To accompany this year’s directory of Indian law firms, India Business Law Journal consulted widely with the country’s legal practitioners to reveal the current state of play in the legal market

Ashopkeeper in Assam hides behind a rickety wooden table covered in giant plastic jars of coconut-flavoured sweets and stacks of Sizzler biscuits. A curtain of small packets filled with Bingo crisps and sugar-coated fennel dangles above, framing his face as he waits eagerly for customers to make a purchase. But the sweet and savoury snacks on sale are not the shopkeeper’s only source of income. Firmly attached to one side of his wooden table is a row of more than 20 plug points. The humble kiosk transforms into a charging station for mobile phones, allowing the shopkeeper to profit from providing a reliable electricity supply in a village where that is a luxury.

The shopkeeper’s innovative approach to business is a small yet telling example of the enterprising spirit that permeates many of India’s companies. Several, having flourished within India, are determined to explore new markets overseas. Others are partnering with international companies to bring new products, services and solutions to India.

The United Nations Conference on Trade and Development (UNCTAD) identified India as the third most favoured country for foreign investment, behind China and the US, in its 2009-2011 World Investment Prospectus Survey. But India’s prosperity continues to be limited and weighed down by slow improvements to infrastructure, regulatory spasms and policy paralysis.

“The country is run by a bunch of buffoons,” says Jyoti Sagar the managing partner of J Sagar Associates. “What message are we sending? Billions of dollars have been invested in 2G auctions and now they’re saying we’ll cancel your contracts.

Jyoti Sagar Managing Partner J Sagar Associates

“Investors have nowhere else to go, they’re not here because they want to be,” he adds.

An unclear division of responsibility between Indian regulators is further cause for concern. “We have a multiplicity of authority and that is a big challenge,” says Ashish Razdan, a senior associate at Khaitan & Co.

While UNCTAD’s investment survey paints a relatively rosy picture of India’s attractiveness to investors, other reports such as Doing Business, highlight the difficulties associated with running a business in the country. According to statistics from June 2010, India was ranked a paltry 134 out of 183 countries on the ease of doing business, far below China and Pakistan and lower even than Bangladesh, Kosovo, Kazakhstan and Malawi. Foreign investment levels are also threatened by the rising cost of doing business. “India used to be considered a low-cost manufacturing base,” says ML Bhakta, the managing partner of Kanga & Co. “That difference in price is now marginal.”

ML Bhakta Managing Partner Kanga & Co

Taxing times

Another factor that has forced caution upon foreign investors is the Vodafone tax controversy. The British telecoms company is appealing a September 2010 Bombay High Court decision that upheld the Indian tax department’s right to collect US$2.5 billion as capital gains tax for Vodafone’s acquisition of Hutchison Essar in 2007. Tax authorities have stated that Vodafone failed to claim withholding tax when it made its acquisition and is thus liable to pay the hefty tax bill. Vodafone argues that it should not have to pay the Indian authorities since the acquisition was an offshore transaction, through its Dutch subsidiary, which purchased a Cayman Islands holding company controlled by Hutchison. The case is being closely watched by international investors who fear a shift in the Indian tax department’s strategy to aggressively pursue cross-border transactions. Over 400 notices have been issued to foreign companies in situations similar to Vodafone.

“Nothing is more upsetting than the Vodafone case,” says Alka Bharucha, a senior partner at Bharucha & Partners in Mumbai. “Idea and Tata have been issued notices. It’s something that continues to loom.”

Alka Bharucha Senior Partner Bharucha & Partners

Another recent ruling involving AT&T and the Birla Group has raised more eyebrows and cast a doubt over the benefits of the India-Mauritius double tax avoidance agreement (DTAA). The DTAA is reportedly being renegotiated to eliminate exemptions on capital gains in order to be modelled more closely on the Singapore-India DTAA. “The minimum size of a business or investment in Mauritius has changed to ensure it is a real company and to ensure investments are not coming from Mauritius entities that are shell companies,” says Rajan Gupta, a partner at SRGR Law Offices.

