Indian lawyers are in demand like never before. Foreign law firms and LPOs have entered the race to snap up the best candidates. How can local practices and in-house legal teams withstand the onslaught?

As bankers in the West live in fear of salary cuts and redundancies in the face of financial turmoil, lawyers in India can sit back, somewhat relaxed and highly assured of their job security. The steady growth of the Indian economy and increase in the demand for high-end legal work have resulted in a recruitment crunch. Salaries are skyrocketing, lawyers are jumping from one employer to another and law firms are struggling to attract and retain talented individuals.

“Recruiting the best talent was never easy, but recently, retaining them has become even more difficult,” says Dinesh Sharma, head of Personnel Junction, a Delhi-based recruitment consultancy.

Dinesh Sharma, Head, Personnel Junction

“There is a total change in the nature of the legal profession and the churning continues,” says Sumeet Kachwaha of Delhi-based law firm Kachwaha & Partners. “We are witnessing a whole new ball game in matters of recruitment and retention.”

Competing for talent

Indian law firms are far from the only contenders in the clamour for qualified professionals. International law firms, corporate in-house legal departments and outsourcing companies are also chasing the relatively small pool of competent commercial lawyers practising in the country.

The greatest impact is felt by firms focusing on international clients, mergers and acquisitions and private equity. Robin Doenicke, a partner at Tokyo-based recruitment agency Zensho, reveals that “an increasing number of our US and UK law firm clients are asking us to find Indian lawyers to join their India practice teams in Hong Kong and Singapore.”

From the perspective of domestic firms, lawyers in the middle rung of the legal ladder, with over five years of experience, are the hardest to recruit. In addition, there appears to be a severe shortage of the highest-calibre lawyers, particularly in fields where specialist technical expertise is required.

“Good drafting skills, terrific judgement, and an ability to take risks are essential to being a successful corporate lawyer,” says Anand Pathak of P&A Law Offices. However, many observers are finding that the majority of the talent on offer falls well short of these requirements.

Anand Pathak, partner, P&A Law Offices

Mark Ross of outsourcing firm LawScribe explains that in the US, intellectual property lawyers generally hold an undergraduate degree in engineering. However, finding individuals with similar qualifications in India can be very difficult.

Lawyers possessing in-depth knowledge of sectors such as finance, telecoms, media, energy, real estate and infrastructure are equally difficult to locate.

When looking for specialist skills, says Vinod Mahboobani, in-house counsel at Yum! Restaurants, it is difficult to recruit lawyers “who are prepared to give clear directional advice to the management on [a] ‘yes, please proceed’ or ‘no, we cannot proceed’ [basis], as opposed to answers like ‘it depends’ or ‘there is a 50% chance of success’”.

The shortage of specialist skills is exacerbating the problem of legal recruitment, especially at a time when emerging businesses such as outsourcing, combined with the recent trend for international law firms to recruit heavily in India, are creating unprecedented international demand for Indian lawyers.

Law schools fail to deliver

The lack of practical skills should, theoretically at least, be resolved by an increased flow of young graduates from India’s law schools. However, according to Nikhil Chandra, the CEO of Mumbai-based recruitment firm Rainmaker, only a small percentage of the 50,000-80,000 fresh law graduates every year have the skills needed to make an impact on the profession.

No one doubts the calibre of graduates from the National Law School in Bangalore, Nalsar University of Law in Hyderabad and the National University of Juridical Sciences in Kolkota, the three leading law schools in the country. However their total annual turnout is a mere 300.

Sharma at Personnel Junction believes that most law graduates are not adequately prepared to take on the complexities of legal practice. Chandra attributes this problem to flaws in the curricula of various Indian law schools that rely predominantly on theoretical instruction.

Signs of change are, however, beginning to emerge. Ross says that some Indian law schools are starting to work closely with leading legal process outsourcing companies and universities in the US with regards to the development of additional curricula to supplement traditional LLB programmes and improve other existing courses.

Vivek Hurry, COO of Mumbai-based outsourcing firm Exactus Corporation, says some law colleges are now teaching computer applications, corporate etiquette and management skills, which along with poor language skills are said to be significant shortcomings among graduates.

But according to Chris Wyman, a partner at London-based law firm Clifford Chance, the wait for new graduates to solve the problem might be too long. A substantial pool of good lawyers will only be available in five or 10 years, even if commercial law institutes revamp their curricula and double their intakes right now.

The only other alternative, for domestic recruiters at least, is to find a way of encouraging more overseas Indian lawyers to return home. However, Tara Brennan, head of Asia-Pacific at recruitment firm Laurence Simons, says that “only a small percentage of them are convinced that the quality of work and level of financial reward [in India] would justify such a move”.

Stockpiling expertise

It is also unlikely that the foreign employers of Indian lawyers would let them go without a fight. Indeed, the international law firms that have been snapping up Indian graduates over the last few years have done so with a long term strategic agenda.

