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April 01, 2013

U.S. legal profession faces challenges in India

The U.S. legal profession faces significant challenges in providing legal services in India, and addressing those challenges is one of the steps necessary for expanding the  long-term trade and investment relationship between the two countries, the ABA told Congress last month.

“The ABA has long supported a liberalized, rules-based system of international trade, both as a mechanism to advance the rule of law and as a means to enhance the ability of U.S. lawyers and law firms to effectively serve their clients through cross-border practice,” ABA Governmental Affairs Director Thomas M. Susman wrote in a letter to the House Ways and Means Subcommittee on Trade, which held a hearing on U.S.-India trade relations March 13.

Susman noted that the ongoing globalization of commercial activity by American individuals and businesses makes it imperative for U.S. lawyers to be able to provide advice and assistance to their clients wherever the clients need that assistance. The United States, he said, is the largest exporter of services in the world, and the U.S. legal profession exports more than $7 billion in legal services a year. As a rapidly emerging economy and a leading destination for U.S. business and investment, India is a critical market for U.S. lawyers and law firms, he said, but unfortunately India continues to be one of the most restrictive markets.

A 2009 ruling issued by the Bombay High Court prohibits U.S. and other foreign law firms from establishing offices in India, but a 2012 Madras High Court found no bar to foreign lawyers or law firms from providing services on a fly-in fly-out basis to give advice on home country or international law or to participate in arbitration proceedings involving international commercial transactions. The Bar Council of India appealed the Madras ruling, however, and the case is pending before the Supreme Court of India.

The ABA, which will be filing an amicus curiae brief in the case, predicts serious consequences for the U.S. legal profession and U.S. commercial transactions in India if the Supreme Court issues a decision prohibiting fly-in fly-out access.

“Requiring officials of Indian companies to travel outside India to obtain advice concerning non-Indian law would significantly raise the transaction costs of Indian companies, creating an additional impediment to retaining the services of U.S.-based law firms,” Susman said. In addition, prohibiting American lawyers from traveling with their U.S. clients to India to advise on U.S.-related legal issues in connection with transactions, venues, financings, and international arbitrations with India-based companies, Susman said, will severely handicap the ability of U.S.-based companies to pursue activity with Indian counterparties.

Thirty-two U.S. jurisdictions have adopted the ABA Model Rule for Licensing and Practice by Foreign Legal Consultants, which allows foreign licensed lawyers, upon certain conditions, to establish an office in the relevant state and advise clients, face-to-face or otherwise, on the laws of the jurisdictions in which they are licensed without passing any examinations or undergoing any additional training.

The ABA maintains that U.S. lawyers and law firms should be provided access in India comparable to that accorded lawyers from India by most jurisdictions in the United States.

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