What it means to be a partner at an Indian law firm and why it may matter to clients
By Rebecca Abraham
India’s legal profession differs from most other jurisdictions, with established firms housing some of the brightest legal minds, who in many instances are stubbornly dynastic and by design more conducive to individual endeavour.
Individualism in many respects is a good thing, but too much of a good thing may not be wise; self-interest precludes unity, and dynasties, as we know too well, will rise – and fall.
Writing almost half a century ago, Marc Galanter, an American academic with a keen interest in the Indian legal profession, wondered if lawyers in India would be capable of overcoming “their individualism to find forms of enduring collaboration” so as to develop expertise in the areas required by their clients. Galanter noted that India’s “simultaneous commitments to economic development, a welfare state and democracy imply vast new demands on the legal system”.
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TOO MUCH OF A GOOD THING?
Fast forward to the current environment and questions continue to be asked about the ability of India’s many corporate lawyers to find, and sustain, forms of enduring collaboration.
“People [lawyers in India] don’t appreciate how to balance their individual and career aspirations, and the need to build an institution,” says Berjis Desai, senior partner at J Sagar Associates. Having laid the foundation for an egalitarian partnership at the firm along with Jyoti Sagar, the firm’s founder, Desai appears somewhat defeated when he says “everybody is on one big crazy ego trip and I think that is the biggest stumbling block in developing a good durable institution that is merit-based and survives an individual”.
Desai, who will retire from the firm in March 2017, believes that Indian lawyers don’t think like their counterparts in the West, as “too much importance” is paid to the individual’s ego in India. “It’s not about greed or money, or desire to make more money,” he adds.
A STRAW POLL
DO CLIENTS CARE IF THE ‘PARTNER’ THEY ARE DEALING WITH HAS LITTLE OR NO STAKE IN A FIRM?
India Business Law Journal turned to corporate counsel to find out. Excerpts of their opinions follow:
Anurag Chauhan, head of legal and senior vice president, Max Life Insurance: It really does not matter to me that a lawyer I am dealing with may have little or no stake in the firm.
Ashok Sharma, founder president, Indian Corporate Counsel Association: Basically what matters is the competence of the partner.
Badrinath Durvasula, senior vice president, legal, Adani Group: Of late, and with the emergence of multiple firms, the swap of partners has become the order of the day. In my view, a partner’s credibility is established with a tenure in comparison to personality. Maturity is the key, which I look for.
Debolina Partap, vice president legal and general counsel, Wockhardt: It really does not matter so long as the partner or the law firm is able to provide a person with the right set of skill sets and able to keep the cost of the service competitive.
Himavat Chaudhuri, chief legal and regulatory affairs officer, Tata Sky: I would always like to work with a firm where the equity is not family held, if an equally good alternate exists. And yes, I always enquire whether a partner is equity or salaried. As they are less invested in the firm salaried partners are more open to change.
PM Devaiah, partner and general counsel, Everstone Capital Advisors: The real challenge in dealing with a pseudo as against a real partner is one of continuity rather than competency. Partners with no stakes tend to watch for greener pastures.
Sanjit Kaur Batra, senior counsel & legal manager (South Asia), DuPont India: I assess if the person, irrespective of designation, can deliver on the commitment and the timelines and if she or he has enough clout in the firm to get me the best rates, the right resources, and an opinion from the most well regarded subject matter expert.
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STRATEGIES VARY
Forging collaborations between lawyers is a challenge and, according to Rajiv Luthra, managing partner of Luthra & Luthra Law Offices: “There is no single strategy to get the structure right, since what constitutes the ‘right’ structure varies depending on the nature, history and dynamics of the partnership, among other things.”
“The Indian market is very complex so you have to have a very sensible balance between younger and older partners,” notes CR Dua, managing partner of Dua Associates, which has 36 equity partners, and 55 partners in total. “It is completely fallacious to run an Indian firm with just youngsters. You will just give bad advice and your clients will just run away.”
While the vast majority of law firms across India are sole-proprietorships, the number of partnerships is increasing. However, with the power within firms typically held by certain individuals or families, crafting a partnership structure that blends the vision of a firm with the interests of its partners is a challenge.
COMPLEX FACTORS
There are several reasons for this. India is a country that “respects seniority and grey hair”, as Cyril Shroff, managing partner of Cyril Amarchand Mangaldas, puts it, yet it is also a very young country from a demographic perspective. Add to this considerable growth in demand for legal services in the past few years and the result is that, unlike in most other jurisdictions, lawyers in India with around eight years of post-qualification experience can be designated partners, albeit often only in name.
“The average age of a junior partner is much lower at an Indian firm than in a UK or international firm,” says Krishnava Dutt, managing partner of Argus Partners in Mumbai. Dutt, who was a partner at 31 at the now defunct Amarchand Mangaldas, credits the firm with popularizing, and possibly pioneering, the concept of a seven- to eight-year roadmap to partnership.
In addition, partnerships in India do not always have a two-tier structure as in most other jurisdictions. In a market where titles are sought after, some firms have a third strata of partners – sometimes referred to as retained partners – who occupy a rank below that of equity and salaried partners. Similarly equity partners, as understood at international law firms, are virtually non-existent.
