Wednesday, August 19, 2009

The Law Firm Scene in India - Legal 500

India centric Editorial in http://www.legal500.com/c/india

Despite surging inflation and the stock market losses of 2008, India’s upwardly mobile middle class continues to reap the financial gains of a buoyant economy. Consequently, the legal community is enjoying an unprecedented range of work, and in the last year found itself especially busy with telecoms, automotive and energy clients. Incoming funds work also remains lively, especially within the real estate and infrastructure sectors, and private equity continues to dominate the M&A scene.


However, despite persistent lobbying and clear incentives for domestic law firms to grow, The Partnership Act still limits each Indian firm to 20 partners, and local firms are prohibited from constructing websites or otherwise advertising their services. The restrictions limit growth options both domestically and internationally, although many practitioners continue to regard them as promoting stability, continuity and identity within the legal community. A handful of law firms are rumoured to have opened up additional offices under different names to circumvent this legislation but the legal market comprises small and mid-sized firms, often either family-run or in the form of sole proprietorships. Control of even the biggest firms is frequently found in the hands of a select few.


Pursuant to a 1996 High Court decision regarding the Advocates Act, foreign law firms are not permitted to give any form of legal advice on Indian soil and so operations are necessarily restricted to advising on matters of international law from offices in Singapore, Hong Kong, New York or London. Increasing foreign direct investment (FDI) into an ever-broader range of sectors, buoyant IT and outsourcing markets, and growing competition from international firms have prompted several local practices to prepare themselves for any changes. For example, a number have engaged in knowledge exchanges with foreign law firms, improved response times and made billing more transparent.


Meanwhile, the market for India-related work for foreign firms continues to develop, particularly in the financial services and corporate sectors; more and more outbound M&A is taking place, the most recent example being Indian giant Tata’s historic acquisition of Land Rover/Jaguar from Ford for US$2.3bn.


A number of foreign practices - including the likes of Linklaters LLP, Ashurst LLP and White & Case LLP- have liaison offices in the country, although in theory their activities are currently limited to marketing exercises. However, with the Indian business sector increasingly opening up to foreign investment, it is surely only a matter of time before India honours its WTO commitments, the restrictions are relaxed, and foreign firms are allowed to operate to some extent. Last November, the Indian Law Minister’s liberalisation paper proposed allowing foreign law firms to practise foreign law in India, but this met with a frosty reception from certain quarters of India’s legal community. Many domestic lawyers concede it is time for India to open up but insist that the playing field be level and the question of reciprocity resolved. Understandably, they ask why foreign lawyers should be allowed to practice in Indian courts when Indian lawyers cannot appear before foreign courts. Nonetheless, this perplexes UK lawyers only interested in transactional work and who have no great urge to appear before Indian courts, especially when considering that Indian law firms Fox Mandal Little and ALMT Legal have already opened up shop in London.


Other fears are indeed tangible. When foreign firms are eventually permitted entry, it may be that local firms, although relatively inexpensive, suffer an exodus of clients, not to mention talented lawyers being attracted by the spoils of foreign lockstep systems, unless the marketing and advertising restrictions imposed are finally relaxed. Even then, many Indian firms may not be able to compete with the internationals despite fielding high-quality lawyers and the advantage of local knowledge.


The UK’s Justice Minister Bridget Prenticerecently visited India to talk to Indian government representatives about this thorny issue. In June, members of the Bombay Bar Association and the Bombay Incorporated Law Society were invited to visit England and Wales’ highest courts of law as part of an attempt to promote mutual understanding. Notwithstanding such goodwill exercises, the Indian Government is facing 2009 spring elections and it looks unlikely that any real market opening will be achieved before 2010.


Meanwhile, Indian lawyers are already switching allegiances more readily than at any other time. Projects specialist Sumantu Baso recently left Trilegal for J Sagar Associates and, after several years at Mumbai-based Kanga & Co, corporate partner Kalpana Merchant headed forAZB & Partners. Manjula Chawla departed Kochhar & Co after 13 years to join Trilegal as counsel. M&A partner Nihar Mody, who only last year left Wadia Ghandy & Co for UK firmFreshfields Bruckhaus Deringer LLP, has already returned to found Platinum Partners with Karam Daulet-Singh, formerly of Daulet-Singh & Associates.


When, back in 2006, Shobhan Thakore and Suresh Talwar teamed up to found Talwar Thakore & Associates, a domestic practice very closely associated with top international firmLinklaters LLP, the move shook up the local legal community. In 2008, the talking point tie-up was the non-exclusive, non-financial arrangement entered into between UK legal powerhouse Allen & Overy LLP and Indian firm Trilegal. Some domestic law firms interviewed remain suspicious of such arrangements, regarding them as cynical attempts by UK firms to circumvent India’s Bar rules by getting into bed with Indian legal practices.

