As time takes its toll on a generation of founding partners, Indian law firms, like their clients, are grappling with succession planning
At the end of December 2012, Ratan Tata steps down as the chairman of Tata Sons, the holding company of the Tata group of companies. Tata, who succeeded his uncle as chairman in 1991, is said to have spent the initial years of his reign wresting control of group companies from company stalwarts, some of whom were reluctant to move on despite being in their 70s.
Tata’s own succession has been orderly. Cyrus Mistry, who takes over from him, was chosen by a selection panel in November 2011 and has been playing understudy for a year. Unusually for the head of what has been a family-controlled group of companies, Mistry is not a family member, although he has several close links with the Tatas.
The professionalism with which the change of guard at the top of Tata Sons is being handled is remarkable for India and may account for some of the publicity it has received. A 2009 report by Bain & Company indicates that most Indian companies shy away from discussing succession issues. The report found that globally 60% of S&P 500 companies discussed succession at least once a year. In India, however, 75% of directors at prominent companies said their boards did not discuss it at all.
But India Inc is changing slowly and steadily after two decades of liberalization and more companies are starting to handle succession professionally. One example is Infosys, which unlike Tata Sons, was never family run. Only two of the seven founders of Infosys – a company started in 1981 – continue on its board.
Change trickles down
Like their clients, Indian law firms are also grappling with succession planning. The challenge is perhaps most acute in firms that are built around a single individual or members of a family. The majority of Indian law firms are still structured this way, but a few do things differently.