India’s big firm influx: don’t worry, be happy

International law firms need to start engaging with India with the long term in mind.

The best approach to the Indian market is based on equal standing (for local and international lawyers) and focusing on the development of local talent. Investment in knowhow, training and legal education in the local market is vital if international law firms are to avoid being seen as the robber barons of the 21st century.

International firms often look to common law jurisdictions to source excellent lawyers at trainee or newly qualified level, and India is one of those jurisdictions. These lawyers tend to requalify as English solicitors or US attorneys. But instead of just using these talented young men and women exclusively for Indian transactions, they should, after the same training as everyone else at the firm, be involved in the same range of international transactions as their colleagues from England, New York or any other country.

The gradual entry of international firms into the Indian market will usher in a period in which Indian lawyers will be able to enjoy the equal standing they deserve within the international legal community and within international firms.

Some of the concerns around liberalisation, however, centre around the notion that local firms will not be able to compete with the international firms because there will be a brain drain out of these firms and, indeed, from India. But the brain drain is already happening (even though liberalisation has not happened) – it is a function of globalisation and the quality of Indian law graduates.

Part of the problem may be due to the fact that Indian lawyers do not have the option of joining an international practice in India: if they did, perhaps they would remain. We need to overcome these concerns through a process of debate, empathy and understanding.

Indian firms will change as they start to engage increasingly with international firms, and we are starting to see these changes already. In particular, it is hoped that the Indian firms, in responding to the challenge posed by foreign firms arriving in the market, will become more transparent and even-handed in equity allocation and HR management. This is not intended as a criticism of these firms, it merely reflects the growth cycle of law firms in developing and growing economies and, indeed, reflects what has happened in UK-based firms as recently as the past 10-20 years. However, it would be disappointing if the involvement of international firms in India were to compound practices in equity allocation or HR management that would not be acceptable in London or New York.

Increased foreign investment depends on international standard legal infrastructure. If India wishes to establish its status as an economic superpower, the barriers to entry for international law firms will have to be lifted. There is already reciprocity – as many as nine Indian law firms have already set up in the UK.

Liberalisation in legal services will be much less disruptive than is imagined in some quarters of India. International firms do not want to practise advocacy in the Indian courts. They are not seeking to eliminate local firms; quite the reverse. They want to work with a variety of local firms and establish good relationships. Most lawyers in India are employed in local litigation matters and therefore the arrival of international lawyers will have little or no effect on them.

So what is the perfect strategy for India? No one has a catch-all solution that can address all the issues, but law firms’ approaches must be guided by cultural and political sensitivities and they must pursue strategies that are in the best interests of their clients.

All law firms must think beyond their own agendas and ask themselves, “What can we do for India?”, and maybe then international law firms will be welcomed into this fascinating and exciting market.

Sanjeev Dhuna is a partner at Allen & Overy