Issues Facing The Legal Sector – A Wish List of Reforms

The recent Supreme Court judgement in the NJAC case has once shone the spotlight on the current state of the Indian legal system and the need for reform. There are a number of key issues facing Indian lawyers and in many cases there is no right answer or a perfect solution. This article is an attempt to generate a debate around some of the most important issues, in the hope that it will bring change.

How can the prestige and standing of the legal profession be improved?

Low Threshold For Entering The Legal Profession: In my opinion, this, and not the entry or foreign law firms or the NJAC versus Collegium debate, is the most important issue facing the Indian legal profession. There was a time when in India, lawyers had the same standing in society as doctors or chartered accountants. Even now, in all developed countries, lawyers (be they attorneys or solicitors or barristers) have a very high social status. Why is it that in India alone the legal profession has fallen to such a low?The main reason is that the threshold for entering the legal profession, despite the presence of many national law universities, is still very low. It is very easy to get admission to a law college (though not to the top ones) and until recently, one became an advocate on completion of one’s law degree. The recently introduced All India Bar Exam (“AIBE”) has not raisedthe entry threshold one bit, though it’s a step in the right direction.

Follow the ICAI’sExample: The Indian Bar Council could take a leaf out of the Institute of Chartered Accountants of India, which makes its exams so tough that only a small percentage of the applicants make it through. By controlling the number of entrants, the ICAI ensures that those who successfully qualify as chartered accountants command a premium for their services. Since every chartered accountant comes with an assured stamp of intelligence and ability to work hard, those who seek employment are eagerly snapped up by banks and other organisations. In my opinion, the AIBE should be made much tougher so that the median quality of candidates entering the legal profession improves. Also, the total number of qualified advocates should be such that there is better equilibrium between demand and supply.

High Thresholds For Entering The Legal Profession Globally: Keeping the entry threshold high is a practice followed by many legal systems. Bar exams in the United States are notoriously tough, though the degree of difficulty varies from state to state. California is supposed to have the toughest bar exam. The United Kingdom does not have bar exams, but if one wants to become a solicitor in the UK, whether in England and Wales or in Scotland or Northern Ireland, one needs to obtain a two-year training contract with an established law firm. The barriers to becoming a barrister are even tougher and as a result a majority of British law graduates do not manage to enter the legal profession.

Bar Exam Preferable To A Training Contract: In my view, the American system of having a bar exam is much more democratic than the British system of having a two year training contract. In the late nineties, the Bar Council had introduced a one-year apprenticeship rule, which was stuck down by the Supreme Court.  In my opinion, India should not go down that route again, simply because, in the current context, an apprenticeship requirement will not improve the quality of new entrants into the profession. Rather, those left out will be those without the right “connections” needed to secure an apprenticeship.

Age Should Be No Barrier – Other Professionals Welcome: In the early nineties, the Bar Council had sought to introduce a rule requiring that only those under 45 years could register themselves as advocates. The idea was to prevent individuals from entering the legal profession, post retirement, from some other profession or from government service. The Supreme Court had, quite rightly in my opinion, stuck down that rule. As long as an individual satisfies the criteria for enrolment as an advocate, age should not be a barrier to entry. Rather, professionals from other streams such as medicine, engineering and the bureaucracy should be encouraged to join the legal profession. A doctor-turned-lawyer is bound to have a huge advantage when handling a medical malpractice suit. A civil engineer-turned-lawyer will be good with construction contracts and a lawyer with an accounting background will have an edge with financial statements.

Three Year Course Should Continue: Recently, the Madras High Court ruled, with a view to improving the quality of entrants to the legal profession, that the three year law degree should be scrapped. Whilst I respect the sentiment behind this ruling, I disagree with it. The five year integrated law degree was introduced because it was felt that many entered the legal profession after not ‘making it’ anywhere else. Apparently, the three year law degree, essentially a second bachelors, attracted those who could not get good jobs after graduation.  Even if there is some truth behind such a statement, the five year law degree has its own drawbacks. There are many graduates from the five year stream who, towards the end of five years, run out of steam, who feel they made a mistake choosing law in the first place. After five years of legal education, a course correction isn’t easy, if one starts to feel one made a mistake in having taken up law. Not everyone makes the right decision when choosing a profession at the age of eighteen!