Other complications arise when lawyers take into account the possibility that the new Direct Tax Code (DTC) will override the DTAAs India shares with other countries. The general anti-avoidance rule (GAAR) to be included in the DTC could wipe out tax-friendly structures altogether. “The GAAR has been worded in such a manner that tax avoidance won’t be allowed,” says Freddy Daruwala, a partner at Juris Corp. “It’s draconian.”

Freddy Daruwala Partner Juris Corp

Nishith Desai, the managing partner at Nishith Desai Associates, says that far too many barriers have been put up at the tax and exchange control level. He adds: “The DTC is more like the ‘disaster tax code’.”

Nishith Desai Managing Partner Nishith Desai Associates

Both the DTC and the new goods and services tax (GST) regime are expected to be in force in 2012. “The GST is coming up but not much is happening from the government standpoint,” says Abhishek Datta, a partner at HSA Advocates who recently joined the firm from BMR Advisors. “There has been a lot of contract vetting and drafting so clients can have their systems in place.”

An explosion of disputes

India’s courts have been furiously busy, not only with tax disputes, but an explosion of commercial and company law disputes, project disputes and infringement litigation.

“With volatile market conditions, we expect more corporate litigation matters in the near future,” says Ameet Naik, the managing partner of Naik Naik & Co.

Raian Karanjawala, the managing partner of Karanjawala & Co notes an improvement in court efficiency and says the credit must go to a new generation of driven judges. “At Delhi High Court, younger judges have taken on the brunt of work and are keen to dispose of matters,” he says. “There’s a certain desire to hear and dictate judgment which has led to a brisk business-like approach.”

A culture of awarding damages has yet to emerge, but Rajneesh Chopra, the managing partner at C&C Associates, says this is something litigants can look forward to. “More defamation suits have been filed and fines have been awarded so it’s just a matter of time,” he says.

Prateek Bagaria, an associate at Nishith Desai Associates, foresees a rise in international disputes targeting India, even though litigation in bilateral investments has been scarce thus far. “India went ahead and signed a huge number of treaties without thinking of the repercussions,” he says. “We have 66 bilateral treaties and four CECAs [comprehensive economic cooperation agreements]. India will soon be stormed by claims from investors belonging to its treaty partners if regulators and lawmakers do not realize the implications of their constantly changing stands on existing laws and policy.”

Several firms have ramped up their litigation capabilities in anticipation of a rise in disputes. HSA hired Supreme Court litigator Meenakshi Arora in April; Phoenix Legal recruited Jyoti Singh from Dhir & Dhir; and SRGR Law Offices poached Vijay Kaundal from Dutt Menon Dunmorsett.

Vijay Sondhi, a senior partner at Luthra & Luthra, says the firm has its “hands full with litigation”. Recognizing the need for proper training in the art of litigation, Sondhi says he asked the Delhi Bar Council, of which he is a member, to organize a continuing education programme. Sadly, there was little interest. “When you are arguing before a judge, you have to talk on your toes,” he says. “You need to know how the court will react. You need to know how a jurisdiction clause should be worded.”

Vijay Sondhi Senior Partner Luthra & Luthra

Top of the pile when it comes to litigators are the country’s senior counsel. Many observers complain, however, that senior counsel’s flair for winning cases does not justify their exorbitant fees. “Branded counsel can dictate any price, charging more than Queen’s Counsel in England,” says Sumeet Kachwaha, the managing partner of Kachwaha & Partners. Although his firm handles most of its disputes work in-house, Kachwaha says there are times when you have no choice but to engage them. “Sometimes the feeling is that if a senior isn’t present, the matter just isn’t important enough,” he says.

