Just as the Indian economy is leaping towards sophistication, so too is the legal community which derives sustenance from it. The country’s largest firms have proven their credentials by playing lead roles in some of India’s seminal transactions, but never before have the high number of mid-tier firms and the wealth of smaller players also played such an important role.
One need only look at some of the largest transactions of the last 12–18 months to see that local firms are just as capable of executing big deals as are firms like Amarchand, JSA and others. But how have these firms – many of which have been in existence for less than five years – lured multi-billion dollar international and domestic clients away? “Most invest more time in client care and relationship building,” says the general counsel for one of India’s five largest companies. “It has not traditionally been an area where your Amarchands, FoxMandal’s or Crawford Bayley’s have excelled … I think it is fair to say that these firms have depended on their brand – or certain individuals – to bring business through the door.”
According to this general counsel, the irony is that the gains made by the smaller firms are forcing the larger firms to rethink and redouble their client care strategies. For their part, the big firms deny that their client care skills are anything but finely honed and cite numerous studies to substantiate these assertions. “We have always considered our closeness to our clients as a pillar of the firm,” said Amarchand’s Shroff. “We have been noted by a number of independent studies – like that recently done by RSG – as the leading firm in India in these areas.” Despite the conjecture, one cannot deny that the cache of specialist and boutique firms now operating in India is fast eroding a market share that was hitherto considered the exclusive domain of the top-tier firms. Another explanation may also be found by looking at the pedigree of these firms’ proprietors.
For example, Saxena co-founded Phoenix Legal after time spent at Trilegal, Bijesh Thakker founded Thakker & Thakker after a stint with Denton Wilde Sapte in London, and the Baruchas left Amarchand to start their own firm (Barucha & Partners). The founding partners of ALMT all worked in the London office of Singhania & Partners, while Zia Mody traces her roots back to Baker & McKenzie in the US. “Coming from a well-established and well-credentialed law firm certainly helps in picking up new instructions, giving you enough work to get by when you are in the process of building your new firm,” Saxena says. But he is quick to point out that, pedigree or reputation notwithstanding, there is no substitute for “blood, sweat and [a] few tears.”
All this raises a valid question: why would one want to branch away from the seemingly nurturing bosom of the larger law firms in India? “It is purely about independence,” he says. “There is ability in a smaller firm – in a start-up – to build your own business free of the hurdles one faces in the family-run shops … we don’t have to deal with the politics – we can just be lawyers. We wanted to build a firm that was more democratic. We didn’t want it to be just rhetoric but show a real commitment to it by giving our lawyers equity in the practice and power in the decision making process… we feel the best way to do this is to model ourselves on the international firm model.”
Independence and democracy aside, there is a sense of entrepreneurship among the mid-tier law firms in India that is tangible. Many, if not most, harbour ambitions of turning their law firm into India’s next legal leviathan. “We don’t want to be thought of as a mid-tier firm,” says Bijesh Thakker, the founding partner of Thakker & Thakker. “The work we do is top-tier and the clients we act for are top-tier.” He makes reference to the firm’s location in one of Mumbai’s most upscale corporate locations: Express Towers in Nariman Point. DSK Legal and ALMT (both also located in Express Towers) also cite their locations as evidence of their firm’s higher ambitions.
Consolidate and prosper
Putting aside the claims of DSK, Thakker, ALMT and others, there is a perception that now has never been a better time for smaller law firms in the market to make a name for themselves. This is especially as the Indian legal services market seems to have entered into a phase of consolidation. Earlier this year, AZB & Partners subsumed the Bangalore boutique firm of Anup S Shah, after acquiring the Dehli-based practice of Ajay Bahl. In June M&C Partners, another Bangalore-based outfit, was acquired by JSA, and there are more rumoured to be on the cusp of taking up similar opportunities.
PwC executive director Ketan Dalal says that the consolidation witnessed over the past six months is driven by a number of factors, including the desire to increase one’s geographical reach, bring in additional skillsets and leverage existing clientele for more work. These drivers may actually work in favour of start-ups and mid-tier firms, who could find themselves either filling a niche created by these mergers or becoming the target of a lucrative merger themselves. “A larger firm would usually have the infrastructure and capability to provide increased services to existing clients of a smaller firm,” Delal says. “Hence, mining the revenue potential from the same pool of clients increases. It also increases the potential for well-credentialed and experienced smaller law firms to become potential targets, or if not, reap windfalls that arise from matters where the newly-merged firm is conflicted out.”
Sudhir Kapadia, head of tax with Ernst & Young, says that the rush to consolidation is evidence that the Indian legal services market is still in a nascent stage of development. The market still has some way to go in terms of achieving critical mass. “Consolidation will only grow as law firms try to keep pace with clients,” he notes. “To keep larger clients, law firms will need to build multiple skillsets … we would expect this process to increase in the years ahead.”
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