India Business Law Journal presents its annual legal market report and directory of Indian law firms
Sitting at the Gurgaon office of the 240-lawyer, five-office law firm that he has created over the past two decades, Jyoti Sagar, founder partner of J Sagar Associates, says: “We will chug on this year because of work that is in the pipeline, but the next six months are very critical.”
Despite the slowing of the Indian economy, signs of an impending drought, and talk of foreign direct investment dwindling, Sagar is among the few who say that these are tough times for India’s corporate lawyers.
Most report it is business as usual, even though some things may have changed. “Today we are very busy, but we are not closing deals that much,” says Mohit Saraf, senior partner at Luthra & Luthra. Saraf adds that as a result of the downturn the work that is coming their way requires “very senior level attention” and as a result “associates are less busy, partners are more busy … the more senior you get in the firm the busier you are”.
“The froth has gone out of the market,” remarks Feroz Dubash, a Mumbai-based partner at Talwar Thakore & Associates.
Lucrative capital market deals, which require armies of lawyers working behind the scenes, have dried up. Although firms report that their capital markets teams have been redeployed to M&A, private equity and other practice areas, there is talk that lay-offs may be inevitable at the larger law firms if the economy continues the way it is.
Shardul Shroff, a managing partner at Amarchand Mangaldas, India’s largest law firm, dismisses such an eventuality as impossible in India: “I don’t think an American kind of situation for retrenching lawyers in firms can happen in India because it is too human a country. You just don’t tell people to go home and sit. You don’t bench lawyers in India.”
A new reality?
But the centre has shifted. India’s larger law firms are dealing with the twin challenges of dealing with clients from outside their existing networks, and keeping at bay the many mid-size firms that are snapping at their heels.
“India is not growing, Bharat is,” says Abhijit Joshi, Mumbai-based senior partner and CEO of AZB & Partners, referring to the large number of mid-size companies that populate the hinterlands of India and continue to flourish despite the downturn. He adds that AZB & Partners does a lot of work for mid-market companies, which may be a price-sensitive market but is willing to pay for expert legal advice.
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Other law firms are similarly reaching out to the growing domestic market.
“The future of India lies in its mid-tier companies,” says Alka Bharucha, a Mumbai-based partner at Bharucha & Partners. “We believe that having a lot of mid-tier companies [as clients] is good for the firm.”
At Wadia Ghandy & Co, which recently rented an additional 11,000 square feet of office space in the heart of Mumbai, complete with a creche and rooftop views over an attractive part of the city, the focus is on being there for the client.
“Our reaction to the market being bad is that now is when clients reach out to lawyers they trust most,” says Ashish Ahuja, the managing partner of Wadia Ghandy & Co. “Fees should not matter to the firm – lawyers need to be with their clients.
Staying ahead of the pack
Be that as it may, the downturn has been good for a growing number of mid-size law firms, especially those that have been able to carve out a niche for themselves.
“The size of the cake is large and we cater to a different clientele,” says Manish Desai, managing partner at Vidhii Partners, which focuses on real estate. Desai points out that in the current climate the “ability to change and innovate is critical” for the well-being of a law firm.
Several commentators point to the need for consolidation among mid-sized firms. But over the recent past there is little evidence of any successful long-term mergers between Indian law firms.
The recent extremely acrimonious parting of ways between Delhi-based Fox Mandal and Mumbai-based Little & Co, which had merged to form Fox Mandal Little in 2006, has left many firms wary of seeking the economies of scale that a merger can provide. There appears to have been little in common between the two firms. In addition as a lawyer who wished to remain anonymous told India Business Law Journal earlier this year: “The firms were not referring work to one another … they were working absolutely separately.”
In general however, mid-size firms are finding they are in greater in demand. The market is witnessing intense fee pressures and these firms are able to offer both competitive rates and greater partner-level involvement.
“Clients question being served by lower level lawyers,” remarks Rajat Sethi, a Delhi-based partner at S&R Associates, a 40-lawyer firm that has advised parties involved in several headline-making deals over the past year.