Sumeet Kachwaha Managing Partner Kachwaha & Partners

Anand Desai, the managing partner of DSK Legal, accuses senior counsel of unethical behaviour. “Senior counsel need to get sued and a firm needs to get sued,” he says, pointing to what he calls a “drop in quality” at larger law firms. “Some of the advice is so blatantly wrong. There is no ethics and no responsibility. Senior counsel don’t read. They appear once for you and the next day they appear for your opposition. It’s chaotic. They think they’re above the law.”

Anand Desai Managing Partner DSK Legal

For parties seeking to steer clear of India’s courts and dependence on senior counsel, arbitration is gaining traction as a popular method of resolving disputes. Although costly in some cases, arbitration is favoured for its confidentiality and relative speed.

“We see joint ventures getting sour and going into arbitration,” says Shardul Thacker, a partner at Mulla & Mulla & Craigie Blunt & Caroe. “Mid-cap companies want to put an end to their marriages.”

Another forum for dispute settlement is the specialized tribunal, of which a number, such as the Electricity Tribunal, the National Green Tribunal and the Telecom Disputes Settlement & Appellate Tribunal (TDSAT), have been established. The challenge, according to some lawyers, will be to succinctly and coherently present a case in these niche areas. “When you deal with a tribunal, far more specialized knowledge is required than what is presented to a general court,” says Karanjawala. “It is a necessary burden to achieve that level of specialization, because even the judges will be experts in these areas.”

The TDSAT, the Electricity Tribunal and the Securities Appellate Tribunal are among those praised for their efficiency and effectiveness in disposing of cases. Other tribunals, however, have been neglected. The Appellate Tribunal for Foreign Exchange has not had a chairperson for six months. “Tribunals haven’t been properly managed by the government,” says Vikram Nankani, a partner at Economic Laws Practice. “The government gives tribunals stepmotherly treatment. It fails to appoint commissioners on time and that has contributed to their downfall.”

Opening the floodgates

The government frequently teases foreign investors with hints of liberalization in insurance, retail and defence. But will foreign investment caps ever be raised?

India may be a land of opportunity for some, but for many investors, the decision to invest is complicated by restrictive caps on foreign ownership. The retail sector is a case in point.

“International big fashion brands want to capitalize,” says Ashish Razdan, a senior associate at Khaitan & Co. But “they aren’t happy with the franchise model.”

“This government must have the courage to liberalize retail,” says Premnath Rai, the managing partner of PRA Law Offices. “I’m in favour, but it won’t be easy.”

Smaller independent stores could suffer if India allows foreign retailers to exercise a greater degree of control and this could damage the Congress Party’s image. “How will they face the BJP states who favour merchants and mom-and-pop stores?” asks Vikram Nankani, a partner at Economic Laws Practice. “That is their vote bank.”

Those familiar with the government’s mindset believe the private sector must be more sensitive to the circumstances faced by the administration. “When dealing with the government, you have to understand the compulsions of law and policy from the government’s perspective,” explains Sharad Bhansali, the managing partner of APJ-SLG Law Offices in New Delhi. “The private sector cannot quite understand the government. That ability is missing.” Bhansali, who worked at the Ministry of Commerce for almost 20 years, adds that “building synergy is the biggest challenge – being friendly to the policy process and ensuring that industry is happy and comfortable.”

Foreign investors are certainly not comfortable with their offset obligations in the Indian defence sector. The country may have tantalized the global defence industry by increasing its defence budget to US$33 billion this year. However, foreign players are disappointed by the obligation to produce 30-40% of their products locally. “International defence players are not able to find the right partner,” says Kaviraj Singh, the managing partner of Trustman & Co. “There are very few names that can make more than nuts and bolts.”

Insurance is another area foreign investors are watching carefully. The industry is pinning its hopes on the Insurance (Amendment) Bill, which, if passed, will increase the foreign investment limit in the insurance sector from 26% to 49%.

