NITI Aayog suggests modernising India's legal services framework

NITI Aayog's report recommends modernising India's legal framework by allowing multi-disciplinary law firms, revisiting advertising restrictions, and clarifying rules on foreign participation to enhance the global competitiveness of the legal services sector.

NITI Aayog has suggested modernising India's legal services regulatory framework by considering multi-disciplinary law firms, revisiting restrictions on advertising by lawyers and bringing greater clarity to rules governing foreign participation in the sector.

Push for Multi-Disciplinary Practices

In its report, India's Services Sector: Insights on Regulatory Regime in Professional Services, NITI Aayog said that permitting law firms to operate as multi-disciplinary practices (MDPs), with appropriate safeguards, could help Indian legal service providers adopt modern business structures and compete globally. "To support evolving business needs, permitting law firms to operate as multi-disciplinary practices (MDPs), subject to safeguards such as i) restrictions on non-lawyer ownership and voting rights; ii) confidentiality and conflict-of-interest protocols; iii) mandatory registration and regulatory oversight, etc., may be considered," the report said. It added that such a move may "enhance global competitiveness."

Clarity on Foreign Participation Needed

The recommendations come as India gradually opens its legal services sector to foreign participation. NITI Aayog said there was scope for greater regulatory clarity on the taxation of revenue generated by foreign law firms in India, conditions governing partnerships between Indian and foreign law firms, and the permissibility of foreign investment in legal services.

India's Restrictive Regulatory Ranking

The report also flagged India's relatively restrictive regulatory environment. Citing the OECD Services Trade Restrictiveness Index, it said India ranked third among 51 countries in terms of restrictiveness in legal services, with a score of 0.865. India ranked second in architectural services and fourth in accounting services, while engineering services were considerably more open.

Revisiting Advertising Rules

NITI Aayog also recommended revisiting restrictions on advertising by legal professionals. Under existing Bar Council of India rules, lawyers are prohibited from soliciting work or advertising their services directly or indirectly. "In light of the evolving nature of the legal profession, particularly in a digitally driven, client-oriented marketplace, a contemporary approach to advertising may be explored," the report said, adding that this could allow legal professionals to responsibly use digital tools to improve visibility and outreach while maintaining professional standards.

Mutual Recognition Agreements

The report further suggested exploring mutual recognition agreements with foreign regulatory bodies to make it easier to recognise legal qualifications and improve the cross-border mobility of Indian lawyers. Such arrangements could include structured mechanisms for bridge courses, licensing procedures and other qualifying conditions based on reciprocity.

Expanding Statutory Recognition

It also proposed expanding statutory recognition beyond advocates to include professionals such as in-house counsel, legal process outsourcing professionals and other legal consultants, reflecting the changing structure of India's legal services industry. (ANI)

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