Amarchand & Mangaldas & Suresh A. Shroff & Co clearly remains the leading commercial firm in the country, and features in most of the biggest corporate deals. It has offices in all four of the country’s biggest cities and boasts over 300 lawyers. However, while it has many extremely talented lawyers, and has made efforts in recent years to broaden its management structure, it is nevertheless somewhat dominated by one family. It suffered notable losses when star litigator M P Bharucha, his corporate lawyer wife Alka Bharucha and nine associates recently departed the Mumbai office to form spin-off law firm Bharucha & Partners.


Progressive multi-office firms with more democratic structures are also emerging and may appeal to the country’s up-and-coming legal talent. Prime examples include J Sagar Associates and Trilegal, the latter recently becoming the first Indian firm to introduce a lockstep system for its attorneys. The former is a star performer of recent years, with its superb infrastructure law credentials now complemented by an enhanced corporate and finance capacity in its Mumbai office. It can presently justifiably claim a place as one of the country’s three leading corporate law firms, alongside the previously mentioned Amarchand & Mangaldas & Suresh A. Shroff & Co, and also AZB & Partners, which in Zia Mody and Ajay Bahl has two of the country’s top practitioners.


Other firms of national scale include Fox Mandal Little, following the 2006 merger of Fox Mandal with Mumbai finance stalwarts Little & Co. It recently celebrated the opening of an office in London.

Khaitan & Co. has been going from strength to strength, garnering excellent market feedback. The firm is an example of the way family businesses can dominate in India, with the Khaitan family forming the backbone of not just Khaitan & Co., but also of Delhi firmsSuman Khaitan & Co and O.P. Khaitan & Co. Solicitors and Advocates.


The nature of firms and offices in each of India’s key legal centres varies considerably. The work of firms in Bangalore and Chennai largely reflects the booming outsourcing and technology clusters in those centres, and the same can be said for Hyderabad and Pune. Kolkata remains a bastion of the traditional family firm, its decline as a commercial centre having encouraged local outfits to expand into other more lucrative state jurisdictions. Khaitan & Co. and Fox Mandal Little both have roots in the city.


Home of the Supreme Court, it is no surprise New Delhi houses a number of top litigation practices. These include P H Parekh & Co, whose senior partner P H Parekh was last year re-elected for a third term as president of the Supreme Court Bar Association, Kachwaha & Partners, Karanjawala and Company, Bhasin & Co and a number of influential litigation boutiques and sole practitioners. It is a world where highly talented and highly paid counsel rub shoulders with the nation’s power brokers, where there is fierce rivalry between law firms and with little love lost. The city also has significant corporate practices as well as first-class capital markets practices like S&R Associates. In addition, it is a site well positioned for large-scale infrastructure and power projects.


Business and finance-focused Mumbai has a much more genial legal community, with a spirit of getting deals done. Traditional corporate stalwarts like Crawford Bayley & Co andMulla & Mulla & Craigie Blunt & Caroe- where many practitioners have decades of experience and historical links to India’s biggest and oldest companies - work alongside up-and-coming outfits, such as DSK Legal, Thakker & Thakker, Majmudar & Co and ALMT Legal. Mumbai also boasts excellent banking boutiques, such as Dave & Girish & Co andJuris Corp.


Potential clients should note that when visiting firms in Delhi or Mumbai, no judgement should be made based on the humble appearance of some practices’ offices. Modesty is a prime characteristic among Indians and this is often reflected in its lawyers and their working surroundings. Many would regard a plush office as showy and inappropriate, and domestic clients may not be impressed by such displays. There is no correlation between the glossiness of a firm’s marketing efforts and the quality of its work in India, and the same goes for premises. There are also proximity issues at play. In Delhi, many top firms are based in houses in the residential Kailash area or even further out in family farms, while in Mumbai most are clustered around the downtown Nariman Point and Fort areas. The primary reason for this is easy access to the courts in cities where poor infrastructure can make cross-town journeys a marathon. The gleaming office towers and business parks associated with India’s booming economy that have sprung up elsewhere, often in out-of-town sites, are often not suitable either to Delhi or Mumbai law practices. That said, Amarchand & Mangaldas & Suresh A. Shroff & Co’s Mumbai practitioners work from an impressively ornate business park building out in the suburbs, while Anand and Anand relocated its Delhi lawyers last year to a swish new location in Noida’s Film City. Now that New Delhi is so tightly squeezed for quality office space, law firms like J Sagar Associates are taking on additional premises in Gurgaon and looking forward to completion of the new highway that will link this fresh commercial hub to New Delhi’s city centre.

Source - Legal 500

No comments: