Laying foundations

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Are legacies built by strong men and women or by the institutions they create?

Abit of both, is what most people would say. It takes individual talent backed by dogged determination and strength of character to climb to great heights, but to remain there and create significant ripples requires team effort. Yet, the challenge of creating robust teams – and beyond that, institutions – is considerable. This is more so in people-focused spheres of activity, such as the practice of law, where raw talent, entrepreneurship, management skills, egos and family ties (and feuds) all come into play.

This month’s Cover story (Partnership) investigates law firm partnerships in India, where equity partners as understood at international law firms are a rare breed. As clients with their ear to the ground will know, the majority of “partners” at Indian law firms are either salaried employees or those on a retainership, who occupy a virtual no-man’s land somewhere south of equity and salaried partners.

LeaderWhat does this mean for clients? Most would agree with PM Devaiah, partner and general counsel at Everstone Capital Advisors, who says: “The real challenge in dealing with a pseudo as against a real partner is one of continuity rather than competency. Partners with no stakes tend to watch for greener pastures.”

Would more inclusive partnership structures work better? Karan Singh, a partner at Trilegal, believes they would. But Trilegal is the exception rather than the rule when it comes to attitudes towards partnership. It is one of the few law firms in India where everyone with the title “partner” is an equity holder, and every partner gets one vote irrespective of the percentage of equity held. Singh explains that this approach has come about because the firm “has always been very focused on institution building”. But in a market where, in the words of J Sagar Associates’ senior partner Berjis Desai, “everybody is on one big crazy ego trip,” such a focus is rare.

Further scrutiny of India’s legal market can be found in this month’s Vantage point, where Murali Neelakantan, a former general counsel at Cipla and experienced private practice lawyer, argues that while the legal profession globally has evolved to nurture specialization, Indian lawyers have a predilection towards becoming generalists. “We compete, at the highest levels, as generalists, to the detriment of our clients,” he says, adding that this often results in “the blind leading the blind, in more ways than one”.

Neelakantan believes that the aversion to specialization is fuelled to some extent by insecurity over the risks posed by the possible entry of foreign law firms.

In Commercial shields we investigate risks of a different nature – those posed by mergers and acquisitions. M&A activity involving Indian companies was worth US$48.4 billion in 2015, an 11% jump from the previous year, triggered in no small part by a relaxation of foreign direct investment limits and a wave of private equity funds divesting mature assets. With the surge in activity, companies are seeking new ways to manage and mitigate the risks associated with M&A deals, and many are warming to idea of taking out specialist M&A insurance. As a result, risk protection for M&A deals looks set to become big business in India.

Other considerations for parties to M&A deals include the structuring and tax efficiency of their investments, and in this regard, a recent change to the India-Mauritius double taxation avoidance agreement, pushed through by a confident India in May, has given many companies the jitters. In Paradise lost we investigate the implications of the change for companies that have already used the Mauritius route, as well as for those that were planning to use it in the future. Has the goose that laid the golden egg been killed?

Staying on the subject of mergers and acquisitions, this month’s What’s the deal? (A cat among the pigeons), investigates a recent ruling – The Chief Controlling Revenue Authority, Maharashtra State v Reliance Industries Limited – that is set to significantly increase the transaction cost of schemes of amalgamations. A full bench of Bombay High Court ruled that every order sanctioning a scheme is chargeable to stamp duty. Our coverage considers the implications of the ruling and provides some pointers on how companies can minimize the impact.

In this month’s Intelligence report India Business Law Journal presents its 10th annual survey of the top international law firms for India work. Drawing on submissions from hundreds of international law firms that have documented deals and matters with an Indian element in the past 12 months, and testimony from clients and peers, we deliver our verdict on the firms that are are leading the field. Our coverage reveals the top 10 foreign firms, as well as 10 key players and 22 significant players. We also highlight 15 regional and specialist law firms, and 43 “firms to watch”, which we believe clients should keep well within their sights. At a time of renewed interest in India by foreign investors, and with talk of liberalizing the legal market back on the agenda following a long hiatus, this year’s survey is of particular interest.

This issue of India Business Law Journal marks the start of our 10th year of publication and we have laid the foundations for our second decade with a fresh new look. In redesigning the magazine we aimed to make India Business Law Journal more attractive, accessible and compelling, while enriching its unique focus and quality. We hope you like it. Drop us a line and let us know what you think.

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