Indian firm Amarchand & Mangaldas & Suresh A Shroff & Co has taken the unusual step of converting to a full lockstep model after years of maintaining tight reins on its equity.
Amarchand currently operates an eat-what-you-kill system, whereby a small number of founding partners and family members are understood to command a large proportion of the equity.
Managing partner Cyril Shroff (pictured) believes using a more meritocratic system will give the firm an “acquisition currency” that will allow it to grow “massively”.
He said: “We wanted to create a more broad-based partnership. The benefits of lockstep are well-known, and ;collegiality ;and sustainability were what we were looking for.”
The restructuring is expected to finish by the end of March.
Amarchand has 450 associates and 40 partners, 15 of whom are in the
equity.
Sense prevailed..at last !!!!!
Indian law firms are largely family owned and it high time these greedy partners acknowledge merit..
Brand
A smart bit of branding – AMSS have been suffering from the departure of their most junior and talented layer for years.
As such, this is high time for them.
Lockstep
Whoever wrote this article doesn’t have a clue what lockstep means. A lockstep system is one where equity partners in a law firm are paid according to how long they have been in the partnership. Lawyers in the partnership for seven years, for example, will all earn the same, even though they may all bring different amounts of work to the firm.
Many European firms are moving away from the lockstep system (under which senior partners always make more than partners junior to them, even if they bring in less revenue) to a merit based system (where Partners are paid according to their billings or killings!).
On a general note, most Indian law firms controlled by a family, neither follow the lockstep system, nor are they strictly merit based (where you are paid according to what you kill)
Amarchands Lockstep
This is a positive move. Lockstep encourages a collegial climate where the firm comes before individual partners, however powerful they may be In adopting it, the firm is sending out a powerful message
Joseph
Mr Joseph, what do you mean exactly?
That eat-what-you-kill-style systems are meritocratic in that a few family members get most of the cash because they kill the most, hogging all client relationships at the expense of junior partners?
A new game starts
Cyril has been clever as usual. By being the first mover in this direction he has taken the game by the scruff of the neck. He has changed the dynamics of the Indian market and now has the opportunity to take full advantage of being the leader of the pack
Fact v. fiction
This article is incredibly sketchy on details. It raises more questions than it answers! There is no mention of how the points are awarded on the lockstep – is it based on tenure or other factors? What AMSS may have understood to be a “lockstep model” may be very different from what it is.
Key words
I think the key word is sustainable – there is no perfect system , but lockstep does discourage a purely short term view. This model should serve them well for a few years – and help them grow
Amarchand’s Lock-Step
Friends, both Shardul & Cyril have always been very candid in stating that AMSS is a family run law firm and would remain so. In this bargain he may have lost partners, so what? both are Stars and would continue to be! How should they run their family business is their problem and hence do not warrant any outside comment, nor should these comments matter to both of them. Atleast they are trying hard to fulfill the aspirations of any young lawyers, albeit in limited manner, but they are taking steps in right direction.
Interesting!!!!!
Lock Step model is not suitable for Indian firms, as mentioned by a very knowledgeable and observant commentator below, it is a system which is controlled time bound formula and does not really incentivise merit based growth. Also, in Europe it has been seen to choek young lawyers to grow within a firm. Hopefully, this does not lead more disaster at an already troubled set of young bright minds seeking rewards and recognitions in Indian firms. Most importantly, I hope that the firms in India do not trample over each other to follow suit, causing chaos and more confusion in an already absolutely confused law employee market.
Amarchand has chosen independence
Interestingly, Amarchand and AZB, the two main rivals, have chosen diametrically opposite paths. Some years from now, when the market opens, AZB would have most probably merged into Clifford Chance, lost half its partners and would be a thing of the past. Only some partners such as the name partners and a few others will be absorbed into CC. Amarchand on the other hand, by choosing lock step, has ensured its independence and durable identity. Of course, lock step is not easy but it is a lot better than loosing one identity. A very smart and astute move by the shroffs. Well done!!
