With rapid growth in technology, telecommunications, pharmaceuticals and biosciences, Bangalore has become a major destination for Delhi and Mumbai law firms, writes George W Russell in Bangalore

From Garden City to Pensioners’ Paradise and Outsourcing Capital to India’s Silicon Valley, Bangalore has earned a number of sobriquets over the years. But the recent onrush of law firms to India’s fifth largest metropolis suggests a new title for the Karnataka state capital: Legal Hub of the South.

With its temperate climate, an educated and relatively cosmopolitan population of more than seven million, and a host of multinational corporations, Bangalore – perched 1,000 metres up on the Deccan Plateau – has long drawn migrants from all over India in search of better jobs and a higher quality of life.

Economic immigrants from Nepal and western China and students from Iran and Nigeria add to the city’s diversity, while multinational corporations have brought in about 10,000 employees and families, creating one of the largest expatriate communities in South Asia. “Bangalore is no longer a part of Karnataka or India, it is today a global city,” says Sajai Singh, who heads the Bangalore practice of Delhi-based J Sagar Associates.

Although foreign companies such as Germany’s Bosch and US-based Texas Instruments have helped create Bangalore’s unique position since the 1960s, the city has long hosted home-grown Indian defence, aviation and telecommunications majors, as well as the traditional garments and textiles, light manufacturing and furniture industries.

Then the city witnessed unprecedented growth in the 1990s with the development of technology, especially software, and the well-known “call centres” used for corporate customer relations based outside India, and again in the 2000s with the development of telecommunications, biotechnology, pharmaceuticals and business process outsourcing (BPO). “I would say that Bangalore was and continues to be an ideal melting pot for high technology talent from all over the world,” adds Singh.

Sajai Singh, J Sagar Associates

Development troubles

But both growth and its higher profile, initially welcomed, soon spiralled out of control. Traffic snarls became commonplace, while the city’s green cover began to disappear under the bulldozers of development. The influx of cash also worsened corruption and crime, while the municipality has struggled to cope with expansion.

Poor governance frustrates even the city’s boosters in private enterprise. “Bangalore continues to be a lovable city with a sadly pathetic administration,” says Ujwal Tickoo, director of product management at the Bangalore office of Roamware, a US-based maker of telecommunications software, who writes a popular technology blog.

More significantly, the city’s native inhabitants, the Kannadigas, feel under siege from migrating Tamils, Keralites, Marathis and other hopeful newcomers from northern and eastern India. Today the Kannada-speaking indigenous inhabitants represent only about 30% of Bangalore’s population, which has become a continuing source of tension. Central Bangalore is dotted with English-language signs that have been blacked out by spray-can-wielding pro-Kannadiga activists. Protests and even violence between Kannadigas and outsiders are on the increase.

One prominent result of the increasing regional chauvinism is the attempt to ditch the name Bangalore – despite its international recognition – in favour of the romanized Kannada spelling Bengaluru (or Bengalooru, as India’s famously fractious linguistic activists can’t agree on the correct version). Most residents seem to be dragging their feet on the issue, as in the initial reaction to the changes from Calcutta to Kolkata or Madras to Chennai.

However, there’s no doubt that Bangalore’s development has sparked an increasing demand for top-rank legal services. Despite the southern boom, Mumbai and Delhi have long retained a stranglehold on the legal industry, even though Bangalore has for decades been home to India’s finest legal college, the National Law School of India University. Kolkata was also a more important legal centre, while the only notable law firms in southern India were those in Chennai, such as King & Partridge and Surana & Surana.

Until the early 1990s, the legal market in Bangalore consisted largely of single-member operations and advocates, working on parochial matters like conveyancing and wills. At that time, Bangalore had few law firms with offices in other cities and was a city where a large number of multinationals were setting up operations. Such companies were forced to consult professionals based in Mumbai or Delhi for legal advice.

Early entries

However, India’s economic liberalization from 1991 – followed by the rush of international corporate majors to Bangalore – changed the very nature of the city’s legal profession.

“The law firm concept was unknown in Bangalore even in the 1990s,” says Shuva Mandal, the Bangalore-based managing partner for South India at FoxMandal Little, India’s largest firm, which has had an office in Bangalore since 1994. “We realized that liberalization was coming and we decided to get into the market,” he says.

Shuva Mandal, FoxMandal Little

Khaitan & Co was also among the early firms to see Bangalore’s potential. The firm opened a Bangalore office in November 1993. “With the emerging importance of South India-based industries, it was felt that Khaitan & Co should expand to this part of the country as well, rather than remain a Kolkata-centric firm,” says resident managing partner in Bangalore Rajiv Khaitan. “Khaitan & Co wanted a pan-Indian presence.”

Several other firms followed suit in the mid-1990s, but many of these paid only lip service to Bangalore in announcing that they had established a branch. Some were mere one-person offices, often headed by a semi-retired partner from Bangalore heading home after a career spent in Delhi or Mumbai. Others were little more than post office boxes: a call from a client meant hastily arranging a flight down to Bangalore from headquarters.

The half-hearted approach was not lost on the legal staff of multinationals, which experienced noticeable delays in service. “It was obvious that these offices were not well staffed and were simply operating as an extension of head office in Mumbai or Delhi,” says the Bangalore-based chief legal officer of a global telecommunications company.

As a result, law firms decided to beef up their southern presence. J Sagar Associates followed suit in 1996 with the launch of its Bangalore practice. “I guess it may have been a combination of foresight and convenience that led to the opening of the first J Sagar Associates office outside of Delhi,” says Singh, who has headed the office since its inception. It has grown to 20 attorneys and paralegals, he adds.

Since that time, a slew of northern firms have opened full offices in Bangalore, establishing the city as the country’s third legal hub. Arrivals over the past decade have included AZB & Partners; Dave & Girish & Co; Dua Associates; Khaitan & Co; King Stubb & Kasiva; Kochhar & Co; MV Kini & Co; Mulla & Mulla & Craigie Blunt & Caroe; Seth Dua & Associates; Singhania & Co; Singhania & Partners and Thakker & Thakker.

Recent entrants include Mumbai-based full-service firm Majmudar & Co, which opened a Bangalore office in 2006, and Delhi IP boutique Preconcept in 2005.

Companies welcomed the arrival of first-rate lawyers from firms they had been dealing with, in some cases, for decades. “Over the past five years, there has been a tremendous change in Bangalore with the ‘true’ establishment of some leading firms,” notes the Bangalore-based general counsel of a major US industrial corporation. “In the past, firms in Bangalore were generally small firms without much real expertise in large or complex matters.”

Important hub

Lawyers now see Bangalore as an important hub, being only an hour’s flying time from the major commercial centres of the South: Chennai, Hyderabad, and the Kerala cities of Kochi (Cochin) and Thiruvananthapuram (Trivandrum).

“Bangalore is becoming very important and gives us very good positioning,” says Mandal, speaking from London where FoxMandal Little has just opened an office. The firm now has more than 55 staff in Bangalore.

Lawyers also point to profitability as a major reason to be in Bangalore. “Today we would be the third-largest revenue-generating office of the firm, after Delhi and Mumbai,” says Singh of J Sagar Associates (his firm expanded to Mumbai in 2000, Hyderabad and Dubai in 2006 and Gurgaon in2007). “It was self-sustaining from the first few months of setting it up, and has only continued to grow in terms of people, work and revenue since then,” he adds. “In terms of profitability per attorney, we have consistently been the most profitable office of the firm.”

According to some firms, Bangalore practices have now begun to overtake those of larger cities. Delhi-based Singhania & Partners says its Bangalore office is more important than its Mumbai operation. “Delhi is the main office,” says Manju Mohotra, the firm’s chief executive officer. “However, the Bangalore practice comes next, as some of [our] most prestigious clients are based out of Bangalore.”

Firms acknowledge that, in many cases, the need to be in the South was client-driven. US technology companies Novell, Oracle and Digital Equipment Corporation (now part of Hewlett Packard) prodded J Sagar Associates to open its office in the city, says Singh. Khaitan at Khaitan & Co, meanwhile, says some multinational clients have chosen the firm in part because of proximity, while Majmudar & Co’s managing partner, Akil Hirani in Mumbai, admits: “Client requirements led us to open a Bangalore office.”

Akil Hirani, Majmudar & Co

US multinationals Qualcomm and EDS are among the major Bangalore-based clients of Majmudar & Co. (Partner N Raja Sujith heads the firm’s Bangalore office.) “Over the past few years, Bangalore has become a significant corporate law market,” says Hirani. “A number of technology company deals that were being managed out of Mumbai or Delhi are now being handled in Bangalore itself.”

