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Indian law firms ask entry of foreign firms to be put on hold-letter

FILE PHOTO: A Lawyer speaks on his mobile phone as he walks past India's Supreme Court in New Delhi

By Arpan Chaturvedi

NEW DELHI (Reuters) - A group of 125 law firms has called for a reform that will allow the entry of foreign firms into India to be put on hold, calling the proposal "discriminatory" and saying it creates an unlevel playing field between local and overseas companies.

In a 20-page letter to the Bar Council of India, dated March 30 and seen by Reuters, the Society of Indian Law Firms (SILF) argued that domestic reforms are needed before the market can be opened.

India's Bar Council did not respond to Reuters' request for comment on the letter.

India has protected local law firms for decades, allowing foreign lawyers to only operate on a fly-in, fly-out basis. However this month, it allowed foreign lawyers to set up foreign law advisory offices for matters such as M&A and appear in international commercial arbitration.

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The new rules set the stage for a shake up of the legal services sector, which some estimates show is worth up to $4 billion. Some top Indian law firms fear foreign firms could poach their leading talent and spark big fee hikes as competition heats up in the market.

"SILF maintains that reforms of the domestic sector must precede such a decision," the letter said.

At present, domestic firms, unlike foreign ones, are not permitted to advertise their services, raise capital from non-lawyers, or bill clients different types of fee, including so-called “success fees” linked to the positive outcome of a case.

SILF said India passed the new rules without consultation with the local legal community and the decision could also be challenged legally in courts.

That, the group said, "could be an embarrassment before the international community- an outcome that no one wishes".

The Bar Council of India has said its new rules were necessary to help establish the country as a hub for international commercial arbitration and to boost the industry overall.

(Reporting by Arpan Chaturvedi; Editing by Aditya Kalra and Sharon Singleton)