There are over 40 private insurers in India – most of them joint ventures between Indian and international companies. This proliferation of providers has widened the range of insurance products on offer in the Indian market, but in order to exercise greater strategic control, international companies want more than 26% of the pie. “It will be a sea change if the bill comes about with M&A opportunities and IPOs in the offing as some insurers reach the 10-year mark,” says Celia Jenkins, a partner at Tuli & Co.

Those interested in capitalizing on new areas say investors should focus on research, technology and the environment. “Space, biotech, nanotech, stem cells research, etc. … These are critical areas,” says Suman Khaitan, the managing partner at Suman Khaitan & Co. “The future will be in hi-tech areas, in defence, waste disposal, water recycling, garbage disposal, hybrid cars and clean energy.”

KV Singh, a senior partner at Kochhar & Co, agrees: “The environment is one area where India needs foreign direct investment,” he says. “Most states don’t have common effluent treatment plants or hazardous waste disposal sites and we need these solutions.”

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Innovation, interpretation and eligibility

One tribunal that has been fiercely criticized is the Intellectual Property Appellate Board (IPAB), which was set up primarily to deal with appeals against orders of the Trade Marks Registry, petitions against registered trademarks and orders of the registrar of geographical indications.

One problem is simple operational inefficiency. “It is a matter of public knowledge that most of the records which are summoned by the IPAB from the office of the registrar are seldom provided to the board,” says Amarjit Singh, the managing partner of Amarjit & Associates. “I have seen the parties to the litigation providing copies of the registrar’s records to the IPAB to avoid delays in the hearing and disposals of their appeals.”

Another issue revolves around how tribunals and boards are constituted. This is a question that Shamnad Basheer, a lawyer and professor at the National University of Juridical Sciences in Kolkata, is determined to answer. Basheer filed a writ petition in January stating that several members of the IPAB were unfit for their positions because they clearly lacked the qualifications and competence required to hear and decide patent and trademark matters.

In his writ, Basheer writes: “Over the last few decades, there has been a conscious move … to tribunalize administration of justice … While the Hon’ble Supreme Court did initially permit limited tribunalization … in order to ensure speedier justice, it has recently clamped down on the rapid dilution of judicial standards in these tribunals.”

With reference to the IPAB, Basheer says in the writ: “Although the IPAB has been constituted to take over the functions of the high courts in key areas pertaining to the adjudication/resolution of trademark and patent disputes, the independence of the IPAB from executive influence is under serious question. The norms for appointment of IPAB members, its current constitution and its mode of functioning are all in blatant violation of sacrosanct principles of an ‘independent judiciary’ and ‘separation of powers’ as enshrined in the constitution.”

The writ is pending in Madras High Court. Lawyers hope it will help rectify the inherent conflicts within the IPAB, improve its decision-making powers and raise its credibility. Some experts note that improvements are already evident. “The IPAB has changed dramatically in the last few months,” says Pravin Anand, the managing partner at Anand and Anand. “There is a great judge, Justice Prabha Sridevan, retired from Madras High Court, who is the chairperson. They now sit daily and have started sitting mostly in the high court premises, at least in New Delhi. The approach is much more liberal and there are fewer inconsistencies.”

Delhi High Court has sealed its reputation as a respected forum for IP disputes. Yet poor staffing at the trademark and patent offices as well as unfamiliarity with new forms of trademarks has hampered progress. “IP is at a pre-boom stage,” says Pankaj Soni, a managing associate at Remfry & Sagar. “Every decision from a case law point is precedential. It’s important to create jurisprudence in new forms of IP. There is hesitation to create a precedent.”

Vishnumohan Rethinam, a partner at Remfry & Sagar, echoes this concern. “Courts in India start with the presumption that something is invalid, whereas courts everywhere else assume validity,” he says.

Samta Mehra, another partner at Remfry & Sagar, points out that although the judiciary is becoming active in setting and interpreting case law, there is still a long way to go before non-traditional marks such as shapes, sound marks and motion marks are understood. “The shape of a vodka bottle as a trademark has been accepted,” says Mehra. “But the trademark office still has far to go to comprehend the nitty-gritty on non-traditional marks.”

