignty as FLF’s would be dominant due to superior infrastructure and more resources is ill-conceived. The move will rather reform the Indian legal market with far-reaching potential benefits than what we anticipate. It will boost competitiveness, improve the quality of services, and align with international standards. Thereby, pushing ILFs to expand their services and work efficiently.

This blog appreciates the decision of BCI to bring the amended rules, analyses the landmark judgements, and highlights the potential benefits & concerns of this decision. Drawing on Singapore’s model of phased liberalisation, the blog aims to provide a balanced perspective on how the BCI is making systematic decisions on the entry of FLFs while safeguarding domestic interests.

The Journey Towards Liberalisation

Notably, till 2009, the BCI opposed the idea of opening the market and followed the model of protectionism. Between 2007-14, the BCI was authorised to identify the prospects and potential challenges of entry of foreign lawyers/FLFs in the field of practice of foreign law and international law in non-litigious activities, based on the principle of reciprocity. Later, the BCI framed the rules for registration of foreign lawyers in India, 2016, under Section  49(1) and 47 of the Advocates Act, 1961. However, they were withdrawn because of legal and procedural reasons.

Later, BCI came up with the rules in 2023. Questions were raised regarding the authority of the BCI to frame these rules and the prospective hurdles presented to Micro Small and Medium Enterprises (hereinafter ‘MSMEs’). On the same line, a writ petition was filed by Narendra Sharma and a group of advocates challenging the validity of these rules. However, it is crucial to note that the Advocates Act,1961, authorises the BCI to frame the rules under the sections stated above. Further, these 2023 rules were amended in 2025 and came into force. 

This highlights that BCI has been making consistent efforts for many years to frame the rules to safeguard the domestic interest while also paving the way for liberalisation. The government has also expressed support for this BCI move, viewing it as a step towards broader trade and legal reforms. However, this endorsement comes after the criticism from the U.K. law society regarding India’s reluctance to include legal services in the India-U.K. Free Trade Agreement negotiations.

Abiding by The Judicial Precedents

In 2009, the Bombay High Court endorsed BCI’s previous stance in the Lawyer’s Collective judgement. It clarified that ‘practice of the profession of law’ covers both non-litigation and litigation. Section 29 of the act only recognizes ‘one class,’ i.e., advocates, and Section 33 provides that only advocates are entitled to practice law. Therefore, it held that only Indian citizens who are enrolled as advocates can practice law.

This view was reiterated in 2018 by the Supreme Court, in BCI v. A.K. Balaji, which held that FLFs and foreign lawyers are barred from practicing law in India. It also held that the Advocates Act, 1961 includes law firms, as it equally applies to groups of individuals or juridical persons, and carved out a narrow exception for FLFs/ foreign lawyers to dispense legal advice to their clients on matters relating to non-Indian laws, for a temporary period on a ‘fly-in and fly-out’ basis in India.

Additionally, both these judgements left the door open to the BCI and the Union of India to formulate appropriate rules regarding the entry and regulation of FLFs. Thereby, empowering the BCI with the discretion to make rules and supervise the functioning of FLFs in India, and also administer ILFs outside India.

Towards A Competitive Legal Market

The introduction of these rules henceforth demonstrates the need to open the market gradually, with strict conditions to make it globally competitive, with an emphasis on establishing it as an ‘international arbitration destination.’ Regarding regularisation, the BCI in the official press release stated that ‘It is working on resolving the issue of advertisement, Limited Liability Partnerships (hereinafter ‘LLPs’), etc, to make sure that ILFs compete effectively’. This decision facilitates access to the market with:

Dual Registration Platform-

Earlier, Indian advocates could not practice simultaneously in India and another country(s) and had to forfeit their licenses to practice outside India. However, under Rule 6(2), Indian advocates are now allowed to practice in the countries where the principle of reciprocity is followed, conditional upon Rule 5, i.e., their fair treatment in other jurisdictions. In case of ‘unfair discrimination’, the BCI holds the authority to bar practicing in such jurisdiction.                                                                    

Affiliation to Merger

FLFs had already influenced the Indian legal market through affiliations. Especially through the popular ‘best friends’ model, where they create an exclusive bond with a particular ILF and send needy clients to each other, helping both firms gain without violating the act. The recent amendment permits unregistered firms to collaborate through referrals and consultancy contracts with ILFs, through which they can avoid tax liabilities and the cost of establishing an office in India, continuing to serve Indian clients from their international base.