According to Martin Piers, global head of recruitment agency Hudson, many international law firms are seeking to stockpile the best Indian lawyers in anticipation of the liberalization of the country’s legal market. “For the time being these legal geniuses will be deputed in their London offices,” he says. “And once the firms get a chance to open offices in India, these lawyers would be shifted back home to enable the firms to be up-and-running from day one.”

Martin Piers, Global Head, Hudson

Piers adds that London-bound lawyers also know if they spend about three years with an international firm, they could become very senior players, increasing their chances of a partnership position upon their return to Mumbai or Delhi.

Darius Udwadia of Mumbai-based law firm Udwadia & Udeshi notes that Linklaters, Simmons & Simmons and Clifford Chance have been among the most prolific recruiters of graduates from Indian law schools.

Fully aware of the problem, Indian law firms are beginning to fight back. The economic downturn in the West has made it easier for them to lure overseas lawyers back home. In recent months, a few high profile successes have illustrated that the talent war is not always won by foreign firms.

The most notable achievement was Khaitan & Co’s appointment of Murali Neelakantan and Kalpana Unadkat, from UK firm Ashurst.

“My friend [at] Tata Sons used to ask me, ‘why is it so that for seeking advice on UK and US laws, I always have to fly to London, Hong Kong or Singapore? Why can’t we get it in India?’” explains Neelakantan, who was a senior equity partner at Ashurst and head of the firm’s India Group in London. “He prompted me to shift to Mumbai to provide international quality advice on cross border deals [to] Indian companies doing business in other jurisdictions.”

It took six months of due diligence for this dual-qualified graduate of the National Law School in Bangalore to make the decision to move back home.

Regarding the conspicuous absence of other partner-level lawyers returning home, Neelakantan says that the problem lies with Indian firms not being able to show a vision for the future.

Khaitan & Co has decided to change the situation where the local firms get only a tiny portion of legal work as their contribution in most international deals [is] done by Indian companies,” he says.

“We are set to become the first Indian firm of international stature.”

The crumbling middle rung

Neelakantan’s observation highlights a key issue that makes overseas lawyers reluctant to return to Indian firms, especially those that are still family run. The fact that the majority of family run firms are unwilling to take on outsiders as equity partners provides a strong impetus for high-end candidates to shun the domestic legal establishment.

And when disillusioned Indian lawyers look beyond domestic law firms, they see no shortage of opportunities elsewhere. Foremost among them is the burgeoning legal process outsourcing sector. “It employs in excess of 10,000 Indian attorneys, and this number is set to treble in the next couple of years,” says Ross.

Sharma cautions, however, that “specialized lawyers are still hesitant to shift to LPOs, fearing the monotony of work and a lack of valuable diversified legal exposure.”

In-house legal departments offer another opportunity. They generally pay less well than law firms, but their job prospects often appear more attractive due to performance-based incentive schemes and, as Sharma points out, “limited working hours and less stressful work”.

Whether they head to LPOs, foreign law firms or in-house legal teams, Indian lawyers with around five years experience are deserting the domestic profession in droves. When their positions become too small for their aspirations, they move away, leaving behind the top-heavy, bottom-heavy structures that are exhibited by most Indian law firms today.

Opportunity beckons: Indian lawyers are being courted by a wide range of prospective employers.
Opportunity beckons: Indian lawyers are being courted by a wide range of prospective employers.

Sharma believes this poses a serious problem. While senior lawyers should be busy developing their businesses, their time is consumed training junior recruits, a function that would ordinarily be undertaken by the mid-ranking lawyers at a firm, he says.

More importantly, the missing middle rung in the structure of many Indian law firms compromises their ability to handle large projects. Doreen Jaeger-Soong of recruitment firm Hughes-Castell in Hong Kong says the industry will need to consolidate so as to have the resources capable of handling mega deals.

Anup Bhasin of outsourcing firm UnitedLex Corporation shares Jaeger-Soong’s concerns. “Due to the [evaporation] of good resources, law firms are unable to fully meet the expectations of their clients,” he warns.

Money matters

The rapid rise in lawyers’ salaries is another challenge facing Indian law firms that are desperate to retain their talent.

According to Ruchika Sukh of Australian recruitment firm EA International, salaries have more than doubled at some firms. “Last year was [an] exceptional one as top law firms in the country gave out ad hoc increments, year-end bonuses and promotions,” she says.

Ruchika Sukh Consultant EA International

The trend seems set to continue. Piers predicts that the salaries of junior to mid-level Indian lawyers are going to skyrocket in the next few years.

Wyman at Clifford Chance describes it as a redistribution of earnings away from the proprietors to their lawyers, while Anuj Kumar Chauhan, a partner at Delhi-based AVA Law Associates, says the legal profession has now found its true worth, awarding lawyers the compensation they should have received much earlier.

Almost all experts agree that the most generous payers are international law firms, followed by top-tier Indian firms. Second-tier Indian firms, in-house legal departments and outsourcing companies lag behind.

