A pivotal moment

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Have the country’s debt woes come home to roost?

Action on the legal front has been fast and furious as companies across the country adjust to the realities of the new insolvency law. While the recently formed company law tribunals find themselves swamped with cases, each day brings new developments in the battles being waged between companies, their creditors and the powerful resolution professionals.

Is this a sign that India is making some headway in acting against errant corporate borrowers, who until now saw little risk in piling debt onto their balance sheets? Or is this merely the prelude to a fresh wave of dispute cases that will struggle through the already clogged higher courts?

Either way, sound legal advice – in this developing area – is in great demand. So, even as law firms rush to put together specialist teams to advise on insolvency and bankruptcy, in-house lawyers find themselves under pressure to weigh in on the complex and fast-moving issues surrounding it. Moments such as this are what make or break credibility, and the opportunities it presents will be valuable for the legal market as a whole.

The Supreme Court’s recent and long-awaited ruling on the status of foreign lawyers working in India (Locked out!) takes on greater significance when seen against this backdrop. India continues to be a sought-after market for international law firms and lawyers, and there is relief that the court has legitimized the current situation of foreign lawyers visiting India on a “fly-in, fly-out” basis. However, by implying that they may be subject to Indian laws and regulations, it has also sparked some confusion and it is vital that the government and the regulator provide clarity on this.

Given that it is a matter of “when” the government opens the market, rather than “if”, it is essential to focus on the more important issue of what form liberalization will take. This will be key to whether foreign law firms do indeed flock to India. Chris Parsons at Herbert Smith Freehills may have been speaking for many of his peers when he said: “If liberalization simply means an ability to open an office and practise foreign law, then … we do much of what corporate India wants us to do by being there regularly”. Be that as it may, in the words of Lalit Bhasin: “The ball is now in the court of the government and the regulator”. Can we expect the government to act when it is occupied with other matters?

The parliament witnesses frequent disruptions and protests, and very little work is actually undertaken. Continuing our coverage on what it has achieved this month’s What’s the deal? provides an assessment of key commercial bills that were debated and passed recently by parliament. It includes an amendment to the Insolvency and Bankruptcy Code, 2016, which replaces an ordinance that prohibited certain people from submitting resolution plans or participating in the liquidation process. This was an important change as it had included promoters and company management if the company’s debt has been a non-performing asset for more than one year. Another key bill passed recently amends the Negotiable Instruments Act, 1881. It allows a court trying a cheque bouncing case to direct the drawer of the cheque to pay interim compensation, not exceeding 20% of the cheque amount, to the complainant. Businesses know this is an area of concern and legislation such as this will be a welcome change.

In Management in motion we turn the spotlight on the concept of management by walking around, which can make general counsel (GCs) more effective. This involves GCs proactively engaging with stakeholders to understand issues and come up with solutions, as well as actively partnering with colleagues from other departments. This is vital for fostering a strong culture of ethics and compliance and allows issues to be solved on the spot. As we note, posters, emails and websites can never replace a GC who meets employees, empathizes with their concerns, and offers solutions.

Writing in this month’s Vantage point Aman Abbas, a legal and professional services marketing expert, says a robust marketing strategy can distinguish a law firm from its competitors. Abbas, a former director of the client and markets department at Shardul Amarchand Mangaldas & Co, writes: “Indian firms regardless of size need to focus on areas such as business intelligence technologies like their
international counterparts.”

This month’s Intelligence report analyses hurdles faced by women in law firms and companies. Is enough being done to ensure gender parity? Many are rightfully proud of the achievements made, but more can be done. While Tejashree Kumar, a deputy general manager of human resources at Jet Airways, says the company is “committed to encouraging and building a culture that respects diversity in all forms”, Lucy Rana at SS Rana & Co candidly states that “despite earning their place in the workforce, women are still faced with disadvantages, as compared to men”. Perspectives vary and acknowledging it is crucial.