Despite the apparent challenges, IP owners have much to look forward to as India prepares to accede to the Madrid Protocol. In addition, smaller companies, keen to innovate, could profit from a new patent law system – the utility model – which may make it easier for them to obtain patent grants through a more lenient system of registration. “The utility model is all about grassroots innovation,” says Abhai Pandey, a partner at Lex Orbis. “Germany, Japan, Australia and Korea have similar pieces of legislation. It works well for innovations the patent office is unaware of, or those that aren’t worth patenting because it takes time.”

Feeding India Inc

India Inc’s insatiable appetite for growth has meant long nights and little sleep for the country’s M&A lawyers. Companies are making purchases, forming partnerships, and on big-ticket deals, waiting in line for approval from the Competition Commission of India. “The merger control provisions have been put in place, but the legislation has been drafted very badly,” says Margaret D’Souza, a partner at Udwadia & Udeshi. “Competition law should be the biggest business.”

From an administrative standpoint, some of the provisions are considered inconvenient. “Form I is very simple and Form II is so detailed that it can delay the entire deal process,” says Atul Sharma, an advocate at Lakshmi Kumaran & Sridharan.

New norms have also been introduced by the Securities and Exchange Board of India (SEBI) for the Takeover Code. The size of the open offer has been increased from 20% to 26% – a sensible rise according to most analysts. “By accepting a minimum public offer norm of 26%, SEBI has removed the anomaly between its delisting regulations, which require a Swiss auction method, and the TRAC [Takeover Regulations Advisory Committee] recommendation of a fixed-price offer,” says Shardul Shroff, the managing partner of Amarchand Mangaldas. “This will encourage promoters to raise their stake to 50%+1 share to immunize themselves from a hostile takeover.”

Shardul Shroff Managing Partner Amarchand Mangaldas

Investments into and out of India appear resilient, despite the introduction of the new regulations. “There’s been a lot of focus on Japan,” says Charandeep Kaur, a partner at Trilegal. “There’s a great deal of interest in food, auto, IT and IT-enabled services. There’s also interest in renewable energies from Europe.”

Hospitality, resources and fast-moving consumer goods are some sectors where activity continues to bubble. “In the hospitality sector, new international collaborations are coming in,” says Lalit Bhasin, the managing partner of Bhasin & Co. “Sheraton is trying to come in and Intercontinental is waiting to expand.”

Sunil Seth, a senior partner at Seth Dua & Associates, predicts a wave of consolidation and M&A activity in the telecom sector due to fierce competition, a strain on margins and the possible cancellation of some licences (see Crossed Wires, page 31). “Other sectors likely to see significant M&A activity include energy, banking and finance, automotive ancilliaries, insurance, retail, real estate, media and technology,” he says.

Indian companies are also venturing into unfamiliar markets. “In Africa, big players are investing in real estate, agriculture and telecoms, but not necessarily for big transactions,” says Abhijit Joshi, a partner and the CEO of AZB & Partners in Mumbai. “The political landscape is risky, but it’s the pricing and promise of the future that takes investors to Africa.”

Another industry that has witnessed rapid movement is pharmaceuticals. “There’s big interest in pharmaceuticals, but there aren’t many targets left,” says Rahul Mahajan, a partner at Wakhariya & Wakhariya. “The market has consolidated a lot.”

Rahul Mahajan Partner Wakhariya & Wakhariya

Private equity players, meanwhile, are exploring the possibility of new avenues for Indian investment. “Private equity funds are realigning their strategies from Europe to India,” says Seema Jhingan, a partner at LexCounsel. “TA Associates, Providence and Baering are all coming to India.”

The market is also buoyant with private equity interest in ancillary services related to education. “There has been investment in coaching, training and tutorial services,” says Akil Hirani, the managing partner at Majmudar & Co.