good deal for younger partners
When I compare the choices made by some of the star younger partners who stayed behind to work with Amarchand and those that moved to foreign firms, its very clear that the former have got the better deal in life considering whats happening in London and the positive changes within Amarchand. Despite all the criticism about being a so called ‘family firm’, it is Amarchand and the shroffs who have consistently for the last many decades changed the paradigm and moved the industry forward. The others have only followed. This is a tremendous development for younger lawyers who want to work with independent firms.
lock step can be dangerous
Clearly the shroffs have been generous in moving to lock step, but we hope they know what they are doing. Lock step is now a much discredited system and is actually more severe and brutal than performance based systems. Neither asia nor India nor Amarchand or any other Indian firm are remotely ready for a pure lockstep. A lock step and a two tier partnership are fundamentally inconsistent. I can bet my next months salary that they will be reversing the pure lockstep within a few years and move to a modified lockstep with more performance and bonus. This is just not sustainable and seems like a gimmick, or a very foolish move. Nonetheless, our compliments.
Wake up AZB!!!!!!!
For younger lawyers and partners, independent law firms are always the better bet, especially in Asia. Surrendering one’s independence through alliances and mergers is the shorter and less courageous route. AZB has an even higher concentration of equity than Amarchand, though this is less publicized. Clearly, neither Zia nor Ajay are in a mood to share the booty with younger partners who make alotta money for them. By trying to sell out to foreign firms the named partners will protect their future but shaft the younger generation without their realizing it. Zia, are you moving to lock step?? Or, still going to take the lioness’ share home?
Lockstep
We knew about this for a while. since the firm announced it last year. we only want to see it implemented asap and in totality and at high standards. not all those partners considered for lockstep are really lockstep material. Mr Shroff, a bit more quality control please?! If we are to believe in this and choose you over foreign firms. nonetheless, good move!
mergers in the offing?
In my view AMSS will benefit most from the economic slowdown in US, UK. The Indian lawyers who went there during the boom are returning home, and AMSS is still the place to work in India. So AMSS will get people who have worked in AMSS (thus who know about the AMSS culture) and who have in addition been trained by the foreign firms.
If you read between the line, do we see prospect for some law firms mergers – “we want to grow massively”!?! A merger of AMSS with firms will Crawford, Mulla or Dua will create a big enough firm to dominate the domestic market even if the market opens for foreign firms.
Choices
Have ‘star young partners’ in Amarchand made a better choice in staying in Amarchand then in joining an international law firm? I don’t know. I do know that a fair number of these ‘star young partners’ tried their best to move laterally to international law firms a few years back and failed spectacularly – I really could name names, but should not!
Amarchand looks as divine to me right now, as does a government job with the Registrar of Companies. It offers comparative security, tea breaks and a stable environment, but little else. Give me risk with a more dynamic but professional outfit anytime.
Really, its bad enough working for partners in a law firm, without having to work for the family in a family run law firm and compete with their kids!
And the fact that commentators below speak about Amarchand and the Shroffs interchangeably or about “Amarchand and the Shroffs”, speaks volumes about how much progress Amarchand has really made. Amarchand, with lock-step, other bells and whistles, et. al., remains a family run firm. Let a non family member become Managing Partner for a starter or the partnership deed be made a little more even handed – then Amarchand would have really gotten somewhere.
Oh, and as a someone who knows Amarchand, I am guessing that the lock-step will fail. Amarchand simply does not have enough quality control (for the time being) for lock-step to work.
Choices
What I meant to say instead of the last two lines below: Oh, and as a someone who has worked at Indian law firms before, I wonder whether lock-step will work and whether firms in India will demonstrate enough quality control (for the time being) for lock-step to work!! Unfair of me to single out Amarchand – that would be too subjective a view to take and I have no basis on which to single Amarchand out!!
Amarchand still has the best chance
Despite some of its drawbacks which may actually be its strengths, it still has the best chance by a long shot of being the sole dominant independent player. Just look at the rest. AZB has sold its soul. JSA has no leadership and functions as multiple firms. Mulla, Crawford, Little and Dua are ancient history. Luthra has no real depth and is just a marketing machine. Fox mandal is not even worth mentioned. Trilegal was decent but has become A&O. so what’s left??