Considering this, why would the FLFs register and partner with ILFs when they can already collaborate without registration? Arguably, to have control over service delivery, hiring an Indian legal talent pool, and most importantly, to maintain a brand presence in India. Furthermore, the unregistered firms would be restricted to work in India on a fly-in and fly-out basis, for only 60 days a year, depriving them of the opportunities and long-term benefits this evolving market provides.

After liberalisation, ‘Indian- Foreign firm partnership’ will emerge, as these affiliations would turn up to merge with ILFs to gain local legal market knowledge. As per Rule 2(vi)(b), in such partnerships, ILFs will be able to work independently on Indian laws and partner with FLFs for foreign laws. Therefore, ILFs/advocates can represent the cases referred by the FLFs, provided FLFs don’t participate or make a profit from such cases, and ILFs can refer them cases on foreign law, making it a mutually beneficial agreement.

Obligation to GATS    

General Agreement on Trade in Services (GATS), a treaty regulated by the World Trade Organisation, has made a mandate under Article 16 that members should open their service sectors and trade with each other, with the objective of expanding the economic pool of all the members. India is a party to GATS and, like other member countries, it has opened the service sectors to the member nations except the legal sector.  India, by restricting trade in the legal sector, violates the objective behind the agreement and causes economic loss to the member nations. Therefore, by liberalising the legal sector, India will fulfill its obligations towards the member nations.

Alignment with Arbitration & Conciliation Act, 1996

This move also aligns with the Arbitration and Conciliation Act, 1996, which permits foreign advocates and firms to participate in arbitration proceedings related to international commercial arbitration. Section 2(1)(f) provides that when one of the parties is a foreign native, it becomes their right to seek legal advice from lawyers of their jurisdiction. There is no bar on foreign lawyers representing them in arbitration proceedings conducted in India, and Rule 8(2)(e) of the amended rules reiterates the same.

This decision will help in establishing a standard infrastructure of arbitration in India, facilitating the exchange of know-how from countries like Hong Kong, South Korea, Japan, the U.K., which have built a strong presence in international commercial arbitration. As Justice B.R. Gavai stated, “the BCI step is in the direction to make India a renowned international hub of arbitration, increasing the overall efficiency of the arbitration services in India.”

Singapore’s Gradual Opening: A Model For India

Singapore, the international arbitration hub, opened up its market in a phased approach. Firstly, they brought legislation and came up with the concept of Formal Law Alliances and Joint Law Ventures. But still didn’t allow FLFs to practice Singaporean law directly. Later, they introduced the Qualifying Foreign Law Practice (hereinafter ‘QFLP’) Scheme, which provided selected foreign law practices with licenses to practice Singapore law in all areas, except domestic litigation and general legal practice.

This step enhanced global competitiveness but triggered concerns for MSMEs, as the resource-rich foreign firms could easily hire talent and serve the broader client base. The Singaporean government engaged with the stakeholders and implemented policies such as updating licensing regulations, assisting indigenous companies, and encouraging cooperation. Along with this, the QFLP scheme was regularly reviewed and was subjected to scrutiny to guarantee that reforms were in line with changing demands.

From Singapore's journey, it is clear that regulation and monitoring are key. In India, there is a need to create a specialised body that can be handled by either the BCI or the law ministry. This body should examine the impact of FLFs, address stakeholders’ grievances, collect data to suggest policy changes, and make a real-time effort to implement these changes in a phased and regulated manner.

Additionally, to create a fair level playing field, there is a need for government intervention in skill development programs. Taking a lesson from the Saudi Arabia’s Vision 2030 plan, as per which, FLFs that apply for licences are required to employ a certain percentage of lawyers of the country’s nationality, a certain percentage of the earnings of the foreign firms need to remain in the country, fulfill the knowledge-transfer provisions etc., so to protect the sector from adverse impacts. India should also include such requirements in the rules and regulations.