Delhi-based KR Chawla & Co’s Bangalore clients include EADS, the parent company of aircraft manufacturer Airbus, as well as several Finnish technology and electronics companies such as contract electronics manufacturer Elcoteq, antivirus and intrusion prevention systems maker F-Secure, and telecommunications equipment contractors Aspocomp Group and Salcomp.

“Our Bangalore operations have gained a lot of significance in the past two years,” says Sumes Dewan, a partner with the firm in Delhi. “The growth of the Bangalore office is at a greater pace than that of the Delhi office.”

Sumes Dewan, KR Chawla & Co

Khaitan & Co lawyers say the development of their Bangalore office has mirrored that of the firm’s other branches. A number of initial public offerings, cross-border acquisitions, restructurings, media and entertainment-related transactions, labour and employment matters, energy and natural resources deals have been undertaken wholly from Bangalore.

Technology remains the bedrock of Bangalore’s growth. At the same time, “technology” has become an all-embracing term covering a huge variety of specialties. Stephen Mathias, Bangalore head of Delhi-based law firm Kochhar & Co, lists his major roles as setting up software development and BPO centres and implementing transactions involving software licensing, e-commerce and outsourcing. Other firms focus on pharmaceuticals development, nanotechnology, biotechnology, food and beverage technology or aviation and space technology.

Routes to success

One part of Bangalore’s success was its ability to ride the dotcom bust in 2000. Not only was India’s economy sufficiently insulated from the global meltdown, Bangalore had also diversified itself sufficiently to absorb the failure of pure internet players. International and domestic companies alike had already branched out into a subdivision of the BPO sector called knowledge process outsourcing, handling everything from US accident insurance claims to British medical records.

“After the dotcom bubble burst came the era of consolidation,” says Singh. Technology companies, covetous of their proprietary information amid the downturn, helped boost intellectual property practices. The nascent Indian private equity and venture capital sector also began to stir and mergers and acquisitions work increased. As investment poured into Bangalore, the city became a major property hub.

“Real estate is hot all over India right now, and so is it for our office,” explains Singh. Healthcare, including so-called “medical tourism” and distance education, have also added to the diversification that has helped Bangalore to prosper.

But Bangalore’s development has not come without a price, and real estate has become one of the most contentious issues. Property prices roughly doubled between 2003 and 2006, although 2007 saw a correction of 10-20% as buyers balked at developers demanding 25% upfront payments.

Some law firms cite rising property prices as one of the biggest obstacles to growth. “The rising real rentals have definitely slowed our expansion plans in Bangalore,” says Dewan. Meanwhile, Mohotra says Singhania & Partners counts itself lucky to be one of the few law firms to own its central Bangalore premises.

Other costs have also risen ahead of projections. “In terms of human resources, the salaries have seen a remarkable change,” Mohotra adds. “The practice has grown and so have the expenses.”

Another major problem is the city’s creaking infrastructure. “Bangalore, despite being one of the hottest destinations to do business, is still quite unfriendly in terms of infrastructure,” says Dewan. “It is becoming difficult to move people to Bangalore due to lack of infrastructure.

But in spite of the difficulties, many law firms remain optimistic that the advantages outweigh the setbacks. “We see a major upward trend in the Bangalore practice,” says Mohotra.

Pockets of resistance

Not all lawyers, however, are so confident. George Vivek Durai, who until this year headed the Bangalore practice of Delhi-based firm IndoJuris, is one who’s had enough of the city’s chaos. From March 2008, Durai began to practice at his own start-up, Atman Law Firm, in Chennai, India’s fourth-largest metropolis, which is an hour’s flight (or five hours by road) from Bangalore. “Chennai is a place to get things done quickly,” he says. “The city is far more business oriented than Bangalore.”

Other lawyers offer qualified agreement that Bangalore faces stiff competition. “Chennai does score over Bangalore in terms of infrastructure, while Hyderabad is definitely very investor friendly,” says Singh.

Yang Yen-Thaw, managing partner of Yang Lawyers – a 10-year-old firm started in Delhi by lawyers from Bangalore that opened its own Bangalore office in 2003 – expresses concern over the possible effects of Bangalore’s uneven development.

“Infrastructure, quality of living, rising costs, traffic and other well-known problems will see Bangalore lose out to other southern cities and states, not unlike the analogy of India losing out to China in terms of software and hardware,” he says.

