Regulatory Barriers to Litigation in India

The legal profession in India does not seem to have any significant entry barriers as are prevalent in other sectors in India. Yet litigation fails to attract talented law graduates, except those who have a parental/family background in litigation. Litigation in India is marked by the presence of small and middle-size family-run law firms who employ law graduates as juniors and may fall short of world class corporate culture. On the other hand, it is rare for a fresh law graduate to become an entrepreneur-style practitioner on their own, right after college. This is in contrast with other sectors where graduates with degrees can take a bank loan and can start an enterprise. This paper reviews the regulatory framework of how legal barriers with noble intentions makes the sustainability of new entrants almost impossible in the legal profession and thus discourage new entrants from choosing litigation as a career after college. These barriers, though not entry barriers in a strict sense, are operational barriers and include: a) restrictions on the legal form of a law firm; b) a ban on advertising; c) a ban on charging a contingent fee; d) a ban on moonlighting. The paper also looks at moral hazard associated with self-regulatory bodies viz. the Bar Council of India and the State Bar Councils. Finally, the paper makes a case for reforms in the form of doing away with restrictions to lay down a level-playing field for all practitioners and foster competition.