Greater partner involvement in executing the work and not just attracting the client may “hurt revenue generation but is the way forward”, according to Sawant Singh, a Mumbai-based partner at Phoenix Legal.
However, at Vichar Partners, a two-year old Chennai-based firm, being able to assure partner-time has meant “clients have been willing to pay a little above the market on certain mandates”, according to Aarthi Sivanandh, a partner at the firm.
Changing demand
Partner involvement may also be critical to retaining a client. With the disappearance of “the old loyalty style of functioning”, as N South Law managing partner Rajeev Dubey puts it, companies routinely distribute work among multiple law firms.
In addition, several larger Indian companies – including the Aditya Birla, Essar and Bharti groups – have built up significant in-house capabilities and so have reduced the amount of work that they outsource.
“Earlier if we worked on drafting, negotiation and opinion for one of the larger companies, now we may be only asked to provide an opinion,” says Bharucha at Bharucha & Partners.
As a result, most firms go to great lengths to emphasize that not only do they understand the client’s business, but their partners roll up their sleeves and work on deals, and don’t just hand work down to their teams of associates.
Litigation – to the rescue
Firms with a healthy dispute resolution practice seem to be riding out the slowdown more successfully.
Most such firms began as litigation practices and then moved into corporate practice. This is true of firms of all sizes. Delhi-based Maheshwari & Co, a 20-lawyer firm led by Vipul Maheshwari reports that it moved into corporate practice over the last six years.
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Trilegal, a 140-lawyer law firm better known for its M&A, banking and finance and other work, on the other hand reports that over the past two and a half years it has built up a “nascent litigation practice” that currently has around 18 lawyers.
“We have had significant mandates which went bad and into litigation,” says Karan Singh, a Mumbai-based partner at Trilegal, adding that the firm’s litigation practice has come in handy to serve the needs of its corporate clients.
Similarly Juris Corp, which began as a banking regulatory practice, has developed considerable expertise in a wide range of practice areas including dispute resolution, primarily due to its ability to understand the financial dynamics of a dispute and develop strategies accordingly.
The firm represented unsecured bondholders of Wockhardt, an Indian generics drug maker, in a series of cases that culminated in a victory before a divisional bench of Bombay High Court in October 2011.
“We have disproved the theory that law firms need to be full service,” says Veena Sivaramakrishnan, a Mumbai-based partner at Juris Corp. “We began as a specialist firm and have gone into litigation … in that specialist area.” The firm recently strengthened its dispute resolution practice by appointing Ranjit Shetty as a partner. He previously led the litigation team at Hariani & Co, a 21-year-old mid-sized firm that is recognized for its real estate work.
Litigation practices are being developed despite the challenges of India’s hugely overburdened court system. While some courts are making valiant efforts to reduce the backlog – several have computerized their case management systems and information about the status of cases being heard by Bombay High Court is now available on a mobile phone – the key to litigating successfully is effective strategizing.
“If right strategies are adopted, the perception about the Indian judiciary as projected may not be true,” says Manoj Singh, founding partner of Singh & Associates in New Delhi, pointing to a dispute involving a Chinese client that was resolved through Delhi High Court in a little over a year.
Image matters
As part of their strategy to stay ahead of the pack, law firms across India are working towards getting their structure and brand image right
On 1 April Majmudar & Co changed its name to Majmudar & Partners. The tweaking of the name of this 50-lawyer firm coincided with a broadening of its equity partnership from four to seven partners.
Neerav Merchant, a Mumbai-based partner of the firm, says the name change was prompted by a need to “send out a clear-cut signal to competitors, clients and prospective clients that we have a true partnership structure and all of us are stakeholders”.
“You don’t want clients to discount you just because they perceive you as a family-owned firm,” says Merchant.
Breaking the ties
Other law firms are similarly working to structure themselves appropriately.
At HSA Advocates – named after founder partner Hemant Sahai – and J Sagar & Associates, no two members of a family can work at the firm, while younger firms such as Trilegal and Phoenix Legal pride themselves on not being identified with any one individual.