Sridhar Gorthi, a partner at Trilegal, believes large private equity buyouts can be expected in the near future. “iGate’s acquisition of Patni Computers was the first significant private equity-led buyout of a listed Indian company,” he says. “TPG’s acquisition of Vishal Retail is also indicative of an interesting trend that hasn’t happened at all in India until now. We will probably see similar buyouts occurring.”

Sridhar Gorthi Partner Trilegal

Restructuring and refinancing

Sandeep Parekh, the managing partner of Finsec Law Advisors, predicts that the securities market and private equity will be his busiest practice areas the coming year. “Fundraising is likely to be done through the setup of domestic and offshore funds and the deployment of this money is likely to witness a larger number of private equity and PIPE deals,” he says.

The flurry of defaults and enforcement actions has also led to a rise in restructuring assignments. “The RBI [Reserve Bank of India] is getting more strict in its approach and interpretation,” says Gorthi. “In particular, there seems to be a move to disallow synthetic structures that had become popular.”

Prem Rajani, the managing partner of Rajani & Associates, believes investors are facing a somewhat depressed market this year. “A lot of restructuring is taking place among group companies,” he says. “No one’s willing to call 2011 a depressed market. It’s a mixed market. But in all three dips, in 2002, 2008 and this year, I’ve seen a lot of restructuring taking place. Companies have started doing house-keeping, they’re hiving off non-core activities, closing down companies, engaging in debt restructuring, capital restructuring and consolidation.”

Many are also anticipating more mandates on the derivatives side, including related litigation. “The RBI has heeded market comments and feedback on the draft credit default swap guidelines and opened a small part of the market,” says Hoshedar Wadia, a partner at Juris Corp. “Even though it’s small, it’s a very bold statement for the regulator to say I’m going to allow more derivatives.”

Full speed ahead

Infrastructure is poised to be one of India’s busiest sectors for the next five years. Roads, ports, highways, and power projects are not just the need of the hour, but also gold stars on political CVs. “You get votes by telling people ‘I’ve built a road … I’ve set up a port’,” says Sawant Singh, a partner at Phoenix Legal. “Clean energy and solar energy continue to have inclusive infrastructure development programmes and it augurs well for everyone.”

Sawant Singh Partner Phoenix Legal

There is even evidence to suggest that green projects are easier to complete than regular ones. “Regulatory requirements are less for wind projects,” says Tushar Desai, a partner at India Law Services. “Only one or two lenders are involved and the government doesn’t interfere.”

Improving India’s crumbling infrastructure is vital for the survival of one of its most critical industries – agriculture: “65% of the population lives in rural areas and 50% is involved in agriculture,” says Sagar at J Sagar Associates. “We need roads, storage systems, transport and cool chains to help farmers get their produce to market. Half of it rots because we don’t have the infrastructure.”

The government hopes to attract greater private participation in infrastructure and replicate the success it has experienced with the country’s highway projects. “Railways are sitting on prime property,” says Suchitra Chitale, a partner at Chitale & Chitale Partners. “These are being developed on public-private partnership models.”

Equal enthusiasm is visible in the real estate sector, particularly in urban areas. “Builders, developers and societies are going in for redevelopment work,” says Sowjanya Menon, a partner at Vidhii Partners.

“Real estate is booming,” says Sameer Tapia, a partner at ALMT Legal. “Mall spaces are opening up in metros and tier two cities like Jaipur, Aurangabad and Nagpur. Prices have shot up astronomically but space is a constraint in tier one, so you don’t have an option.”

Sameer Tapia Partner ALMT Legal

According to Joyita Sabharwal, a partner at Law Point, the real challenge within the real estate sector will be to “generate liquidity to remain afloat by encashing existing stock at realistic prices within the reach of buyers”. He adds that overcoming the liquidity crunch and timely project completion will be crucial to winning back investor confidence in construction projects where people are wary of investing.

