"Indian law group names City leaders in call for action against foreign firms" read the headline in LegalWeek a few days ago. The (brief) article goes on to explain that a group called the Association of Indian Lawyers filed a petition for a writ compelling the Indian Government to act against foreign lawyers in the Madras High Court naming, among others, Allen & Overy, Clifford Chance, Shearman & Sterling, White & Case, and the legal outsourcing firm Integreon.
Somewhat colorfully, it accuses the firms as follows:
"The issue is no longer about the entry of foreign law firms, it is also about the manner in which these foreign law firms continue to do business in India despite a ban on them. These firms have already entered India indirectly and are operating out of five-star hotels and business centres."
Perhaps three-star hotels would be less objectionable?
This follows the news that Ashurst, Chadbourne & Parke, and White & Case all agreed to close their offices last February after the Bombay High Court "ruled against the practice of law by foreign firms in India."
Despite the ever-sunny ABA Journal's attempt to put a positive gloss on it ("Still Open for Business"), quoting a Baker & McKenzie senior counsel as saying that "it's nothing to get excited about," the question remains: What are they thinking?
To paraphrase the late William F. Buckley, Jr., you can stand athwart the tide of history and yell, "Stop," but it's a feckless endeavor. The inexorable trend of the past century and more has been towards:
- More powerful globalization;
- More open national borders (in terms of trade in goods, in services, and vis-a-vis people and ideas);
- And accelerated "creative destruction" as competition, in its ruthless but fabulous way, ensures that only the fittest survive.
Consider the US car industry, notorious basket case whose problems were of course first exposed by the invasion of the Japanese in the 1970's. Detroit had been selling essentially--with or without tailfins--the same cars for two decades, from the early 1950's through the early 1970's. Can you name a significant innovation during all those years? No airbags, no disc brakes, no 4-wheel independent suspension, no improved fuel economy, no advances in automatic transmissions or even sound or heating/airconditioning systems. Nothing.
But consider the cars of today vs. those of the 1950's. Here's a fascinating comparison that shows what happens when a 2009 Chevy Malibu has a head-on collision with a 1959 Chevy Bel Air (thanks, NHTSA).
The moral is simply that competition causes everyone to raise their game. Raise your game or, as the schoolyard (or NFL) taunt would have it, "Go home."
The Indian lawyers challenging US and UK firms are decisively and apparently blindly on the wrong side of history. They appear frightened at the prospect of having to "raise their game" and, as industries in denial are wont to do, would prefer salvation-by-government to the vicissitudes of an open market--vicissitudes which we know, from the teachings of everyone from Joseph Schumpeter ("creative destruction") to Clayton Christiansen (The Innovator's Dilemma), lead rapidly to tremendous improvements in products and services.
Perhaps the only explanation for this obtuseness was the one provided nearly a century ago by Upton Sinclair:
"It is difficult to get a man to understand something when his salary depends upon his not understanding it."
We shall see how long the Indian barriers last.
April 21, 2010 1:03 PM
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