Most of the larger law firms have moved from being sole proprietorships to partnerships. A notable exception is Kochhar & Co that functions as a sole proprietorship, according to Anjuli Sivaramakrishnan, a Gurgaon-based partner at the firm.
Creating a new look
The repositioning of a law firm can also involve adopting a new logo. During its centenary celebrations earlier this year, Khaitan & Co unveiled a bright blue circular motif designed by a French company to “reflect the vigour and modern outlook of the firm towards servicing its clients in the new century”.
Rabindra Jhunjhunwala, a Mumbai-based partner at the firm, said the new logo is meant to emphasize the firm’s “ambition to become a leader in the field, a high performance Indian law firm, both modern and unparalleled”.
Size matters
Amarchand Mangaldas – now India’s largest law firm with over 550 lawyers – aims to become a 1,000-lawyer firm by its centenary in 2017. The plan to get there, unveiled late last year, was drawn up with help from the Boston Consulting Group.
“We are driven by a vision,” says Shardul Shroff, joint managing partner of Amarchand Mangaldas. “It’s not a dream in the sense of an idle dream. It is a tough task to achieve, it’s not easy.”
Central to this vision is what Shroff has described as the firm’s “two wheels of the bicycle” concept, whereby it will simultaneously promote both family and non-family talent. In May the firm promoted 13 lawyers to its partnership, two of them family members.
However, many doubt that the two wheels of the bicycle will carry equal clout and the firm provides a steady trickle of legal talent for its competitors. Several ex-Amarchand lawyers have also struck out on their own.
Mixing it right
A recent repackaging of legal talent has intrigued the market: the merger of the young firm of Argus Partners, founded by ex-Amarchand lawyers Krishnava Dutt and Ramya Hariharan, and 15-year-old Udwadia & Udeshi, led by two veteran practitioners who set up the firm after retiring as partners from Crawford Bayley & Co.
While several lawyers question the feasibility of the merger – given the seemingly incongruous cultural mix – others see synergies to be had from the mix of youth and experience.
“If they can pull it off, hats off to them,” says one lawyer who wishes to remain anonymous.
Speaking in February, when the merger was announced, Dutt said he was confident that it would bring “exciting new opportunities” that would enable the firm to “create an unparalleled value proposition” for the clients of both entities. Recently Dutt said the merger was proceeding as planned.
Mumbai-based I&S Associates, founded in 2006 by two former partners at AZB & Partners, has also been focusing on re-branding “to get at par with our peer law firms”. “We recognize that firm visibility is very important in the volatile market,” says Jaya Kumar, business development officer at I&S Associates.
But some of India’s corporate lawyers are not convinced of the virtues of repackaging and repositioning a firm.
“It is good to have packaging, but content is what counts,” remarks C Rashmikant, a partner at Federal & Rashmikant, one of a dwindling number of conservative albeit successful law firms.
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White-collar crime
The litigation practices of several law firms have received a boost from the 2G spectrum scam, which has led to the prosecution of over two dozen people. This, combined with investigations by the Comptroller and Auditor General of India that have uncovered instances of corruption, has brought corporate criminal litigation to the forefront.
“White-collar crime cannot be bottled up and is becoming big,” says C Rashmikant, a partner at Federal & Rashmikant in Mumbai.
This is confirmed by Amit Desai, a Mumbai-based senior advocate, who says: “There has clearly been a significant spike in corporate criminal litigation over the last two to three years.”
While some law firms have responded by developing corporate criminal litigation practices, a few have entered the arena of compliance.
“Advising companies on what it takes to ensure they don’t fall foul of anti-corruption laws both overseas and in India is a growing area of our practice,” says Zulfiquar Memon, managing partner of MZM Legal, a Mumbai-based firm. MZM Legal is currently associated with several high-profile criminal cases, including the defence of Vinod Goenka, one of the accused in the 2G spectrum scam.
Caution rules
While the year ahead looks uncertain, chances are that M&A and private equity practices will remain sluggish.
“Clients are more cautious in making acquisitions,” says Rustam Gagrat, a partner at Gagrats in Mumbai.
