Magic realism

International firms are jostling for position with local players in a packed legal market, but the UK magic circle still dominates

Best friendships have died in India, having outlived their usefulness. At their high-water mark in early 2011 there were at least five relationships between international firms and Indian outfits, including Allen & Overy (A&O) and Trilegal, Clifford Chance and AZB & Partners, Link­laters and Talwar Thakore & Associates, and Clyde & Co and ALMT Legal. Freshfields Bruckhaus Deringer and Platinum Partners had a more casual alliance, as did others.

India

BFF off

Since then, A&O, Clifford Chance and Clydes have been through break-ups in India. However, Clydes started a new best friendship with the ALMT breakaway Clasis Law, and Ashurst set up an alliance with India Law Partners founders Gopika Pant and Piyoosh Gupta, who were ex-partners at DSK Legal.

Nevertheless, having a best friend in India does not necessarily lead to success in the country, according to research from London-based legal consultancy RSG India.

According to RSG’s survey of in-house counsel and firms working on Indian deals, and an analysis of deal flows in 2011 and 2012, the UK magic circle dominates the playing field in India alongside Herbert Smith Freehills(HSF), taking the top five positions in the league table.

A&O and Linklaters dominate in terms of ‘total mentions’, which is a weighted score made up of clients stating they have recently worked with the firm or rated it as having the best reputation in India, as well as Indian law firms mentioning they have recently worked with or received a referral from foreign firms. Linklaters sports the maximum score of 40 out of 40 in the category, closely followed by A&O with 39. Clifford Chance is further behind at 33, with Baker & McKenzie on 28. These findings reflect those firms’ efforts at business development in India.

Linklaters and Bakers are old-school India players who have been at the grindstone for years; both also have or had strong ties with dom­estic firms.

In 2006 Linklaters was the first major firm to sign a formal best friend referral arrangement with an Indian firm – Talwar Thakore – which was a start-up but had grey hairs on its side: it was founded by former AZB partner Shobhan Thakore and ex-Crawford Bayley & Co partner Suresh Talwar. Both are well-known among the who’s who of Mumbai and Indian industry.

Bakers has had the advantage of a historically close relationship with one of India’s most well-connected firms through AZB co-founder Zia Mody, who was and is at least as well-connected as Thakore and Talwar, and used to work at the firm’s New York office in the 1980s. According to several sources Bakers and Mody co-operated closely and regularly referred work to each other for the next two decades until, of course, Clifford Chance and AZB entered into a short-lived best friendship in 2009.

Finally, RSG’s top-ranked firm A&O had the second-oldest major best friendship after Linklaters, having tied up in 2008 with Trilegal. While most of the young Trilegal partnership arguably lacked the proverbial grey hairs of Mody, Talwar or Thakore, having a dozen enthusiastic partners living in India to spread your brand is certainly valuable.

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On the ground-work

Since the judgment in the so-called Chennai writ, where petitioner AK Balaji wanted to prevent foreign lawyers even coming to India for business development, the court has formally sanctioned foreign lawyers to fly in and out of India for business or deals, so long as they do not open an office.

That reflects what international law firms have been doing for a long time now, although some have been more active than others.

Unlike smaller firms with younger India practices, where the designation ‘India practice head’ is usually not a full-time role but rather a hat worn during one or two annual India trips, the larger firms have far higher visibility.

In fact, there are only a few months per year when the largest foreign firms do not have a partner or contingent on the ground in India meeting clients, law firms, working on deals or engaging with Indian legal education by delivering lectures or sponsoring events at law schools – A&O and HSF have had annual programmes on that front for a while.

In light of the above, it is not surprising how the visibility stakes are divided in India among foreigners, and it also highlights how difficult it is for newer foreign India practices to make an impression in India.

RSG’s ranking lists 20 top international firms, with clients having named 45 US and 33 UK-headquartered law firms, as well as around 10 from elsewhere, but there is a long tail of more than 100 UK, US, Singaporean and other foreign firms that are active in India which fly under the radar.

Usually, these firms do not have the resources or headcounts to have lawyers in India on a rolling basis, but they do realise the importance of keeping up relationships with Indian clients and leveraging those for introductions to new clients.

Those foreign lawyers meet domestic law firms too, although most cannot expect to win significant new referrals from Indian lawyers. Instead, they usually aim to build good enough relationships with local lawyers to allow them to provide existing clients with solid Indian legal advice.

In other words, there is an oversupply of quality foreign legal services, but domestically it is a seller’s market, which explains why no best friendships with large or mid-size Indian firms have survived. Keeping an Indian partnership fed and monogamous from abroad while they are being courted on all sides is nigh on impossible.

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Domestic dynamism

The top 40 domestic firms in RSG’s survey are, by contrast, much more dynamic. A sizeable number are around a decade old or were established even more recently after breaking out of established firms -take Tatva Legal, for example, which split out of Dua Associates, Phoenix Legal that was born out of Trilegal, or the Amarchand Mangaldas breakaway Bharucha & Partners.

What is happening in India, however, is that the group of the largest corporate firms is consolidating. Amarchand, AZB, Khaitan & Co, J Sagar Associates (JSA), Luthra & Luthra and Trilegal all have 150 lawyers or more – up to 600 in Amarchand’s case – and have built highly visible brands among consumers of legal services.

To some extent these firms see and portray themselves as an Indian magic circle of six, but their position is not nearly as fixed as the UK equivalent. Most become vulnerable to partner and team defection, which can severely dent bandwidth and client contacts, and struggle with succession issues.

JSA has arguably taken the most promising path towards tackling the latter problem. Its founding partner Jyoti Sagar retired in April from the firm’s partnership, leaving his equity stake to the rest of the partnership.

Others too have attempted to reduce the role of the erstwhile promoters in their firms – Trilegal has converted into a near-all-equity lockstep partnership and Khaitan operates on a variable all-equity model. Amarchand, AZB and Luthra remain more promoter-centric but there too the next generation of lawyers and rainmakers is growing up and will either be accommodated in their existing firms or increase competition in the market.

India’s economy may be in the doldrums – possibly until the elections in 2014 – but for Indian lawyers there are opportunities galore.

Kian Ganz is the founder and editor of LegallyIndia.com

Key figures: India

GDP (2011): $1.87tr

Inflation (2013): 6%

Population (2013): 1.2bn

Life expectancy at birth: 65

Unemployment rate (2012): 9.9%

Source: World Bank, Ministry of Statistics and Programme Information