Vandana Chatlani reflects on India Business Law Journal’s first decade of documenting legal developments
In June 2007, Vantage Asia, a little-known Hong Kong-based publishing house, printed the inaugural issue of a magazine dedicated to covering business and legal developments in India. It was the first publication of its kind, devoted entirely to the Indian market, and catering primarily to a readership of in-house counsel at Indian and international companies. With a Bengal tiger emblazoned on its cover, the magazine vowed to be a reader’s “partner in legal intelligence”, promising insightful advice on navigating the legal and regulatory labyrinths confronting foreign investors and domestic businesses in India.
Our first issue came at a time when many observers were predicting the imminent liberalization of India’s legal market, and its opening to foreign law firms. Our coverage showcased a wide range of views on this thorny and emotive subject from lawyers in India, New York, London, Hong Kong, Singapore, Dubai and beyond. It included a withering critique by Lalit Bhasin, the president of the Society of Indian Law Firms, explaining the reasons for his unwavering opposition to any moves to allow foreign law firms to enter the country.
Ten years on and the much anticipated – and highly controversial – liberalization has yet to materialize. The unbounded optimism expressed by some foreign lawyers in our first issue, many of whom had already assembled India-teams-in-waiting in locations outside the country, was clearly misplaced. In this month’s Vantage point we revisit the issue, hearing from many of the same partners at international law firms about how their India strategies have changed due to the lack of progress on legal market liberalization. We also hear once again from Bhasin, who explains why his staunch opposition to the entry of foreign law firms has softened in the intervening decade.
The era of mega-deals
Since our first issue, India Business Law Journal, or “IBLJ” as it has become (we hope affectionately) known, has witnessed the Indian legal market evolve, mature and thrive. We have been privileged to cover a dynamic market where family-run law firms operating in basements have blossomed into professional, institutionalized, tech-savvy, world-class entities. We have seen partnerships struck and ferociously torn apart, deals meticulously structured and speedily unravelled. We witnessed euphoria as India’s market boomed, attracting interest and investment from around the globe. And we traced transactions that fell into tatters in times of doom and gloom as India faced a dizzying downward spiral fuelled by the global economic meltdown.
In 2007, we covered some of the biggest transactions that India has seen to date; Vodafone acquired Hutchison Essar for US$11.1 billion, Tata Steel purchased Corus for US$12.9 billion, and DLF raised a record US$2.25 billion in the largest IPO in India’s history.
In September 2007, we broke new ground, asking Indian law firms to go public with their hourly billing rates. This proved to be an interesting, controversial and somewhat humorous exercise. “Do not send any email to us on this subject,” read the angry reply from one law firm. “We have discussed this internally. We don’t want our rates published,” said another. Many firms politely refused to share their rates on the grounds of confidentiality but, in a move lauded by in-house counsel, 25 others agreed to let us publish their fee schedules. Openness appears to have grown since then. In our latest billing rates report, in October 2016, 81 law firms revealed their fees. So, how much is an Indian lawyer’s time worth? According to our 2016 survey, US$368 per hour for a managing partner and US$123 for a junior associate on average.
In 2008, we followed legal stalwarts Ashok Desai, Soli Sorabjee and Justice Manmohan Singh as they plied their distinguished trade through the capital’s legal corridors. We observed how the functioning of the courts sometimes resulted in a pervasive imbalance of power – between judges and lawyers, between lawyers and clients, and between the need for effective and enforceable remedies and the inertia of the system. At that time and since then, we have recounted fascinating tales of appeals, deferments and case management. India Business Law Journal’s approach has been neither to ignore the flaws of India’s legal system, nor to dwell on them, but rather to explore strategies by which law firms, local and international, can craft solutions that enable their clients to achieve their business goals. Nevertheless, inherent inefficiencies in India’s legal infrastructure have been a constant theme in our coverage, and here, a series of encouraging developments – efforts to institutionalize arbitration, digitization of the official gazette and other records, permitting cross-examination via Skype, for example – indicate that change, although sometimes slow, is certainly coming.