Most three year law course graduates have a very solid foundation in a discipline other than law, which five year law degree graduates do not have. True, the first two years in the five year degree are meant to provide a foundation in non-law subjects, but law schools are ill-equipped to provide the sort of grounding which is provided by a general arts college. Further, scrapping the three year second bachelor’s course would in effect shut the door to those who wish to switch to law from a different profession. Closing the door to diversity is always a bad idea. As long as the entry levels are high, irrespective of the type of courseundertaken, the quality of the bar will improve.

Continuous Professional Development: Though the Bar Council’s proposal to have advocates renew their registration periodically is a welcome one, it is not sufficient to ensure that advocates continue to keep learning. Globally, lawyers are required to provide to their regulatory body evidence of having undergone a certain minimum number of hours of learning and development. We could adopt this practice in India.

Clearing backlogs and improving efficiency: If we could clear existing case backlogs and improve efficiency, the prestige and standing of the legal profession would definitely improve and clients will benefit. Legal infrastructure, in the form of courtrooms and judges, is as important as building roads and railways and it is obvious that the former has not received the attention it deserves, keeping in mind the Indian population and the per capita judges we have.

Legal Infrastructure: We need to build more courtrooms and hire more judges. The All India Judicial Service was, in my opinion, a good idea, but unfortunately, it is unlikely to see the light of the day. Rather than cry over what could have been done if everyone had cooperated and seen sense, let’s fix the problems that can be fixed. The higher judiciary too has its share of vacancies and even if the NJAC amendments had been upheld by the Supreme Court, I doubt if it would have done much better than the Collegium. We would merely have substituted one set of biases and prejudices for another and the vacancies would have continued. In my opinion, the appointment of judges to the higher judiciary should also be through written exams, rather than by cherry picking senior lawyers who catch the eye of the selection panel. A written exam which may be taken by any advocate who has clocked a minimum number of years after his/her sanad, without the need for references from sitting judges or anyone else, without any consideration for the cases handled or past income, would enable the Law Ministry to not only fill all vacancies, but also create more judicial positions and fill them too. The recent ordinance for setting up commercial courts is a good initiative, but unless hundreds of competent judges are found to staff such courts, this initiative will be in vain. Written exams for the higher judiciary is, in my opinion, the only way forward. It goes without saying that the managers who organise the exams should report to and take directions from the apex court.

Working All Year Round: Long court vacations also contribute to backlogs and delays. Whenever court vacations are questioned, prompt comes the response: don’t judges and lawyers also need to take vacations? They do, but they all don’t need to do so at the same time. The problem is that a few good lawyers corner the lion’s share of the cases in any court. This causes them to lobby against year round functioning of the courts. If only every court could function six days a week and not have holidays other than on the important banking holidays, maybe the backlogs might start decreasing. When busy senior lawyers go on vacations, they would be forced to allow their juniors to handle their cases. Lawyers may end up collaborating more and sharing workloads better.

Mind you, I am not for a moment suggesting that judges should be required to work six days a week, all year round. No, no judge should have to work more than five days a week and they should be entitled to reasonable vacations. This could be done if we had sufficient number of judges – maybe then each judge could hear cases three days a week and spend the other two days writing judgements and doing research. In fact, if we could get the policy for hiring judges right, the lower courts, which are the most heavily burdened, could work in two shifts. Assuming the average judge’s optimum attention span in a day is five hours, courts could have ten hours of hearingson every working day. Lawyers would have to necessarily delegate more work to their juniors and even pay them better.

Need For Better Regulation of Advocates : Advocates are among the most heavily regulated professionals in India. They are supposed to be officers of the court, take on clients as per the cab-rank rule, not turn away any client, charge fees as prescribed by the state bar council and not advertise their services. Despite so many noble regulations, the standards within the legal profession are not so high.

Right To Advertise: Not allowing advocates to advertise their services gives an unfair advantage to established players. In this day and age when every enterprise worth its name has a presence on the internet, why should advocates be prohibited from placing their profiles, experience and contact details on the internet? Some law firms have already taken this route, protected by a flimsy disclaimer. At the very least, every state bar council in India should create a searchable on-line data base of advocates on its rolls, something on the lines of the England and Wales Law Society’s database. This will enable potential clients to locate a local lawyer suitable for their needs, while being informed of such lawyer’s basic details, such as educational qualifications, years of experience, specialisms and whether the lawyer has faced any disciplinary action.

Consumer Courts: If doctors can fall within the ambit of consumer courts, is there any reason why lawyers should receive a special dispensation from the Consumer Protection Act, 1986? The ultimate sufferers are those clients who receive deficient service, since the only remedies available to them, is to file a civil suit for damages or a complaint with the state bar council. The former remedy is not expeditious and the latter is unlikely to provide them with any compensation.

