India opens doors to foreign law firms, but experts flag lack of clarity, reciprocity concerns

Last month, India opened its doors for foreign law firms and legal professionals to offer a host of non-litigation services in the country. The decision of the Bar Council of India (BCI) to liberalise the legal service came two years after such a rule was first notified. Unlike last time, when BCI was forced to keep the rule in abeyance due to protests from local legal practitioners, the current changes seem to be here to stay.

While BCI states that the primary objective of the new rule is to safeguard the interests of Indian advocates while regulating the practice of foreign law and international law in India, experts feel there is scope for further clarity. “On paper, the law firm ecosystem has opened. The English, Japanese, US, Korean firms can all set up offices here, but the exact rules of the game, how the structure can be done, how will it be registered in India, what is the kind of dos and don’ts of how they can advice Indian clients or foreign clients, all that are a bit fuzzy right now”, says Rishabh Shroff, Partner of corporate law firm Cyril Amarchand Mangaldas.

As the Indian legal profession waits for operational clarity on several aspects of the new rule, let’s have a look at what the rule is all about and what the key concerns are.

THE RULE

On May 14, the BCI amended the "Bar Council of India Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022” to ‘provide structured opportunities for foreign lawyers to practice foreign law and international legal matters in India’. The Council said that the permission is strictly limited to non-litigious areas ‘under a clearly defined regulatory framework that prioritises the rights and interests of Indian legal professionals'. Foreign lawyers and law firms are expressly prohibited from engaging in litigation practice, appearing before Indian courts, or practising Indian law in any capacity, it said, claiming the Rules and Regulations comprehensively address the principle of reciprocity, ensuring equitable treatment and corresponding obligations for all parties involved.

According to BCI, the objective and aim are to make India a premier hub of International Arbitration, which would benefit Indian Advocates and Indian Law firms by creating advantageous opportunities for them. “The scope of permitted practice for foreign lawyers is strictly confined to non-litigious areas involving foreign law, international law, and arbitration matters, particularly concerning cross-border transactions and international disputes. Foreign lawyers may participate in international commercial arbitration conducted in India, provided such arbitration involves foreign law or international law, thereby promoting India as a viable destination for international arbitration without compromising the rights of Indian legal professionals”, the Council says.

Further, the regulatory framework is expected to strike a balance between global integration and the protection of Indian legal practitioners by enabling Indian lawyers to access foreign legal markets based on principles of reciprocity. It strives to permit Indian advocates and law firms to register as foreign lawyers or foreign law firms, allowing them to expand their practice to foreign law and international law consultancy without relinquishing their rights to practice Indian law in domestic forums. “This dual registration provides Indian lawyers with an opportunity to broaden their professional horizons while maintaining their status as advocates under Indian law”, the Council says.

THE CONCERN

Pavan Kumar Vijay, founder of the financial and legal consulting firm Corporate Professionals, lists out a series of issues which he believes are matters of concern. His primary worry is that while the rule talks of “principles of reciprocity”, the decision has been unilateral without any clarity on how other countries will respond to this decision. “To my concern, this policy has been implemented without first securing assured reciprocity—that is, a guarantee that Indian law firms will be allowed similar access to practice in foreign jurisdictions. In the absence of mutuality, Indian firms risk being disadvantaged in a game that’s uneven from the start”, Vijay says.

He says that the disproportionate advantage that large, resource-rich foreign firms enjoy with their deep pockets, brand equity, and global client relationships can easily overshadow India’s small and mid-sized firms, which form the backbone of the country’s legal system. “Over 98% of Indian advocates are individual practitioners, and less than 2% are associated with large firms. This structural reality makes the playing field inherently unequal. The sudden entry of foreign players could also trigger a spike in talent costs, leading to a talent war. Indian law firms, especially mid-sized ones, may struggle to retain skilled lawyers in the face of international salaries and global exposure. Over time, this could threaten their viability and weaken the domestic legal fabric”, he adds.

Vijay also flags compliance and ethical risks. “Global law firms operate under diverse regulatory regimes. Ensuring uniform enforcement of ethical standards, especially regarding client solicitation, advertising, and professional conduct, will be a major challenge. In India, such practices are tightly regulated under the Advocates Act. However, foreign firms often rely on brand recognition alone, not advertisements, to attract high-value clients, creating an indirect but unfair competitive edge. This could further blur the boundaries around surrogate advertising”, he warns. “An added layer of concern is the potential expansion of global professional services networks—including Big Four consulting and accounting firms—into legal services under this umbrella. This may accelerate consolidation, reduce independent practice opportunities, and concentrate power in a few multinational hands”.

RIGHT BALANCE IS KEY

Liberalisation of services – including legal services – has been one of the discussion points for India in recent Free Trade Agreement (FTA) negotiations with partner countries. The last one to conclude, India-UK FTA, also talks about bilateral services, though there is no specific mention about legal services. Since the government policy advocates for opening up such services to foreign players, protecting Indian stakeholders from undesired effects is the only way to balance such decisions.

The BCI repeatedly states that it has done everything that is needed to ensure this balance. It talks about a pre-registration scrutiny by stating that foreign lawyers and law firms shall be registered in India by the Council only upon obtaining a No Objection Certificate (NOC) from the Ministry of Law and Justice and the Ministry of External Affairs. It also says that by delineating clear boundaries for the practice of foreign law and international legal matters, the BCI ensures that the sanctity of Indian law remains exclusively in the hands of Indian legal professionals while simultaneously facilitating global integration and opportunities in the realm of international arbitration. “This regulatory framework not only upholds the primacy of Indian advocates in domestic litigation but also offers well-defined avenues for them to expand their expertise in foreign law and international arbitration, thereby establishing a balanced and mutually beneficial legal framework in India”.

One cannot find fault with the intentions. No foreign firms have registered in India yet, so we don’t know how effective the safeguards will be. If Indian stakeholders are complaining of a lack of clarity, it is likely to be there in the minds of potential foreign entrants too. Transparency, hence, is key to seeing BCI’s dream of a mutually beneficial framework turn a reality.