10 years of reform
Over the past decade, we have scrutinized ground-breaking, and at times painful, reforms intended to stimulate higher growth, efficiency and profitability, as well as to foster better corporate governance and business ethics. Several important pieces of legislation have been introduced, including the Companies Act, 2013, and the Sexual Harassment of Women at Workplace at Workplace (Prevention, Prohibition and Redressal) Act, 2013, while major amendments have been made to laws such as the Competition Act, 2002, the Arbitration and Conciliation Act, 1996, and the Trade Marks Act, 1999. Reforms and attempts to streamline regulations continue with the coming introduction of the goods and services tax regime.
India Business Law Journal has always paid close attention to India’s intelligent, opinionated, argumentative, and sometimes dramatic lawyers. Over cups of masala chai, we have discussed their wins and woes, their successes and struggles, their desires and doubts. We have felt their frustrations as they grappled with ambiguous regulations, and worked to create new specializations. We explored themes of succession planning in family-run law firms, talent acquisition, attrition, compensation, career progression, equity structures and more. We tracked the rise of women in the legal profession as they advanced into positions of authority and made their voices heard.
In 2011, we shocked in-house counsel around the world with news that most Indian law firms had no professional indemnity insurance. Even those firms that were covered were found to have levels of cover that were woefully inadequate. “The lack of PI insurance cover comes as a surprise to me,” said Judith Crosbie-Chen, a legal director at Logitech, in early 2011. Since then the situation has improved dramatically.
Going full circle
During our 10 years observing the legal market, we have seen some trends go full circle. A prominent example has been the trend for Indian law firms to enter into marriages, or best-friends relationships, with their foreign counterparts. A rush of such marriages occurred in the late 2000s, giving rise to fears among many firms that they had to find a partner quickly to avoid being left on the shelf. Trilegal tied the knot with Allen & Overy in 2008 and AZB & Partners agreed a formal association with Clifford Chance in 2009. But in the years that followed, with no progress on liberalizing India’s legal market, many of the partnerships began to sour. Reports of law firm marriages began appearing less frequently in our coverage, gradually giving way to reports of divorces. All but a handful of the tie-ups have since been terminated, including those of Trilegal and AZB & Partners.
While some firms were forging tie-ups, others were breaking up. Alka and MP Bharucha left Amarchand Mangaldas & Suresh A Shroff & Co to set up Bharucha & Partners in 2008, while several lawyers split from Trilegal to launch Phoenix Legal in the same year. The most high-profile split was undoubtedly that of brothers Shardul and Cyril Shroff, who dissolved their legacy firm Amarchand Mangaldas & Suresh A Shroff & Co in 2015, creating two rival firms. The move marked the end of an era for one of India’s best-known legal brands.
Another trend that may have gone full circle is the outsourcing of legal services. Following the 2008 financial crisis, cash-strapped companies desperately sought ways of trimming their legal costs. Their search coincided with the rise and rise of a new breed of service providers: legal process outsourcers (LPOs). Initial scepticism turned to acceptance as companies shifted their attitudes towards this fledgling industry. “Five years back, the mantra was ‘Outsourcing? Interesting, but I don’t think we need it,’” said Vivek Hurry, then COO and co-founder of Exactus Corporation, in early 2009. “Today, it’s ‘How do we start?’”
This nascent industry threatened to disrupt the functioning of the country’s legal profession by absorbing large parts of the work undertaken at the time by law firms and in-house legal departments. Law firms, fearful for the survival of their traditional business models, jumped on the bandwagon, with many, including AZB & Partners, setting up LPOs of their own. But not for long. By 2015, the heady growth experienced by the sector in its initial days appeared to be over, and many of the LPOs had been closed or scaled back. The sector has far from died out, but neither has it fulfilled its early promise. Today technology has largely replaced it as the primary disrupter of the status quo in the legal profession.