Should foreign law firms be allowed in?

The entry of foreign law firms raises so much emotion and drama that the various issues involved in this question get mixed up. In my opinion, we need to form a view on the following points:

• Should foreign nationals be allowed to enrol themselves as Indian advocates?
• If a foreign national is allowed to enrol himself/herself as an ‘advocate’, should s/he have an automatic right to receive a work permit and to live and work as an advocate in India?
• Should law firms run by Indian advocates in India be allowed to partner with foreign law firms?
• Should only “advocates” be allowed to practice the profession of law as currently mandated by Section 29 of the Advocates Act, 1961? What exactly does ‘practice the profession of law’ mean? Does it only cover court appearances or does it also include any advice given (for a fee) in connection with the interpretation of laws or the preparation of legal agreements?
• Should foreign law firms be allowed to set up offices in India on condition that they only offer foreign law advice?
• If a foreign lawyer were to fly-in and out of Indiato participate in a negotiation or an arbitration, would s/he require a work permit or would a business visa be sufficient?
• Can Overseas Citizens of India enrol themselves as Indian advocates under current laws?
• Can citizens of Nepal and Bhutan enrol themselves as Indian advocates under current laws?

A Global Survey of Entry Requirements For Foreigners: Before we make up our minds on any of the questions given above, let’s take a look at the eligibility criteria prescribed in various developed markets for registration as an attorney or a solicitor.

In the UK, the Qualified Lawyers Transfer Scheme (QLTS)allows lawyers who have qualified in a foreign jurisdiction to take a set of exams and qualify as an English solicitor. Nationality is irrelevant and one can travel to the UK on either a student visa or a business visa to take this exam.

In the State of New York, foreigners can take the New York bar exam if they have done a one year LLM course anywhere in the US. The State of California allows qualified lawyers from other jurisdictions to take its bar exam even if they haven’t studied law anywhere in the US.On the other hand, in the State of South Dakota, only those with a law degree from a law school accredited by the American Bar Association may take the state bar exam. However, there is no nationality requirement. Most other states in the USA follow this practice.

It should be noted that the relative ease of enrolment for foreigners as a solicitor in England and Wales or as an attorney in New York or California does not go hand in hand with grant of work permits for such solicitors and attorneys.  For this reason, one finds numerous English solicitors and New York and California attorneys all over the world, but many of them are dual qualified lawyers and would not have worked in the UK or the US as a solicitor or attorney.  Many lawyers, after doing an LLM in the UK or USA, also qualify in England or New York before returning home. Back home, the LLM stamp, coupled with that of enrolment as a solicitor or attorney,is displayed with pride. If nothing else, the dual qualification helps impress clients!

In Singapore, one needs to be either a citizen or a permanent resident to be eligible to join the Singapore Bar. Further, the applicant’s legal education must be from an approved university. Only a handful of US, UK, Australian and New Zealand universities meet the cut here. However, in Singapore, as in Hong Kong, one finds a number of foreign law firms, largely staffed with foreign lawyers qualified in England and Wales or New York, which offer only foreign law advice(mainly English or New York Laws). Any local law advice which may be required, is given by locally qualified Singaporean lawyers. Since Singapore is the Asian hub for banking and finance and capital markets, foreign law firms based in Singapore have their work cut out, advising on numerous banking andfinance transactions and capital market fundraisings which are documented through agreements that stipulate English law or New York law as the governning law. Singapore has a well-oiled system immigration system and foreign lawyers can easily get an Employment Pass, which then translates into a Residency Permit in no time.

An Indian Bar Exam – For Foreigners: In my opinion, India should allow foreign nationals to enrol as “advocates” with any State Bar Council of their choice after taking an exam on the lines of the England and Wales QLTS. This exam should be tougher than the All India Bar Exam. We could even consider having two sets of exams for foreign applicants, one for lawyers who are already qualified in a common law jurisdiction and a lengthier one for those from civil law and other legal systems.

Work Permits: After putting in place a system whereby foreign lawyers can enrol themselves as advocates, India ought to handout work permits on the basis of reciprocity. If a hundred Indian advocates are issued work permits (in any form) by the USA, India can do the same for US nationals who have enrolled as advocates and wish to practice in India. To be honest, I suspect there may not be a rush for enrolment as an advocate. If and when foreigners are allowed to enrol as advocates, we are likely to see the few who manage to do so return to their home jurisdictions and flaunt their dual qualification.