So long as the family partners are self sustaining professionals, and contributing to the firm, it really makes no difference. At least, Amarchand will keep the Indian flag flying. No market should be without a national champion, and there is little doubt that this mantle belong solely to Amarchand. Noone is even close. If associates and young partners can work for foreign bosses, thousands of miles away, whats wrong with working for a talented family. As a former Amarchand lawyer, I see nothing wrong. Whatever I am today is because of the fabulous training I got in Amarchand. They still do the best work, and have the smartest talent.
Gimmicks
I completely agree with the comment that Amarchand’s understanding of the lockstep model may be completely different from the understanding of the term internationally.
This is not unusual in the Amarchand context as they tend to view things in the manner most advantageous to them. As an ex-Amarchand lawyer, who still has dealings with Amarchand, all I can say is little has changed in the firm and these sorts of steps are mere gimmicks with little substance. They are probably driven by the desire to get more attention from the legal press, given all the hype about AZB’s best friends deal. Unless the family changes its mindset, which is difficult to imgaine, attempts to make Amarchand a better place for younger lawyers are unlikely to succeed.
some missed the bus
Guptan really missed the bus didn’t he??
london buzz
A lot of buzz in london about Amarchand’s bold move. They should come out with more details in a comprehensive communication package. Loads of Indian trained lawyers would be interested and many may move back. The atmosphere in London firms is horrendous. There is little work and Indian firms seem more busy. More work + positive restructuring is a recipe for attracting Indian lawyers back.
They would prefer Amarchand now over the other options, including AZB, which seems to have entered an opportunistic and hasty alliance.
fab branding!
The best thing that Amarchand has done in years. Really caught the imagination of young Indian lawyers in London!
what’s the big deal!
What do people think working with foreign law firms is like!?! Plain sailing! The hours are as bad, job security is nil, and taking purchasing power parity into account, AMSS pays better in India!
As a ‘young talented lawyer’ you will be the bottom feeder where ever you go…and don’t kid yourselves that you can make partner in a foreign firm and count the riches – partners are being thrown out by the MC too!
Amarchand needs to do more
Whilst this move will help Amarchand secure the top slot, it needs to quickly make further changes in its management and external PR. There will always be loads of sympathy and support for a local firm trying hard to remain independent. A move to lock step is not enough. The market wants to see much more. The grapevine is that lots more is in store. Why don’t they announce it??
AZB in a fix
AZB has clearly set itself on a path to eventual merger. So what happens to its partnership structure and talent in the meantime?
Will they make changes like an independent firm would, as Amarchand did, or keep things in abeyance to suit their ultimate partner, without structural change.
Structural change would make things very difficult at the time of merger. AZB will go into suspended animation till the market opens and merger is complete. Zia will give some spiel to hoodwink her younger partners but, there is no doubt that CC will call the shots for eventual merger. A smart younger partner in AZB should be really concerned and look for the sub-text in the alliance story. Haste in alliance will make waste in the interim, apart from having lost the respect of the market.
Odd responses
Some of the comments here come as a bit of a throwback to another age. Sure, there may be something vaguely nice about having a strong independent domestic firm but that is not an end in itself. Let us not pretend that Indian firms are the cat’s whiskers when it comes to systems, processes, management, knowhow and training. As many people have said before, future Indian offices of international firms will be manned by Indians. As partners in these firms, Indian will own (a part of) these firms. They may well go on to become managing partners of these firms as well. Are we not proud of a Indira Nooyi at the head of Pepsi and would we instead have been more proud of a Ramesh Chauhan if he had continued to remain independent?
Zia or someone from her firm may well one day become the head of CC and more power to them for wanting to be a big fish in a big pond. Comments about “selling of souls” etc. are frankly laughable in an age of internationalism, present global crisis notwithstanding. Fat lot of good these souls bring if they cannot lead to a proper career path for every competent lawyer within these family and individual run firms. AZB will have to spread its equity wider but to embrace international standards is to be lauded. Time will tell to see how the AZBs and Trilegals of the world do in comparison to the Amarchands.
As a new law graduate from the US, I would like to return to India and join AMSS or the likes, if possible. I am not able to get any salary info online. Can anyone tell me what the average salary is for an entry-level attorney in one of these top firms in India? Please help.