The unexplored South
In late 2009, we documented the frenzy of India’s “national” law firms racing out of their established hubs in Delhi and Mumbai to set up offices and partnerships in Hyderabad, Chennai and Bengaluru for a slice of action in the south. South India’s economy was soaring on the back of manufacturing, technology and real estate booms. But would lawyers from the north be able to rival their local counterparts? The struggle they faced to understand and be accepted by this new market is a good illustration of India’s immense cultural diversity and differences. “Thinking that what works in the north will also work in the south is a mistake,” said Abhijit Joshi, then a partner at AZB & Partners, late in 2009. “India is more like the European Union than a single country.” Joshi has since set up a new firm, Veritas Legal, of which he is managing partner.
While some view the south as “provincial” and lacking in sophistication, others believe companies and law firms based there demonstrate more loyalty than their northern counterparts. “In the south, a lawyer is identified as a part of the family, even if it’s a firm,” said BC Thiruvengadam, a senior partner at Thiru & Thiru, one of Bengaluru’s oldest local firms, around the same time. “Mumbai and Delhi firms lack local feeling and understanding.”
Joy and sorrow
At festive times we have stepped away briefly from the business of law to celebrate the lawyers themselves, learning about their hobbies, pro bono activities and adventures. We discovered daredevils, artists, chefs, nightingales, athletes, an astronomer, a collector of vintage cars and a lawyer who has a cabinet of Ganesha statues.
But sadly we have also covered tragic events. We watched with horror and disbelief in November 2008 when a group of heavily armed terrorists stormed two of Mumbai’s best-known hotels as well as other prominent locations in the city including Chhatrapati Shivaji Railway Terminus, Cafe Leopold, Cama Hospital and Nariman House. Anand Bhatt, a senior partner at Wadia Ghandy & Co, who was about to celebrate his 60th birthday, was one of over 160 people who died in the brutal attacks. He was remembered by friends and colleagues for his professional stature, sharp intuition and legal prowess.
Others were lucky to escape and shared stories of kindness, unity and resilience. Mark Abell, then a partner at Field Fisher Waterhouse, was trapped in his hotel room for 40 hours and told us of the local support he received. “The Indian legal community was absolutely fantastic,” he said. “Words fail me. Their generosity and courage was overwhelming. They were constantly supplying me with information [by email] about what was happening, they were giving me emotional support, practical advice. They were just absolutely tremendous. I’ve practised law for 25 years around the world … and I have to say the Indian legal profession stands out in my mind for their generosity, courage and indomitability. All these people weren’t going to be cowed by what was happening, and that was very, very striking.”
Tales of corruption
In February 2009 we shed light on the Satyam saga, one of India’s best known cases of fraud. B Ramalinga Raju, the CEO of the IT company, resigned with a confession that he had falsified the company’s balance sheets, artificially inflating profits by approximately US$1 billion over a period of several years. The debacle raised many questions for company stakeholders. How did a fraud of this magnitude escape the attention of the Securities and Exchange Board of India and other regulators? How many people were involved in sustaining the lies that deceived Satyam’s clients and shareholders? How did the company’s auditor, PricewaterhouseCoopers, fail to notice the problems? The case raised alarm bells over independence, corporate governance, outsourcing relationships and regulatory oversight.
In 2011, thousands of anti-corruption demonstrators took to India’s streets calling for stronger anti-corruption laws following a spate of scandals, including those that tainted the Commonwealth Games in Delhi and the country’s telecommunications sector. Widespread media coverage of the scandals, combined with the publication of India’s draft National Anti-Corruption Strategy, the passage of the Bribery Act 2010 in the UK, and the increasingly aggressive enforcement of the US Foreign Corrupt Practices Act, brought the issue of corruption to the top of business and political agendas. “It is important to plan ahead and to look out for stages in the business cycle when a company may be particularly vulnerable to demands for bribes,” said John Bray, a political risk consultant with Control Risks, in early 2011. “Once the risks are identified, it should be possible to develop counter-strategies,” added Nick Panes, a senior partner at the consultancy: “Perhaps the single most important requirement is the personal commitment of the CEO and his or her senior management team to high standards of integrity.”
Intellectual property shocks
Intellectual property law has been a core focus area for India Business Law Journal, and has provided some of our most memorable content.