Concerns and Remedies

The question is whether MSMEs will be able to sustain in the global legal market, as they lack exposure and high-end resources in comparison with the big international law firms. That being said, the market may be trusted to decide, and the fittest will survive. This could be understood through the 1991 LPG reforms, where many Indian businesses survived as they could adapt to compete with global giants. Therefore, instead of looking at the shadow side, this step will help ILFs to flourish internationally.

Moreover, single-window services (offering multidisciplinary services under one roof) provided by FLFs may lead to a breach of confidentiality. The client's comfort comes at the cost of privacy. Their information may be leaked to non-legal professionals, thereby violating their fundamental right to privacy as guaranteed under Article 21 of the Constitution of India. Thus, the first task of BCI would be to frame the code of ethics, which will serve the need for transparency and trust-building.

Recommendations:

The act gives the power to frame the rules, but prohibits the practice of law to foreign advocates/FLFs. The BCI rules are not in harmony with the Advocates Act, 1961, thus, the move of the BCI is a non-starter. Section 2(1)(a), (i), Section 24, Section 29, Section 33, and Section 45 allow only Indian advocates to practice before any authority. As the phrases “practice” and “any authority” are limited to Indian advocates only, there is a need for an amendment before the implementation of rules to allow foreign lawyers and advocates to practice fairly in India.

Moreover, Rule 36 of the BCI rules restricts advertisement or solicitation to protect the noble profession from commercialization, which, as per the BCI, would lead to misleading and unethical practices in the Indian legal sector. However, it has become a dying need to let ILFs advertise in and outside India to remain globally competitive. That being said, certain conditions need to be applied, which can be learned from the U.K. and U.S. advertisement regulations, such as legitimate/true advertisements along with disclaimers, supervision by authorities, maintaining ethical standards, in case of misleading and false statements, subjecting them to appropriate enforcement measures etc. This step would help ILFs highlight credentials and compete fairly and effectively.

In addition, it is recommended that Indian-Foreign firm partnerships should take the form of LLPs. Unlike traditional partnerships, LLPs have limited business liabilities, meaning the partner’s personal assets are protected and cannot be at risk beyond the corporate capital in the business. Additionally, there is no joint liability for misconduct by another partner, which helps protect the interests of both the country’s law firms. In traditional partnerships, tax is charged twice, at the corporate level and individual profit level whereas LLPs provide reduced tax, all paid at once, at the entity level. These are not subject to dividend distribution tax, which means that profits are not taxed again when distributed to partners. When FLFs merge with ILFs, it will be governed by the Limited Liability Partnership Act, 2008. Especially, Sections 34 and 35, which require the annual report and annual return to be submitted, respectively, maintaining the transparency and fairness in partnership. It will also give a fair idea of how these partnerships are benefiting the ILFs.

Conclusion

This move is the need of the hour, with non-litigious activities multiplying. As the world becomes hyper-connected, it is important to open the legal market gradually to let ILFs compete globally and establish their names in the market. This step has far-reaching benefits with providing dual registration platforms, merging with the renowned global giants, which will lead to exchange of know-how, providing the FLFs with local knowledge along with ILFs learning from the better-equipped legal global giants.

With that, there are concerns about the sustainability of local firms in the cut-throat market competition. The government should create a level playing field and create opportunities to develop their skills. However, it will depend on the firm’s determination to get a place in the market. The decision of the BCI is in the right direction, but has to be handled with stringent regulations and a close watch on how things move forward, with making changes like amendments in the act, liberalisation of advertisement with ethical standards to make sure that the process stays fair and benefits everyone involved.  

BCI’s reform to liberalise the Indian legal market, provides with opportunities to compete and expand. It establishes the BCI's authority to frame rules with the help of the preceding landmark judgements. It explores the models of Singapore and Saudi Arabia. Highlights the potential benefits, recommendations & concerns of this decision.

Author: Padamja Gupta, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.