Bithika Anand, founder and CEO of New Delhi-based Legal League Consulting, points out that “at a lot of firms equity partnership is a designation that provides a big leap in the career path of an individual. Often the partner gets only some token equity”.
The lack of any visible pattern in equity structures across firms can be baffling for observers looking in from the outside. “Each firm in India does its own thing in terms of partnership structures,” remarks Melissa Pereira, a co-founder of legal recruiter Asia Search Partners in Hong Kong.
HOW IT SHOULD BE DONE
THREE SIGNIFICANT PLAYERS IN THE LEGAL MARKET DETAIL THEIR EXPERIENCE OF FORGING AN IDEAL COLLABORATION. EXCERPTS FOLLOW
Cyril Shroff, managing partner, Cyril Amarchand Mangaldas: It is tough to be an equity partner, in my firm at least, and the journey is helped by many of the existing equity partners who groomed, mentored and nurtured the talent that we have.
We have a two-tier partnership of salary and equity. Looking back in history we were the first firm to announce a formal career path, and the road to partnership and then to equity partner was laid out. It is aspirational.
To be designated as an equity partner is a matter of honour and pride. I guess it takes market standing, maturity, subject matter knowledge.
Karan Singh, partner, Trilegal: We have always been very focused on institution building.
Each year we have a performance evaluation that is done by the management committee. They then decide the lockstep configuration for the partner for the year. Each year you can go up by a fixed number of units, and once you get into one step you don’t go down.
I think fundamentally a partnership is as much a social contract as a legal arrangement. The reason we are successful is that a partner gets a lot of importance from the system, and evidence of that is we haven’t lost a partner in eight years. Each partner gets one vote. We don’t vote according to our equity.
I think if you’ve been a personality-led firm all along then it’s very hard to move beyond it. But if the firm’s DNA has been to promote the personality of the firm and not the individual then everyone comes into the personality of the firm. We don’t think it’s necessary to have a personality lead the firm.
Our partnership deed had an overhaul about three years ago. It went through a unanimous approval and until everyone was satisfied with it we didn’t approve it. We used RSG Consulting to do our partnership structure, together with Moray McLaren, who now works with Redstone Consultants. Now we work with Brad Hildebrandt – the guru of law firm management – who runs Hildebrandt Consulting.
Ranji Dua, managing partner, Dua Associates: In our firm, equity means equity … it is one firm and a true equity in the sense equity is understood in mature economies. The current structure has been in place for 15 years, if not more.
As an equity partner, we look at the overall contribution, including how much they contribute to the administration of the firm, how much they contribute to client building and training youngsters. We have some people who are very bright but are only interested in the money, so opt to stay as salaried partners because the salary structure is very clear. There is a formula and on the basis of that formula people are paid. So there may be some salaried partners who earn more than equity partners.
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CONCENTRATED POWER
Those who know how matters stand at larger law firms say that few equity partners get to see a partnership deed. According to a lawyer who wishes to remain anonymous, this is quite simply because partnerships in India “are all about power, which is something that the owners of the law firm don’t want to let go of”.
This may be understandable in the Indian context, where partnerships are typically built by founding partners, and partners – even those who are given some equity – who join subsequently are not required to put any capital into the partnership.
“If you put yourself in the shoes of the old guard, the point is quite simply that everything was made out of their blood and sacrifice … so why should they share management or powers with partners who join later,” explains the same lawyer.
Describing the experience of being a junior partner almost a decade ago at one of India’s most respected firms, another lawyer who also wants anonymity says: “Partnership at the firm meant you had the confidence of its controlling lawyers … you served at the behest of ‘the king’.”
He says that not only did he not have a contract, as he was a partner only in name, but there was uncertainty about his monthly earnings. “There was little need for any paper … I would not be able to put my hand on the bible and say I knew what I would earn, because I did not, I did have a fair idea of how much it might be. The timing, however, was a bit uncertain because when I got paid depended on a lot of factors.”
Despite all this, “everybody aspires and desires, and legitimately so, to be an equity partner,” as Desai at J Sagar Associates points out.
“Our equity partnership is something to be coveted I believe,” says Shroff at Cyril Amarchand Mangaldas. The 650-lawyer firm has over 90 partners.
A CONSTANT CHURN
The current dynamism in the Indian legal market has been triggered to a large extent by the lack of transparency in the country’s firms. Entrepreneurial lawyers have moved on to set up on their own, and some have succeeded in creating structures where equity and power is not concentrated in the hands of a few. (See How it should be done on page 20 for details of how some firms work.)
At Trilegal, where all 36 partners are part of the firm’s 13-year lockstep partnership structure, Karan Singh says: “It’s very much our model to have the firm’s personality ahead of that of the partners.” Singh, who is part of the two-partner management committee of the firm, says doing so “keeps all the egos in check and makes the firm much larger than the individual”.
Phoenix Legal, which has both equity and non-equity partners, is another firm where power and remuneration is dispersed. “There is the lockstep that governs the growth within the equity … there are milestones,” says Sawant Singh, one of its three founding partners. “Becoming an equity partner is a question of time, and of having the competency and the wherewithal to wear that hat … the technical skills are a given, but not everybody is ready for enjoying the upside and shouldering the burden of the downside.”
The writing on the wall is clear: Beyond a point, growth may not occur unless equity is shared. An understanding of this is slowly but surely catching on.
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