Undercutting of legal fees is set to continue, as opposing forces of fragmentation and consolidation battle to shape the legal industry in India. Gautam Kagalwala reports
To coincide with the publication of the 2018-19 edition of India Business Law Directory, India Business Law Journal polled 60 Indian law firms of all shapes and sizes to identify the current trends in the profession and provide a snapshot of the state of the India’s legal industry.
The results paint an intriguing picture of opportunity tainted by some unique challenges, foremost among them unhealthy price competition and the growth in the number of law firms. Based on the responses, we have compiled a series of graphics showing the level of agreement and disagreement with various statements on key issues affecting the profession. These are shown throughout this article. We have also compiled a SWOT analysis illustrating the perceived strengths, weaknesses, opportunities and threats facing India’s legal profession (see SWOT analysis of India’s legal market).
Generally, our respondents were optimistic about the state of business and regulation in the country, with 66% of those polled expecting the ease of doing business in India to improve in the year ahead. However, they were less optimistic about their own sector of the economy, with just 43% expecting the profitability of India’s law firms to increase (see below). In what has been a largely self-inflicted wound by the profession, the biggest pressure on law firm profitability has been the rampant undercutting of fees, which has driven down billing rates for all but the most resilient firms and put particular pressure on mid-size general practice firms. Just 13% of the firms polled expect price competition to abate in the year ahead, while 65% expect it to intensify (see below).
Senior lawyers fuel fragmentation
The most prominent trend highlighted by our respondents was that of experienced lawyers pursuing their entrepreneurial spirits and breaking away from established firms. This trend was evident among old hands at some of the country’s largest law firms, as well as lawyers with a decade or so of experience. In October, former equity partner S Seetharaman left Lakshmikumaran & Sridharan after 17 years to start his own firm focusing on international trade matters.