“M&A is more need-based and not just to extend the footprint,” says Prem Rajani, managing partner of Rajani Associates.
It may be “very easy to put money into India, but very difficult to take it out,” as ALMT Legal partner Sameer Tapia puts it, so law firms are grappling with the challenges of providing advice on exit strategies to prospective international investors.
“One has to plan and understand how to get out of India before getting in,” says Tapia.
Part of the reason for the current caution in the market is the government’s handling of the Vodafone taxation issue and the dithering over the general anti-avoidance rules (GAAR).
“GAAR guidelines will govern the dynamics of taxation of foreign investors and business houses for M&A transactions outside India as well,” points out Praveen Raju, a partner at Krishnamurthy & Co in Mumbai.
The government’s dramatic U-turn over allowing entry of multi-brand retail also has made investors wary. Those in favour of retail liberalization have argued that it will not only give consumers a wider variety of products at competitive rates, but also help create much-needed jobs.
Shardul Thacker, a Mumbai-based partner at Mulla & Mulla & Craigie Blunt & Caroe, was of the view that even a “shopkeeper managing a tuck shop would probably find that they could apply for a job at Walmart that is more secure”.
Staple diet
Firms report that regulatory practices provide steady – albeit not the most lucrative – work, given the increasingly complex regulatory landscape of India. Over the years some firms have deepened their regulatory practices in specific areas.
Securities law practices tend to ebb and flow with regulations issued by the Securities and Exchange Board of India (SEBI).
Sandeep Parekh, founder of Finsec Law Advisors in Mumbai, expects the firm’s investment funds practice to grow as a result of the recent notification of the SEBI (Alternative Investment Funds) Regulations, 2012, which require mandatory registration with SEBI of the private pooling of capital. Previously, investors could choose not to register such funds.
Parekh, is a former executive director of SEBI and was responsible for enforcement and legal affairs.
Others with experience at a regulator or in-house legal teams at major Indian banks and companies have also moved into corporate law firms.
Pramod Rao, who until April headed one of India’s largest in-house legal teams as general counsel at ICICI Bank, caused a stir when he chose to join Indus Law, a relatively young mid-size firm.
Public-sector involvement
India’s vast infrastructural needs assure Indian lawyers of a steady supply of work. Many infrastructure projects are undertaken as public-private partnerships (PPPs) and several firms report that they do considerable work in this area.
“The next eight years will be big for infrastructure because of all the projects in the pipeline,” says Aparajit Bhattacharya, a partner at HSA Advocates.
Sunil Seth, managing partner of Seth Dua & Associates, advised the private party in a PPP that developed water supplies in several areas of India, including Nagpur and Delhi.
The Public Procurement Bill, 2012, which was recently introduced in parliament, aims to lay down the law with regard to such projects, which currently differ in structure and are governed by different rules.
“It will fundamentally alter the methods by which governmental agencies and public-sector utilities procure goods and services,” says Deepto Roy, a partner at PXV Law Partners in New Delhi.
Several law firms are also involved with the drafting of laws and regulations, which may not pay much but adds to their credibility.
Seth Dua & Associates reports that it “advised on various constitutional law and administrative law issues arising out of the Real Estate (Regulation and Development) Bill, and also the Tenancy Bill”.
Suchitra Chitale, managing partner of Chitale & Chitale Partners in New Delhi, says that her firm drafted the Rajasthan Infrastructure Development Act.
An emerging practice
Another practice area of great promise is competition law. This follows the notification of all sections of the Competition Act, 2002, and several orders by the Competition Commission of India (CCI) that attempt to rein in anti-competitive practices by companies in India.
Competition law practices are “likely to grow as more companies enter into mergers and amalgamations having effect in India,” says Samir Agrawal, an associate at Dhall Law Chambers in Delhi. Agrawal also expects litigation before the CCI to increase on account of “increasing competition advocacy undertaken by the CCI and consequent better awareness about the law, which should also lead to better self compliance in the longer term”.
