The American Bar Association may have recently given the thumbs up to U.S. law firms outsourcing legal work to India, but that doesn't mean lawyers aren't handling India-related legal work stateside.

And that only looks to increase for international firms as regulations in India loosen and inbound and outbound corporate finance work to and from the region expands.

Some attorneys caution, however, that a stronghold of large-firm leaders in India will push to slow the liberalization of the country's legal sector that would allow foreign law firms the ability to operate in the country.

A recent report by consulting firm Hildebrandt International said India-related legal work is of growing importance to international firms despite the country's ban on foreign-owned offices.

As multinational companies move into India and more investment deals involve Indian companies or investors, large U.S. and U.K. law firms are focusing their efforts on the finance and mergers and acquisitions work coming out of the country, according to the report.

The Indian legal market is also changing, with more partners of Indian firms leaving for more versatile, niche corporate and finance operations, the report found. As the U.S. has seen for years, the competition for talent in India is increasingly fierce. Many U.S. and U.K. law firms are hiring attorneys directly from Indian law firms.

With the pressure from the Indian government and the anticipated re-start of a case before the Bombay High Court over whether foreign firms can have offices in the country, Hildebrandt predicts the liberalization of the Indian legal market within two to five years. It does caution, however, that changes in the country's government after the 2009 election could slow down reform. . . .

Under the country's 1961 Advocates Act, which states only Indian lawyers registered in the country as advocates can practice law in the country, the Bombay High Court ruled that practicing law doesn't just mean appearing in Indian courts, but includes executing documents or negotiating settlements. It ruled licenses issued to the three foreign firms by the Reserve Bank of India only allowed for the establishment of a branch office to act as a communications channel.

The U.S. and U.K. law firms appealed the ruling to the country's Supreme Court and it sent the case back to the Bombay High Court in 1996, where it has sat ever since. Hearings in the case were finally set for April and resulted in a resurgence of talk about whether U.S. firms would soon be able to flock to India. . . .

In the meantime, local firms have either created unofficial alliances with Indian firms or have represented Indian companies in the U.S. and abroad. . . .

Lewis F. Gould, Jr., chairman of Duane Morris' intellectual property group, said his team represents two Indian companies, both out of their U.S. headquarters in New Jersey. They represent pharmaceutical companies Ranbaxy Laboratories and Dr. Reddy's in the companies' intellectual property and litigation needs.

"In terms of our clients going there, there certainly is an increased awareness among our clients of the very dynamic growth which is taking place in India," Gould said. "It is becoming an industrial powerhouse and its financial status is increasing all the time."

In terms of Gould's practice, as India becomes more of an industrialized nation, its companies will be able to benefit from the U.S. Patent and Trademark Office. He said he is meeting more and more Indian patent attorneys at intellectual property conferences around the world.

While Duane Morris isn't at a point where it would do much work on the ground in India through alliances, Gould said his firm has shown itself to be aggressive when it comes to international expansion as long as there is a market for legal work in that area. . . .

Reprinted with permission from The Legal Intelligencer, © ALM Media Properties LLC. All rights reserved.