Foreign Students With Indian Law Degrees: A number of Indian law colleges admit foreign students at the undergraduate and post graduate level. Foreigners who complete either a three year or a five year law course in India should be allowed to take the All India Bar Exam, just like any other Indian law graduate. However, the grant of work permits to such foreign graduates of Indian law degrees should also be on a reciprocal basis. Since many of the foreigners studying law in India are from countries with whom India may not have a reciprocal arrangement for work permits, India could also consider granting, as a goodwill gesture, work permits to a fixed number of foreign lawyers who have studied and qualified in India - say 50 lawyers every year. Eligibility could be decided on the basis of performance in the All India Bar Exam and exams for the law degree.

Partnership With Foreign Law Firms: Whether law firms run by Indian advocates in India should be allowed to partner with foreign law firms is the main issue in the debate involving the entry of foreign law firms. The Bar Council of India Rules state that an advocate shall not enter into a partnership or any other arrangement for sharing remuneration with any person or legal practitioner who is not an advocate.This prevents Indian advocates from forming partnerships with foreign lawyers or firms. Further,rules framed under the Foreign Exchange Management Act, 1999 restrict Indian law firms from receiving funding from foreign partners or remitting any portion of an Indian branch’s revenues to foreign partners by way of royalty or as distribution of profits. In my opinion, preventing Indian law firms from partnering with foreign law firms, receiving FDI and know-how from foreign sources is gross injustice, especially when almost every other sector is allowed to receive FDI. It would be a big boon to Indian law firms if these restrictions could be removed.

Setting Up An Indian Branch: If Indian advocates can partner with foreign lawyers, a logical corollary would be that a foreign law firm can hire a bunch of Indian advocates to start its Indian branch, in compliance with FEMA. If a foreigner wants to work for such an Indian branch, whether qualified as an advocate or not, such foreigner would need a work permit and as mentioned earlier, the issue of work permits must always be on a reciprocal basis.

The Profession Of Law: In my opinion, the phrase ‘practice the profession of law’ used in Section 29 of the Advocates Act would naturally encompass what’s called “non-litigation work” undertaken by law firms. It would be nonsensical to argue otherwise and I agree with the interpretation offered by the Bombay High Court in Lawyers Collective. However, this approach, though mandated by statute, is not very pragmatic. The work done by company secretaries and chartered accountants involves the interpretation of laws and hence involves, to some extent, the practice of law. In the UK and the USA, the right to appear in a court of law is restricted to barristers (solicitors to a limited extent) and attorneys respectively. Also, one cannot call oneself a solicitor or barrister or attorney unless one is appropriately qualified. However, no individual is barred from offering legal advice or from drafting agreements, as long as such individual does not hold forth as a solicitor or attorney. It is high time we amended the Advocates Act (by scrapping Section 29) to move to a similar position. In other words, anyone should have the freedom to draft agreements or offer legal agreement for a fee, provided s/he does not claim to be an “advocate”. The right to appear in an Indian court should be available only to advocates and Section 33 should remain un-amended.

Would the practice of foreign law in India amount to the practice of the profession of law? In my opinion, it wouldn’t, since foreign laws are not ‘law’ in India. The Madras High Court’s ruling in Balaji supports this view.

Only Foreign Law Advice: Like Singapore, India should also facilitate the setting up of firms which only provide foreign law advice. If necessary, work permits should be granted to foreign lawyers who are deployed in such offices, even though I suspect that such law firms would be largely composed of Indian citizens and foreign nationals who hold OCI documents (who would not require work permits), who have qualified overseas. In my opinion, a firm composed of Indian citizens and foreign OCI holders, offering only foreign law advice is within the bounds of exisitng law – they are no different from LPOs from a FEMA point of view. The presence of such law firms in Delhi and Mumbai would serve to boost India’s financial and capital markets and a big portion of the financial and capital market transactions currently carried out from Singapore may move to India. Such firms could also advice Indian MNCs who have operations outside India at a lower cost than firms based overseas.

Fly-in fly-out lawyers: If India is to become a hub for international transactions, it should facilitate the easy movement of lawyers on business visas from other jurisdictions, something which is a common practice across the world. The government’s proposal to follow this is in India (though an ordinance which is awaited) for lawyers taking part in arbitrations should be welcomed.It would be ideal if the Home Ministry could also issue a clarificatory notification in this regard. Should a foreign lawyer who has qualified as an Indian advocate (assuming the laws are amended to permit such qualification) be allowed to appear in an Indian court on a business visa? In my opinion, appearance in an Indian court should require a work permit even if the lawyer in question does not permanently reside in India.