While Dhall Law Chambers is a specialist competition law firm set up by a former chairman of the CCI, Vinod Dhall, law firms across the country have set up competition law practices. This is more so in Delhi where the CCI is located and where a few lawyers have been on government-appointed competition law committees that pre-date the Competition Act and the formation of the CCI.
Lack of liability
However, Ranji Dua, managing partner of Dua Associates, points that “competition law jurisprudence is yet to develop in India”. He is also sceptical about the quality of advice provided by lawyers on competition law.
“A viable competition law practice requires the services of cost accountants and economists,” says Dua, pointing out that few law firms can provide such resources. He says this reflects a “lack of depth” in law firms across the country.
Anand Desai, managing partner at DSK Legal in Mumbai, expresses similar sentiments. He suggests that the Indian legal culture is currently such that “few lawyers will pass up on any work and admit to not knowing something in depth” and that most law firms lack genuine specialists. Desai believes this is symptomatic of the lack of accountability among lawyers.
“This could change when Indian lawyers are made liable,” says Desai pointing out that few lawyers and law firms are covered by professional indemnity insurance.
Neeraj Tuli, managing partner of Tuli & Co, a specialist insurance practice , says that while it is almost unheard of in India to sue your lawyer, attitudes may be changing.
“The entire culture of suing is weak in India,” says Tuli.
This is borne out by reports that following the Satyam fraud, while investors in the US have received substantial settlements thanks to a strong class action framework, Indian investors have yet to receive any compensation.
Tough action
Intellectual property (IP) disputes are one area in which a damages culture is slowly taking root.
“While Delhi High Court has awarded punitive damages in 142 cases of IP violations, costs are now being granted in cases of domain name disputes,” says Pravin Anand, managing partner of Anand and Anand.
Rising IP awareness and greater protection for IP owners will boost IP practices across the country. Increasingly complex patent and trademark disputes are adding to the clout of a growing number of smaller specialist IP firms, which are challenging the dominance of the established IP firms.
A recent landmark decision saw the grant of India’s first compulsory licence for a patented drug to a small maker of generic drugs, Natco Pharma. The two law firms that argued the case – Rajeshwari & Associates and Perfexio Legal – are both relatively new.
IP practices across the country could find themselves swamped with work following recent amendments to the Copyright Act, 1957, which came into effect on 21 June.
“Lawyers are expected to spend a significant amount of their time in advising clients on upsides and downsides [of the amended act] as well as changes to contracting practices,” says Monica Datta, a partner at Saikrishna & Associates in Delhi.
Turf wars?
India’s corporate lawyers appear to have an almost never ending supply of work to keep them occupied. While international clients continue to be courted, the demand from within India is growing. In addition, as Vineet Aneja, a partner at Clasis Law in New Delhi, points out, the “potential in the tier-two companies is largely untapped”.
However, lawyers’ hold over the market is less than assured.
While international law firms wait to be allowed into India, lawyers and law firms are grappling with the challenges of protecting their turf against encroachments from domestic players.
In early July, the Society of Indian Law Firms (SILF) turned its sights to targets within India and called on all business consultants and accounting firms to stop providing legal advice to their clients. A recent Supreme Court ruling that clarified that the practise of law under the Advocates Act, 1961, covers litigious matters as well as non-litigious matters emboldened SILF to take this step.
“We are hell-bent on taking them to court unless they stop providing legal advice,” says Lalit Bhasin, managing partner of Bhasin & Co, in his capacity as the president of SILF.
Bhasin adds that “at least one-fourth of the work being done by accounting firms is all legal work which legitimately only lawyers can do”.
Persuading them to back off is clearly a battle that is worth fighting.
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Open sesame?
Are international law firms taking the right approach as they put pressure on the government to let them in?
Many corporate lawyers across India are open to the idea of international law firms being allowed in, but few expect the market to open anytime soon.
“The entry of foreign law firms will infuse more professionalism into the legal market,” says Bhumesh Verma, a partner at Paras Kuhad & Associates in Delhi.
Sidhartha Srivastava, a partner at DH Law Associates in Mumbai, believes that foreign firms may pose a threat only to the big Indian law firms. “The government should allow foreign law firms to enter,” says Srivastava.