Financing infrastructure projects, however, may become tougher, with rising interest rates and banks having exhausted their internal limits for infrastructure firms. “Banks are finding a reason not to lend, even though they have the funds,” says Kaviraj Singh, the managing partner of Trustman & Co. “It’s easier for established players, but for new ones, it’s difficult to obtain funding.”

Others argue that this is an exaggeration. “Higher interest rates and the exhaustion of internal limits of banks for infrastructure financing are only temporary stumbling blocks,” says Ravi Singhania, the managing partner of Singhania & Partners. He adds that delays in land acquisition, environmental clearances, fuel linkages and the increasing cost of coal have invoked such reactions from certain banks. “Accosted by delays in some projects, the banks aren’t able to disburse further funds,” he says. “As a result, these commitments of financing are eating up the banks’ limit for infrastructure financing.”

The government has taken proactive steps to resolve this issue, Singhania explains. The land acquisition act is being remodelled and environmental clearances are being granted, thereby boosting banks’ confidence in lending. “Alternate sources of funding are also being worked out,” says Singhania. Tax-free infrastructure bonds are in vogue; several infrastructure funds have come up; the government is proposing a greater role for the country’s biggest insurer, Life Insurance Corporation, in infrastructure financing; and remarkably, in the past two years, external commercial borrowings worth ₹600 billion (US$13 billion) have been approved for infrastructure projects.

Ravi Singhania Managing Partner Singhania & Partners

Counting the cost of corruption

A string of high-profile corruption cases has become a noose around the neck of India Inc, hardening regulators’ attitudes, sharpening scrutiny and scaring away potential business. “Corruption is leading to a high level of conservatism in the market,” says Hemant Sahai, the managing partner of HSA Advocates. “Offices in various ministries are getting conservative with larger deals. The country needs to get over this very quickly otherwise investments will slow down.”

Hemant Sahai Managing Partner HSA Advocates

Lawyers worry about the extent to which corrupt practices have crept into judicial proceedings. “We have a very efficient executive and a good reliable judiciary,” says S Venkiteswaran, an advocate and shipping expert. “But they’re dancing to the tune of the politicians.”

The government’s only solution to target corruption is the Lokpal Bill, which seeks to establish an ombudsman that will investigate and prosecute corrupt government officials and politicians. “The Lokpal Bill is a game changer,” says Gautam Khurana, the managing partner of India Law Offices. “If we do a good job of this bill, we could ward away a lot of negative publicity.”

Thousands across India have pledged their support for Indian activist Anna Hazare’s version of the new law – the Jan Lokpal Bill. Hazare and his team have underscored the importance of holding senior officers – including the prime minister – accountable, something which is missing from the government’s version of the bill. “There has been a concerted effort to disengage civil society from the Lokpal process,” says sole practitioner Ramni Taneja.

As India fights on two fronts to defeat corruption and improve efficiency, the internet is emerging as a key ally. Online processes offer a strong degree of comfort, not only because they save time, but because they do away with middlemen – those who often require bribes when applications are submitted in person.

“Incorporating a company used to take 35-40 days, now it’s very quick and can be done from home,” explains Arihant Jain, a senior associate at OP Khaitan & Co. “Another useful tool is access to data on the Ministry of Corporate Affairs’ website. For ₹50, you can get one-time access for three hours to director information. You can find out which companies a director is involved with, his tax payments, [and other information]. It’s a simplified way of keeping compliant.”

The stain of corruption coupled with systemic inefficiencies and uncertainties surrounding the introduction of new laws are certainly hampering India’s growth. Yet such problems may be necessary to fuel debate on policy-making and boost efforts towards achieving best practices in corporate practice and governance.

Getting to grips with such vast changes to an already-complex legal regime will not be easy. But lawyers are typically well-accustomed to the constant fluctuations, modifications and transformations that characterize India’s legal landscape. “Law firms of this generation are so used to changes,” says Gorthi at Trilegal. “Change isn’t a challenge. Structures that worked two months ago don’t work today. We’ve had to reinvent ourselves year on year.”