In response, some firms point to Bangalore’s established advantages in human resources, since both Chennai and Hyderabad employers often look to Bangalore universities and companies for recruits. “The biggest advantage of Bangalore is really the availability of a very large number of trained manpower, as well as its central location, climate and cosmopolitan culture. All these factors help Bangalore in attracting and retaining its competitiveness,” says Khaitan.

Local talent is alive and well

Bangalore’s home-grown law practices say they can weather the onslaught from the big national firms

While the arrival of Delhi and Mumbai lawyers helped put Bangalore on the map, the city’s legal landscape wasn’t exactly a barren field before they arrived. Local law firms such as Thiru & Thiru, Paul D’Souza & Associates, Upasana Associates, and SP Legal had been practising in the city for years before the boom.

“Bangalore has been the hub of major technology and industrial centre in India right from the time of India’s independence,” notes BC Thiruvengadam, managing partner of Thiru & Thiru, a 25-year-old Bangalore-based firm. Indeed, Hindustan Aerospace, telecoms pioneer ITI, manufacturer Bharat Electronics and HMT Machine Tools – all based in Bangalore – provided a significant proportion of India’s limited technology and manufacturing industry in the country’s early years.

As a garrison town in the pre-colonial, British and post-independence eras, Bangalore was also host to scientific research centres such as the Electronics and Radar Development Establishment and the Indian Space Research Organisation. The access to trained employees and talented graduates prompted the private sector to move in and establish what is now one of the world’s largest technology centres.

However, even the most chauvinistic of Bangalore lawyers knew their city was barely a blip before the 1990s in terms of both professional challenges and revenue.

Humble beginnings

“Bangalore was not a patch in terms of the work exposure, professionalism and life experiences that Mumbai, in particular as India’s leading commercial law centre, offered for young lawyers eager to learn, earn and grow in their careers,” recalls Siddharth Raja, a partner in Bangalore technology firm Narasappa Doraswamy & Raja.

Today, most Bangalore law firms are still one or two-person arrangements working out of cramped, crumbling offices in residential areas with the ubiquitous faded white-lettered black hoarding. However, Bangalore’s generally progressive legal environment meant that some local firms were able to move ahead of the pack. Indeed, the innovation that characterized Bangalore’s development – even in the 1980s – meant that some firms were even able to get a step ahead of their rivals in larger cities.

“Before the liberalization of the Indian economy, we were involved in setting up India’s first venture capital fund,” Thiruvengadam recalls. The fund, Technology Development and Information Corporation of India, later went private and became ICICI Venture Funds, one of the largest and most successful private equity firms in India with more than US$2 billion under management.

Some firms focused on specialities that would be relevant to Bangalore’s new technological landscape. Law Firm of Naren Thappeta, for example, is composed of US patent attorneys serving the US patent market for inventions originating in India. “We are in a fairly niche segment,” managing partner Naren Thappeta tells India Business Law Journal.

Other practices sought to leverage their Bangalore experience internationally. Poovayya & Co, a 12-year-old Bangalore firm, entered into a strategic alliance with Boston-based Brown Rudnick Berlack Israels to cross-market services in technology and outsourcing, among other practice areas.

However, Raja concedes that even as late as 2000, Bangalore lagged well behind Delhi and Mumbai. “Speaking for corporate and commercial law, Bangalore today to my mind is on par with Mumbai in all aspects,” says Raja. “Eight years is a short period of time in the larger scheme of things. That it has changed so quickly for Bangalore only demonstrates, I believe, Bangalore’s relevance and continuing growth.”

The influx of national firms is no threat, says Thiruvengadam, who dismisses the big firms’ commitment to Bangalore-based clients. “Delhi and Mumbai firms, barring a couple, have no significant presence in Bangalore,” he says. “Most of these firms are mere outposts and the back-end job is done in Mumbai. The local clients have remained loyal to local firms, while Mumbai and Delhi-based corporate groups also nowadays prefer to work with local law firms, because the turnaround time is fast and the lawyers have rich experience.”

Some local lawyers say they positively welcome the influx of Delhi and Mumbai firms. “They drive competition and help us to build higher standards,” says Ajesh Kumar S of Bangalore-based AKS Law Associates.

Kumar adds that the presence of a major law college – the National Law School of India University, in Nagarbhavi, a western suburb – has positively influenced Bangalore’s legal culture over the years. “It has brought respect to the profession nationally and the young guns have made a mark.”