The Indian legal market: how to win friends and alienate people
27 July 2009
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UK firms’ corporate patronage is not as appealing as some might suppose, says Kian Ganz
Despite best friendships being the talk of Indian towns, very few Indian firms have actually taken the leap to forge such relations.
International firms’ lack of enthusiasm is certainly not the problem, but the dowry they bring to the table can appear trifling
and a steady dealflow is not guaranteed, while risks for Indian firms can be real and numerous.
Ironically, in recent months it has been the unofficial best or good friends, such as Freshfields Bruckhaus Deringer and Platinum Partners, that have been most visible on corporate transactions than many official ‘best friend’ pairings.
Freshfields and Platinum are jointly advising South African telecoms company MTN on its potential $23bn (£13.94bn) megamerger with Indian telecoms major Bharti Airtel, for example. AZB & Partners’ advice for Bharti on the same deal, however, has not yet officially involved its best friend Clifford Chance.
In fact, much of recent Indian M&A work has been dominated by Indian firms acting by themselves, with most foreign firms - especially those with best friends - having disappeared from the M&A league table for the first half of 2009 (LegallyIndia.com, 7 July).
So, if the primary value of a best friendship is currently not dealflow, what is the proposition exactly?
“Other international firms view us differently - some of it’s good for us, some of it’s not so good,” muses Trilegal co-founder Anand Prasad, looking back on almost 18 months of the firm’s formal tie-up with Allen & Overy (A&O), as reported by TheLawyer.com (22 February 2008).
Trilegal and A&O have worked together on transactions such as Nomura’s purchase of Lehman Brothers’ Indian business and the wranglings over Indian asssets in Carlsberg and Heineken’s takeover of Scottish & Newcastle.
The main benefit for Trilegal from its association has in fact been higher domestic visibility and branding, says Prasad.
ALMT Legal very recently tied up with Clyde & Co (4 June), gaining access to lawyers in 22 new markets, and ALMT partner Seebe Raj Arun is quick to agree. He also believes that foreign firms’ brands can bring value in recruitment and associate retention.
The most tangible offerings from foreign firms are generally support in IT infrastructure, training and logistics. These are certainly valuable, but ultimately these are nothing a firm cannot buy and build for itself, albeit more slowly.
On the other hand, the risk of alienating your existing friends is very real.
“It hurts when longstanding relationships begin to disappear,” says Prasad, adding that firms that are competing less directly with A&O have not been too concerned. US practices in particular appear to be forgiving of Trilegal’s UK buddy, and A&O has stepped up to take up the slack. Around 60-65 per cent of Trilegal’s fees continue to be related directly to international referrals - the same proportion as before the tie-up, claims Prasad.
Arun at ALMT agrees, particularly on the US issue, where Clyde’s offering is fairly niche and not a huge threat to existing US friends. “Best friends is best friends,” says ALMT London partner Shalini Agarwal. “It doesn’t mean you don’t have any other friends.”
Some may have a harder time getting over (and around) AZB’s best friendship with Clifford Chance, which was inked little more than half a year ago (14 January 2008).
AZB is one of India’s largest firms and was among most foreign firms’ first choice for corporate referrals until Clifford Chance made the firm a less appetising option for them.
“They’re now kind of unavailable, but the problem is they’re really good so I don’t want to stop using them,” says one US firm’s partner, articulating the dilemma he and others are facing.
Indeed, many international firms will have felt strong claims for AZB’s friendship and several are understood to have tried to make it better. The fact that they did not succeed has created disappointment in some quarters.
AZB co-founding partner Bahram Vakil acknowledges the problem. “It was very clear to us that, once you have this kind of friendship and you are open about it, you’re going to lose out on a lot of other work,”he says.
The tall order for Clifford Chance’s India group will now be to step up to fill the small gaps left by dozens of foreign firms that would in future prefer to work with independents in India, all other things being equal.
AZB faces the challenge of making existing friends feel special, despite the baggage of magic circle affiliation. And it will need a good answer for partners who could start asking their friends: “Why don’t you call me as often as you used to?”
#Kian Ganz is publishing editor of LegallyIndia.com