Putting the shine back into India

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As the environment for doing business worsens, the inevitable question is what can be done to stop the decline?

News that India slipped in the “Doing Business” ratings of the World Bank will cause further heartburn in the corridors of power in New Delhi and Mumbai. For while tweaks to laws and regulations can certainly bring about some degree of improvement, there is only so much they can do to lift confidence and rebuild trust. Some will argue that this can happen only after the next general election, due to be held in May. For
others, however, the time for change is now.

IBLJ 1310 LEADERIn this month’s Cover story 10 of India’s foremost corporate lawyers talk candidly to India Business Law Journal about what needs to be done to put the shine back on the country’s economy.

Lalit Bhasin, the president of the Society of Indian Law Firms, notes that “the situation is grim and is not likely to improve during the next 12 months”.

Rajiv Luthra, the managing partner of Luthra & Luthra, adds that, “given its federal structure, law-making in India is a complex tango performed by the union government (for the entire country) and state governments (for their respective states)”.

Notwithstanding these limitations, there is a lot that can be done, and our panel puts forward a series of bold measures that may help to lift India out of its current doldrums.

“India primarily needs to withdraw the retrospective aspects of its tax law; put in place a commercial court, with regular judges, where commercial disputes will be fast-tracked and rulings delivered quickly; and bring in a new law or amendment that allows courts to impose high penal costs and damages,” says Anand Prasad, a partner at Trilegal. This sounds like a tall order, but it may well be necessary if a turnaround in sentiment is to be achieved.

This month’s Spotlight examines inbound investment into India, which has all but ground to a halt in recent months. While the fundamentals and potential of India have not changed, our analysis finds that the challenge of managing the uncertainties that India throws up on just about every level makes the going very tough for investors. And although strategic investors continue to focus on India, Abhijit Joshi, a partner at AZB & Partners, notes that India “can be a very gloomy proposition” for the short-term player.

Savvy investors are growing adept at managing the risks of investing in India and taking steps to protect themselves. For example, some are now taking insurance cover for representations made during a transaction. This was unheard of just five years ago.

Getting it right on the taxation front has long been a nightmare for foreign investors, and here there may be signs of increased clarity. As Kunal Thakore, a partner at Talwar Thakore & Associates, sees it “there is now no doubt as to what you need to do if you are buying or selling shares”.

Writing in this month’s Vantage point Ravi Shah, a legal adviser at Tate & Lyle Sugars, argues that fresh thinking is needed in the realm of how law firms advertise their experience and expertise. Pointing out that advertising may be used as a weapon for good, he says: “Allowing law firm websites would promote the expertise of Indian lawyers; allow them to collaborate with legal minds in other parts of the world; and invite competition to create new benchmarks for professional excellence.” Shah makes a persuasive argument that will no doubt be welcomed by many in India.

Despite the current restrictions on law firm websites and advertising in India, many tech-savvy lawyers are going all out to embrace new technologies that can improve the efficiency of their law firms or in-house legal departments. But with client records and communications increasingly being stored in a digital format, often on offsite servers operated by third parties, what are the implications for data security, privacy and client confidentiality?

These important questions, which are paramount to every law firm and in-house legal department, are addressed in this month’s What’s the deal?. Perhaps surprisingly in the light of recent high profile hacking scandals around the world, it appears that using cloud-based systems to store emails and other records is a good deal more secure than commonly perceived.

In this month’s Intelligence report, we present India Business Law Journal’s seventh annual survey of law firm billing rates.

This year 58 Indian law firms – the highest number so far – consented to publish their fee schedules. But as in previous years, the country’s largest firms shied away from participating. The results therefore paint an intriguing picture of the billing practices of India’s small and medium size law firms, and given the great strides made by such firms in recent years, this information can be valuable.

The survey reveals that Indian lawyers have, for the most part, escaped the sting of the rupee’s recent decline. Clients, by contrast are feeling the heat as their legal fees soar to record highs.