Overseas Citizen of India:The Overseas Citizen of India (OCI) status bestows on foreigners of Indian origin the right to visit India without a visa, to live and work in India without work permits and to generally do all things which Indian citizens can do, except to vote in elections or purchase farmland. India does not permit dual nationality and an OCI document does not equate to Indian citizenship. In 2009, the government issued this notification which states that OCIs may work as advocates in India. A number of Indian advocates who had migrated overseas and acquired foreign nationality returned to India on the strength of this notification, bringing back with them the experience and knowledge they had gained abroad. In my opinion, the terms of this notification ought to be formally incorporated in the Advocates Act to make it amply clear that OCIs, though not Indian citizens, can enrol as advocates, after meeting all requirements under the Advocates Act which are applicable to Indian citizens, other than the nationality requirement of course.

Nepalese and Bhutanese Lawyers:Article 7 of the 1950 India-Nepal Treaty of Peace and Friendship states that ‘the Governments of India and Nepal agree to grant, on a reciprocal basis, to the nationals of one country in the territories of the other the same privileges in the matter of residence, ownership of property, participation in trade and commerce, movement and other privileges of a similar nature.’ On the basis of this provision, a few million Indians live and work in Nepal and vice versa. The 1949 Treaty of Friendship between India and Bhutan has a similar provision and one finds many Bhutanese working in India.Can it be said that these treaties alsoentitle Nepalese and Bhutanese lawyers to parity with Indian citizens under the Advocates Act? In other words, can a Nepalese or Bhutanese citizen with either an Indian law degree (so many Nepalis and a few Bhutanese do enrol in Indian law colleges) or a foreign law degree which is recognised by the Bar Council (Tribhuvan University is recognised), enrol as an Indian advocate? In a way, Nepalese and Bhutanese are similar to OCI – they have parity with Indian citizens, but can’t vote in Indian elections. Article 7 of the Indo-Bhutan treaty actually says that ‘Bhutanese subjects residing in Indian territories shall have equal justice with Indian subjects’ but in the absence of a notification similar to the one issued for OCIs, it is difficult to unequivocally state that Nepalese and Bhutanese Lawyers can enrol as Indian advocates. Also, I don’t think Indian lawyers are currently allowed to practice in either Nepal or Bhutan, assuming someone wants to do so.

In-House Lawyers

Around 6 months ago, when I quit private practice and moved in-house, I applied to my state bar council to suspend my Sanad. I did so because advocates are forbidden from being employed by any person subject to a few exceptions, such as the right to be employed as a teacher. Officially, this rule is justified on the ground that an advocate employed by a litigant cannot be an officer of the court. Which begs the question whether an advocate who receives fees from a litigant can be an officer of the court?

This rule needs to go and I’m not saying this because I am an in-house lawyer. Even when I was in private practice, I’ve never appeared in court, not even once. This rule should be scrapped because there is absolutely no reason why an advocate cannot be an employee and still appear in court on behalf of his/her employer. An employed advocate will have a single client, whilst those in private practice have many and there ends the difference. In-house lawyers usually have a better understanding of the commercial background to disputes involving their employers and would naturally do a better job of explaining the dispute to the judge.

Independent Regulator

Before I conclude, let me deal with a core issue – shouldn’t advocates be regulated by an independent regulator? I mean, if one were to propose that the RBI governor shall henceforth be chosen by a consortium of banks or that SEBI’s chairman would be picked by the top five merchant banks, one would be laughed at. Why then, should advocates be treated differently?  If the Chairman of the Press Council of India is always a former judge of the Supreme Court, surely Indian advocates can accept an independent regulator?

Conclusion

I could go on for a fair bit longer, for example I would like to discuss whether multi-disciplinary partnerships (where lawyers partner with accountants or investment bankers) would make sense in the Indian context, whether law firms should have the freedom to structure themselves as companies and raise money from the public, whether contingency fees should be permitted, whether lawyers should be compelled to have professional liability insurance, whether one party should always be made to pay the other party’s costs in all cases etc., but that’ll take a lot more space and time and hence I’ll save these issues for another article.

Vinod Joseph holds a B.A. LL.B (Hons) from NLSIU, Bangalore, and an LL.M from the LSE. Currently he is Head Legal at Brand Capital, a business division of Bennett Coleman & Co. Ltd. Vinod blogs at www.winnowed.blogspot.com. The views expressed in this article are his personal views and may not be attributed to his employer or anyone else.