Stop In the Name of The Law: Big Four’s Legal Services Arm Banned in India
May 28, 2019
2 min read
What's going on here?
The Big Four firms have been temporarily banned by the Bar Council of Delhi from expanding their legal services in India.
What does this mean?
This means that, effective immediately, Deloitte, EY, KPMG, and PwC are not able to practice law in India until they are given further orders. They have also been ordered to provide a list of their lawyers in time for another hearing in July.
This ban has come as a result of a complaint from Lalit Bhasin (the President of the Society of Indian Law Firms) who cited the Advocates Act 1961 to argue that accountants are not allowed to provide legal services.
KPMG and Deloitte responded to the order, both denying their role within legal services. KPMG said that it is not and does not hold itself out to be a law firm. Similarly, Deloitte said that none of its employees are enrolled on the rolls of the Bar Council of Delhi. PwC requested to reply within six weeks, and EY has requested four.
What's the big picture effect?
The growth of the Big Four, especially their legal services, has been expansive and even seems a potential threat to law firms. Currently, the Big Four have claimed that they all offer services across at least 150 countries, either through full legal services or “alternate legal services”. However, this ban could set that back greatly. A negative decision could be an impetus for other jurisdictions to take a closer look at whether these full service firms actually have the ability to offer legal services as well. This check could be applied through statutory law or competition law.
On the flip-side, there is the wider discussion on whether the Advocates Act needs to evolve, as was called by the Indian Ministry Of Corporate Affairs. It argued that audit firms need to develop and grow, and the Act is currently hindering that. If the Act were to be overturned, this would create a large gap for audit firms (including both Indian firms and the Big Four) to start competing with law firms and broaden their offerings.
This can also prove a threat to the Big Four firms’ clients, as clients may be uncertain about keeping their business in a legal service strain which may be under threat. It will also be interesting to see the verdict on the claims that the Big Four do not hold themselves out to be legal service providers.
As of yet, the ban is temporary, and with another hearing to go, there’s no way of telling what will happen. It’s important to note that the complaint from Lalit was back in 2015 and the ban has only just come into place, so further action may also be slow. Nonetheless, such a move by India will definitely be a wakeup call to the Big Four, as well as to other countries where the Big Four’s legal services operate.
With such potentially wide-reaching consequences, this is certainly an important case to keep an eye on.
Report written by Harina C
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