Mention India to a lawyer at any sizeable British firm and you are guaranteed an animated response.

India, they will tell you, deservedly boasts of its long democratic history, progressive values and bright future as one of the world’s great economic powers.

But when it comes to the practice of law, British lawyers say, it foolishly clings to a backward and ultimately self-destructive protectionist system that blocks foreign law firms from setting up shop.

Despite gradual moves towards liberalisation and encouraging signs from Delhi, the question of whether — and to what extent — India will open up to foreign law firms was back on the agenda this week. The Bar Council of India, the country’s legal representative group, has reiterated its demands for the Indian Government to abandon its liberalisation plan.

Some lawyers in the UK dismissed the demands as sabre-rattling from a small group of Indian law firms fighting to secure minor concessions in a battle they have already lost. Others were less bullish, pointing out that India’s legal system remains highly politicised and that changing its rules to allow foreign lawyers to come and steal work from local practitioners is hardly a vote winner.

But regardless of their outlook, lawyers have been unanimous in their condemnation: protectionism is bad and prolonging it would be a mistake.

But why does India stir such a strong reaction from British lawyers?

In their quest to grow revenues and profits, European firms are disappointed to be missing out on an increasing amount of lucrative work coming out of India. With estimates of annual growth ranging between 7 and 9 per cent, its economy is one of the fasting-growing in the world. Even more importantly, the type of economic activity that European law firms are likely to profit from is growing even faster.

The firms want to work on large, cross-border deals. Last year, the value of acquisitions by non-Indian companies of Indian companies jumped 200 per cent. Since 2000, the value of takeovers by foreign buyers has grown from $4.4 billion to more than $30 billion so far this year, according to Thomson Financial. (This year's total has already passed last year's despite fears of a global slow down.)

There is a clear picture: European law firm’s clients are buying in India but protectionist rules means their fees are going to Indian law firms.

To be fair to the firms, their desire to get their feet under negotiating tables in Delhi and Mumbai goes beyond simply growing their bottom line. By not being in India, they are also letting their clients down. Yes, there is money to be made in India, but the firms say they are only responding — as good lawyers should — to their clients' needs.

There is some support for this claim. It’s not just foreign firms, greedily eyeing the potential fees, who complain that there is not enough top end legal advice available in India. Earlier this year, Bharat Vasani, the general counsel of Tata Group, India’s largest corporation, told reporters his biggest challenge was “getting the right corporate lawyers to handle my work”. He called for India to relax its stance towards foreign law firms.

But there is another reason that goes beyond India's incredible economic growth and the demands of clients. And that lies in the way City firms define themselves. Visit the web site of any decent-sized commercial firm and you'll see references to European, North American and Asian reach, and promises of "integrated" global advice. As they increasingly pitch themselves as global firms, the lack of a presence in India is a large and obvious hole.

Recent talk about the future of law firms will only exacerbate this problem. Speculation has focused on the establishment of a “global elite”: a small group of leading firms that — regardless of what they are called, where they are headquarted or which stock exchange they may eventually float on — are united by a common ability to offer cross-border advice combined with local expertise.

In terms of their expansion, India has become the final frontier. It remains the only important world economy that large law firms have not conquered.

The lack of Indian capability is therefore not merely an issue of missed fees or individual clients’ dissatisfaction, but, in an increasingly small and globalised world, an existential threat. Whether India will, or should, liberalise its legal market is up for debate, but you can be sure the major firms will keep the pressure on.

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