Dawn Robertson, managing partner of New York-based Cypress Recruiting Group, observes that the salaries paid to top Indian lawyers are moving towards parity with their international peers. Most top tier US firms now pay their Indian associates the same amount as their American lawyers, she says.

In spite of the pay rises, money is not the only criterion used by lawyers to evaluate employment opportunities. Chandra has noticed that law graduates are now assuming a certain level of compensation at the initial stages of their career and evaluating job offers on other parameters.

The phenomenon is not restricted to fresh graduates. Jason Horobin, head of the international private practice of recruitment firm Laurence Simons, says that even senior lawyers who approach him are “not coming for the money, but for the opportunities.”

Jason Horobin, Head of International Private Practice, Laurence Simons

The dangers of bar hopping

Spiralling demand, rising salaries and the growing professional aspirations of Indian graduates have created a culture of job swapping. Lawyers who would have traditionally stayed with one firm for the majority of their career are changing jobs frequently. Staying in one place for too long is even viewed by many as being detrimental to a young lawyer’s career prospects.

“Those who were earlier considered rolling stones are now seen as people who have arrived,” says Udwadia. He cautions, however, that there is a danger in the quick flight of lawyers from one firm to another.

Darius Udwadia, Partner, Udwadia & Udeshi

Hurry describes it as “an immature work force” with “impatient expectations”, while in Robertson’s view, “associates and partners have become commoditized,” which, she says, is unappealing from the perspective of top international law firms and could affect the marketability of these lawyers in the long run.

Most Indian law firms claim to have implemented measures to improve staff retention. But many observers worry that if their efforts fail, there could be a domino effect that speeds up the departure of lawyers and further depletes the middle rung of Indian law firms.

Nisha Chugh of recruitment firm ALS International explains: “In an effort to maintain the standard of work after losing a lawyer, the remaining members of the team have to put in extra efforts, sometimes round the clock. This wears them out and forces them to consider other options.”

The departure of highly sought-after mid-level lawyers is particularly dangerous. As Sukh explains, these professionals are necessary for maintaining the quality and flow of work and are considered to be the most profitable employees.

In addition to a deteriorating standard of work, Chauhan points to the frequent delays that often occur in such situations.

But the real danger, according to Brennan, is created when senior lawyers leave, as they are likely to take the business relationships with them.

The key to retention

What can the employers of Indian lawyers, domestic and international, do to beat the current recruitment crunch?

In addition to ensuring financial increments, Ross advises “more thought provoking legal work” for young lawyers to enhance motivation.

He explains that for the first few years at domestic law firms, Indian lawyers’ daily duties often involve populating the diaries of their senior colleagues, taking minutes of meetings, delivering and collecting documents from government offices, maintaining case files and other secretarial functions.

The provision of job security, growth prospects, training, regular appraisals, fair play, reward mechanisms, good infrastructure and well-organized management are other strategies that have been proven to aid law firm retention.

International exchange programmes for young lawyers, sabbaticals and flexible working hours, especially for women, can further increase an employer’s attractiveness.

To avert the quality-related problems associated with staff turnover, candid conversations with clients and speedy training programmes targeted towards new employees can be helpful.

“As an LPO service provider, we invest heavily in training, process management and quality control to ensure that recruitment or retention problems do not ever cascade down to the client level,” says Hurry.

Vivek Hurry, COO, Exactus Corporation

David Jacobs, Asia-Pacific regional chairman of Baker & McKenzie, emphasizes the role of “employee value proposition” which provides current and potential employees with information about the type of “employment experience” they can expect from the firm, including the firm’s culture, and available learning and development opportunities.

The firm offers an online tool for employees to identify what is expected of them at their current level and what they need to do to advance their careers.

Firms are also recommended to use surveys to establish the levels of engagement of employees and conduct exit interviews to understand and tackle various factors that contribute to a lawyer’s resignation.

Partnership opportunities

In Indian law firms, the motivational factor most frequently lacking is a clear career path, especially for lawyers working in family run firms who are not related to the owners.

Piers emphasizes the need for Indian firms to create proper advancement structures where a junior lawyer may progress to become a senior associate, a counsel and then a salaried partner.

Of course, the ultimate retention tool at the disposal of any law firm is the prospect of creating new equity partners.

Most observers are not predicting an early end to the recruitment crisis. The employers that weather the storm the best will be those that offer the most attractive packages in terms of salary, working environment, professional opportunities and future prospects.

Kirtee Kapoor of international law firm Davis Polk & Wardwell says that institutions with inviolable principles of meritocracy and fairness in recruitment, promotion and compensation, and a focus on training and motivation will be the leaders in the years to come.

With regards to the large population of Indian lawyers that is “stockpiled” overseas, Robertson predicts that the most talented among them will only return when international law firms are allowed to open offices in India.

If and when that happens, Ross forecasts a further surge in the demand for high quality talent. But after the “initial stormy period of entry, this demand will reach a consistent level”.

“When exactly this will happen is hard to predict,” he says.