Our inaugural issue took the bull by the horns with extensive coverage of section 3(d) of India’s patent law, a highly controversial provision aimed at preventing the “evergreening” of patents. Our coverage focused on the travails of pharmaceutical giant Novartis, which was struggling to win full patent protection for a new drug, and ultimately failed as a result of section 3(d).
In March 2011 we reported on a dispute over an infrastructure project that, peculiarly, was being fought out by intellectual property lawyers. The case arose from a campaign by environmental group Greenpeace to stop the construction of a port in Orissa. Greenpeace argued that the port – a joint venture between Tata and Larsen & Toubro – posed a threat to an endangered species of turtle. To raise awareness, the group published a Pac-Man-style video game called Tata vs Turtle on its website, which included a stylized version of Tata’s T-within-a-circle logo as well as references to “Tata demons”. Tata responded by filing for an injunction on the ground that the unauthorized use of its trademark amounted to infringement. But Greenpeace emerged the eventual victor, winning the case with some clever lawyering, which argued that “the juxtaposition of the word ‘Demons’ with ‘TATA’ … is merely hyperbole”.
The dispute – between Enercon, a German wind turbine maker, and its Indian subsidiary, Enercon India – began when the supply of spare parts to the Indian subsidiary was cut following the failure of the two entities to agree the renewal of a licensing agreement. Desperate to regain access to badly needed technology, Enercon India turned its attention to the patents which protected the technology in question. It filed an application with the Intellectual Property Appellate Board seeking the revocation of 19 patents held by Enercon’s founder and controlling shareholder, Aloys Wobben, on the grounds that they lacked inventive step and originality. To the surprise of many, 12 of the patents were overturned, leading observers to question how the German company lost control of its Indian subsidiary to such an extent that the subsidiary was able to attack – and ultimately quash – 12 of its key patents.
In 2012, we covered the granting of India’s first compulsory licence, to Natco Pharma, one of India’s smaller generic drugs manufacturers, for Bayer’s Nexavar drug. In what many viewed as a bitter pill for Big Pharma, Natco was given the licence until 2021 to sell the drug for ₹8,880 for a course of 120 tablets. It also agreed to supply the drug free of charge to 600 deserving and needy patients each year. Bayer had asked for a 15% royalty but was given only 6%. The order sent alarm bells ringing across the global patent-owning community. Pravin Anand, the managing partner of Anand and Anand and a stalwart of many patent battles, said at the time that the decision had “shaken the confidence of our pharmaceutical and other patent clients”.
In 2014, we captured the surge of optimism that accompanied the election of Indian Prime Minister Narendra Modi. At home, Modi worked to convey an image of political strength: showcasing his ability to drive growth through the Gujarat model, making commitments to create jobs and work for the poor, promising to tackle corruption, increase foreign investment, and more. Tech-savvy and determined to improve India’s position on the World Bank’s ease of doing business ranking, Modi has sought to position himself as a proactive leader who welcomes foreign investment. Perhaps his boldest move to date was made last November, when on the same day as Donald Trump’s surprise victory in the US presidential election, India faced the sudden onslaught of demonetization – the overnight withdrawal of ₹500 and ₹1,000 notes from India’s banking system. The idea was to streamline economic policy and curb black money, but while some viewed it as a bold political action, others slammed it for hurting businesses and trampling on India’s vast informal economy, which depends predominantly on cash payments.
So much has changed, including the launch of a new digital edition of India Business Law Journal and the complete redesign of our print edition – yet many things remain the same as we enter our second decade. We look forward to continuing to bring you ground-breaking analysis, informed debate and the legal and regulatory intelligence necessary for a business to flourish in India. After devoting a decade to India, we are honoured to call veteran lawyers and general counsel our friends and trusted partners. We are also proud to have made connections with new entrants to the profession – aspiring young lawyers whose hunger, drive, determination and global exposure assure us of their capability to safeguard the profession while taking it to new heights.
We remain ready to report on a shining India as it gains a more prominent position on the world stage. As this beautiful and culturally rich country opens its doors a little wider to the rest of the world, we are certain there will be no shortage of complex, cutting-edge, challenging and colourful stories for us to report on. We are honoured to share those stories with you.