Indian In-House Lawyers Gain Recognition Amid Employment Status Row

• The Indian regulatory framework for lawyers is being challenged for tying professional recognition and rights to employment status.
• In-house lawyers continue to advise on law, exercise independent legal judgment, and interpret legislation despite changes in accounting treatment.
• India's economic competitiveness is affected by the outdated rule, with leading corporations recruiting partners from law firms into general counsel positions.
• The proper test for determining a lawyer's professional recognition should be whether they are substantially performing professional legal work.
• Regulators should focus on the substance of a lawyer's work rather than their employment status to determine their professional recognition and rights.

Professional identity belongs to the profession not to the payroll.

A long-standing assumption in the Indian legal profession has been challenged, with regulators being urged to focus on a lawyer's work rather than their employment status. This development is significant as it paves the way for greater recognition and rights for in-house lawyers. The issue at hand revolves around the concept of professional identity, which has traditionally been tied to an individual's source of remuneration. However, experts argue that this approach is outdated and no longer reflects the reality of modern legal practice.

The distinction between a lawyer employed by a law firm and one working in-house has long been seen as a key factor in determining their professional status. However, while this dichotomy is still debated, a Supreme Court ruling in October 2025 reinforced this distinction by holding that full-time salaried in-house counsel do not enjoy the same attorney-client privilege as external advocates due to their employment status. In reality, an in-house lawyer's work remains unchanged - they continue to advise on law, exercise independent legal judgment, and interpret legislation.

The consequences of this outdated rule extend far beyond the legal profession. India's economic competitiveness is also affected, with leading corporations recruiting partners from law firms into general counsel positions. This movement not only strengthens the legal profession but also benefits the economy by allowing companies to tap into the expertise of top lawyers.

The Indian regulatory framework for lawyers has been criticized for being based on an outdated principle that ties professional recognition and rights to employment status. This approach is at odds with the way other professions are regulated in India, where membership and mode of practice are distinguished. The legal profession's unique treatment of employment as a decisive factor has become increasingly difficult to justify.

The misconception that employment replaces professional practice arises from viewing an in-house lawyer as having multiple clients rather than one continuing client - the organization itself. This misunderstanding has led to a lack of recognition and rights for in-house lawyers, who are essential to India's economic growth.

India already rejects this principle in every other profession, where membership and mode of practice are distinguished. A Chartered Accountant employed as a Chief Financial Officer remains a Chartered Accountant, while an engineer employed by a manufacturing company remains an engineer.

This development has significant implications for India's economic competitiveness and the recognition of in-house lawyers. If regulators continue to focus on employment status rather than professional work, they risk losing access to top legal talent. This would serve no public interest and undermine India's ability to compete globally.

The proper test for determining a lawyer's professional recognition should be whether they are substantially performing professional legal work. If the answer is yes, then recognition and rights should continue regardless of employment status. Practising rights, rights of audience, and independent client work can always be regulated separately.

Ultimately, this development means that Indian regulators should focus on the substance of a lawyer's work rather than their employment status to determine their professional recognition and rights.

This development means that Indian regulators should focus on the substance of a lawyer's work, rather than their employment status, to determine their professional recognition and rights.

Source: Original reporting via The Salary Fallacy: Why Employment Cannot Determine Who is a Lawyer