The shopkeeper in Assam may have no choice but to do the same.

A changing legal landscape

A new breed of Indian lawyers may be more about guts than glory

Anyone observing the Indian legal market from afar may be shocked at the frequency with which new law firms emerge. Clasis Law, Indian Law Partners, RS & Co Law Offices and Prism Partners are just a handful of startups that have taken their place on the legal stage in recent months.

What is driving this entrepreneurial spirit among lawyers? “I wanted to work with a firm that wasn’t founder-driven,” says Ishtiaq Ali, a partner at Clasis Law, which is a breakaway from ALMT Legal. Ali was one of the founding partners at India Law Services and has over 20 years of legal practice under his belt. “No one can pass on Clasis to their sons and daughters,” says Ali. “An associate should be able to aspire to become the managing partner of a firm.”

For the most part, large firms with established footprints and strong client portfolios appear unfazed by their new competitors. But others admit that they will ultimately have an impact on everyone in the country’s legal fraternity. “Individually, the breakaways don’t make a difference … but cumulatively, they impact big firms,” says Abhijit Joshi, a partner and the CEO of AZB & Partners. “It’s bad for the industry.”

A desire for ownership is one factor that has driven lawyers to launch their own practices, even if it means that entrepreneurial young lawyers miss out on the remuneration and perks they would receive working in one of the leading firms. “As one of my batch mates said: ‘I’d rather drive my own Maruti than Zia’s Mercedes’,” says Abhishek Datta, a partner at HSA Advocates, referring in jest to Zia Mody, the founding partner of AZB & Partners.

But, for small firms without a reputation, survival in the Indian legal market is far from assured. And the challenges are all the more acute for those who do not come from families of well-connected lawyers. “It’s hard for a first-generation lawyer to make a mark,” says Bhumesh Verma, a partner at PKA Advocates (formerly Paras Kuhad & Associates).

Still, there are some who succeed in breaking the mould, and many of the young lawyers who have ventured out alone are shunning traditional Indian models of law firm management and adopting international-style partnership structures. “There is no scope for personal glory at Zeus IP,” the firm’s managing partner, Gunjan Paharia, says plainly. “I’ve sold my lawyers equity and it will have value if they can sell the firm … You want leadership at every level.”

Firms are also keen to implement best-practice management standards. Lakshmi Kumaran & Sridharan recently received a gold award under the Legal and Courts category in the 2011 Global Awards for Excellence in Adaptive Case Management. Finalists came from the Americas, Europe, Africa and Asia. “All of our document movement is now online,” says Badri Narayanan, an advocate at the firm. “Wherever you are, you see the document on the same page as when you last saw it. This has been implemented across six offices. We worked with Newgen for six months to create this software and we spent about US$1 million on the entire system. We’re reducing bad debts and we’re able to predict a lot more accurately how much we can bill. We’re also easily able to track individual efficiency.”

For international clients, this kind of operational efficiency is encouraging and a clear indication that Indian firms are capable of executing technological solutions without outside assistance.

Still, some argue that Indian firms would benefit greatly if foreign firms were permitted to set up in India. “Law is a service sector,” says Manoj Singh, the managing partner of Singh & Associates. “No other service sector prohibits foreign participation. They should be allowed. Why not have a legal sharing route?”

Client demands too, are changing. “Client needs in India are tremendous,” says Sameer Tapia, a partner at ALMT Legal. “They need a lawyer like a doctor on call. If there’s no quick turnaround it means you’re too busy or you don’t care.”

Indian companies that have had a flavour of legal service abroad, however, may become less needy of advice back home. “Indian industries are now getting very savvy and may not want to come to Indian lawyers if they’re going to France, for example,” says Joshi at AZB & Partners. “We hold our clients’ hands … but as business matures we’ll have a smaller role to play in the Western world.”