There is no sign that the government plans to act on this soon.
“Foreign law firms entering India won’t happen. I don’t see it being allowed in the present climate,” says Preeti Mehta, a partner at Kanga & Co in Mumbai.
Several lawyers, including Ranji Dua, managing partner of Dua Associates, point out that international law firms are knocking on the doors of the Indian market in part because revenue generation has slowed in Europe and North America.
The power of numbers
International law firms continue to argue that they should be allowed to set up offices in India. A recent survey of executives and general counsel from India’s largest companies and lawyers from India’s top law firms, commissioned by Allen & Overy and carried out by YouGov, an international market research company, shows that 96% of respondents feel that the Indian legal market should be fully or partly liberalized.
But some think it’s not worth letting foreign lawyers in just to practise foreign law. Only 47% felt that allowing foreign lawyers to practise foreign law in India would have a positive impact on the quality of legal services provided to large companies in India, while 83% felt that allowing foreign law firms to practise both Indian law – through Indian-qualified lawyers – and foreign law would have this impact.
So far, international law firms have only asked that they be allowed in to practise foreign law. But in doing so are they taking the right approach?
Strengthen before opening
Shardul Shroff, joint managing partner of Amarchand Mangaldas, believes that while the opening of the Indian legal market is inevitable, more needs to be done to develop the market.
Pointing out that a domestic market cannot be opened in a manner that destroys it, Shroff says: “You have to calibrate your entry inwards. That’s not happened. And that nobody is even talking about it. What does a foreign firm say – open your market, I want to enter! But it’s not introspecting and saying that you feel that the market entry is difficult – let us address those issues which affect Indian lawyers.”
“Get the issues which are haunting domestic lawyers addressed first, create that environment which is optimal, and then by all means, have open competition,” he adds.
Other lawyers express similar sentiments.
“As lawyers we should debate and discuss and convince the other side,” says Pankaj Soni, a partner at Remfry & Sagar, who suggests that the current environment may not be appropriate for international law firms to enter.
A different perspective
Others see advantages in opening the market now.
Asked if there would be more career opportunities for Indian lawyers if foreign law firms were allowed “to establish offices in India and merge with Indian law firms to practise both international law and, through Indian qualified lawyers, Indian law in the corporate field,” 89% of respondents in the Allen & Overy survey said there would be.
In addition, when asked if competition from foreign law firms would improve pay and work conditions for lawyers in Indian law firms, 80% believed it would.
Judicial wranglings
With no sign of a change in legislation, the legal fraternity both inside and outside India will need to wait for the Supreme Court’s ruling in an appeal in the Balaji case filed by the Bar Council of India for any clarity on the issue.
In this case, a two-judge bench of Madras High Court ruled that foreign law firms may “visit India for a temporary period on a fly in and fly out basis” to advise their clients on foreign law. It also ruled that “foreign lawyers cannot be debarred to come to India and conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration”.
Earlier, in the Lawyers Collective case in 2009, Bombay High Court had ruled that the Reserve Bank of India should not issue licences to foreign law firms to open liaison offices.
An interim order in the Balaji appeal, issued by the Supreme Court on 4 July, says that the Reserve Bank of India “shall not grant any permission to the foreign law firms to open liaison offices in India”. It also clarifies that practising the profession of law under section 29 of the Advocates Act, 1961, covers “litigious matters as well as non-litigious matters”.
Legal or not?
The interim order has left lawyers pondering the legality of the widespread practice of foreign lawyers taking part in arbitrations in India. A lengthy arbitration in a dispute between Essar Oil and United India Insurance over India’s first advance loss of profit insurance claim provides a case in point.
All three arbitrators deciding the claim are lawyers from the UK, and both United India and its London-based reinsurers used UK lawyers. The hearings in the arbitration took place at the Trident Hotel in Mumbai.
It is hoped that the Supreme Court’s final ruling in the Balaji appeal will provide clarity on whether using international counsel in this manner will continue to be legal and on other issues related to the presence of foreign lawyers and law firms in India.
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