UK-Indian firms’ relationships in stasis as liberalisation remains a pipe dream

UK law firms are refraining from strengthening ­relationships with Indian firms as liberalisation of the country’s legal market remains distant.

The breakdown of ­Clifford Chance’s best friends relationship with AZB & Partners earlier this month has made a number of firms examine the market afresh, asking whether the exclusive relationship model is really the right way for an India practice.

A Clifford Chance source said last week that lack of referrals and the fact that the Indian market remains closed to foreign firms sparked the firm’s decision to break off the relationship.

Herbert Smith India group head Chris Parsons commented: “My own sense is that at the time Clifford Chance made their arrangements it was against a ­background whereby people thought liberalisation in some form was on the cards in India over a reasonably short period of time.

“Therefore, against that background, it made a lot of sense for firms to get ­together as a precursor to something more significant happening in the market.

“Now that liberalisation seems more distant it makes less sense, particularly for Indian firms, to be linked to just one firm.”

Despite recent efforts by organisations including the Law Society to strengthen Anglo-Indian ties, India’s law and justice minister Veerappa Moily said last year that there were no ­current proposals to open the ­market to foreign firms.

Freshfields Bruckhaus Deringer India practice head Pratap Amin said: “The market’s been opening up ’next year’ for the past 10-15 years.”

Amin believes young Indian lawyers looking for wider career choices could well be the catalyst for any future liberalisation of the market.

He said Freshfields’ ­informal relationships with a number of Indian firms, which vary according to practice area, is still the firm’s preferred way of working in the country.

“At the moment we haven’t seen any single firm that delivers everything our clients want,” he explained.

Parsons said Herbert Smith was also happy with its informal relationships with Indian firms, including AZB. In June 2010 Herbert Smith and its Benelux alliance partner Stibbe picked up English and Dutch instructions for ­Bharti Airtel on its $10.7bn (£6.7bn) acquisition of Zain’s African mobile telecoms business, with AZB providing Indian law advice.

“For the time being we’re able to remain a very ­successful India practice around our network, but without actually being on the ground,” said Parsons. “If we could be on the ground we would be and we’d like to be.”

Sources said the nature of the Clifford Chance-AZB relationship stood out among other best friends partnerships due to the size of both firms, making it harder to maintain enough referrals.

Indeed, other relationships are still working well. Allen & Overy has an ­informal best friends arrangement with Trilegal, while Clyde & Co signed an ­association with ALMT Legal in June 2009.

Meanwhile, Linklaters’ associate firm Talwar Thakore & Associates has attracted partners from the UK firm and the relationship continues to bring in mandates on large deals.