India Business Law Journal – July/August 2010

Time for inconvenient justice?

These days, it is only in movies that David defeats Goliath

So it might seem for the victims of India’s man-made disasters. For not only is justice commonly delayed, but when it does come it often satisfies everyone except the victims. This convenient injustice could be dangerous for an India in which domestic and international corporate entities increasingly dominate the commercial and industrial space.

In what is clearly essential reading for the in-house counsel at every company with operations in India, this issue’s Cover story (Are your hands clean?) investigates corporate civil and criminal liability and addresses fundamental questions about the shifting ground between corporate and personal responsibility. Many lawyers argue that monetary sanctions and paltry penal provisions are insufficient; tougher legislation is paramount to deterring immoral and unethical business conduct.

So who should pay the price for corporate wrongdoings? And to what degree can criminal sanctions be imposed? “There is a need to evolve new forms of punishments which could effectively deter the corporate from engaging in any criminal activity,” argues Sachin Joshi, deputy director at the Confederation of Indian Industries’ Centre of Excellence for Sustainable Development.

Sixty-three years after India’s creation, is social justice finally knocking on the doors of India’s poor and vulnerable? The first of this issue’s Spotlights (Micro Magic) focuses on the microfinance institutions that have taken banking to the masses, and in so doing, opened up new frontiers for investment. But what are these companies? And who sets the rules?

In the face of the rapidly evolving corporate structures of microfinance organizations, our incisive coverage sheds light on a system in which it makes sense for a company to float an IPO in order to find money to lend to the poor.

While some Indian companies raise money to invest in grassroots ventures such as microfinance, others use it to finance their global ambitions. One such company is Essar. With its recent US$600 million acquisition of Trinity Coal in the US, it has taken another step towards its goal of becoming a “respected global entrepreneur”. In this issue’s What’s the deal? , we take a behind-the-scenes look at this remarkable transaction and talk to the lawyers who helped bring it to fruition.

Essar’s purchase of Trinity comes after failed attempts by other Indian energy companies to acquire assets abroad. According to Gokul Chaudhri of BMR Advisors, the outcome of this deal indicates that Indian companies are “learning the game and learning how to win”. Our coverage includes insights from Mukesh Bhavnani, the head of legal at Essar, who reflects on the challenges he encountered working under a US regulatory framework and striving to ensure there were no hidden surprises in the deal.

Staying on the subject of outbound investment, the second of this issue’s Spotlights examines some of the thorny issues that Indian companies encounter when they advertise their products in overseas markets. Taking the UK as an example, Omleen Ajimal and Charles Lloyd of Taylor Wessing draw on their extensive experience of the advertising industry to advise Indian companies on overcoming the regulatory hurdles they will encounter when advertising there.

Lawyers in private practice are much more accustomed to giving advice than they are to receiving it. But in this issue’s Vantage point, Hitesh Mehra, the general counsel at Ernst & Young in New Delhi, turns the tables by offering some advice of his own that law firms would be wise to heed.

Writing on the subject of how law firms can improve their offerings to clients, Mehra warns that many firms are not adapting fast enough to keep pace with the evolution of in-house legal departments. While acknowledging that great strides have been made in recent years, he argues that further improvements are needed. In particular, he urges Indian law firms to invest in acquiring greater industry expertise and developing strong relationships within a client’s organization.

Such advice will no doubt resonate within the country’s legal profession. As the market matures and clients become more demanding, competition is intensifying. High-profile start-up firms are giving incumbent players a run for their money. All firms are being forced to explore new ways of increasing their competitiveness. Clients, meanwhile, are struggling to make sense of the changes in order to ensure they continue to identify and engage the most appropriate legal advisers.

It is a fitting time, therefore, for India Business Law Journal to present its third annual Directory of Indian Law Firms. This year’s directory illustrates the sweeping changes that have engulfed the country’s legal market. It contains the details of at least four firms that did not exist this time last year. And these are not insignificant startups; all have been established by well-respected lawyers, many of whom are former partners at some of India’s best-known firms.

The directory is accompanied by expert analysis of the challenges and opportunities facing the country’s legal profession. Our coverage reveals that India is in the grip of a legislative makeover and that law firms are striving to keep pace with fast-moving regulatory changes. “Every major law is being changed and updated,” says Aaron Solomon, the managing partner of Solomaon & Co in Mumbai.

Never has the importance of good legal advice been so great.