India Business Law Journal – December 2008/January 2009

Standing shoulder to shoulder

Mumbaikars have once again demonstrated their immense resilience. India and the world should follow their lead

Defiance amid unity is framing the rightful response of the Indian people. See the following pages for such messages from the local and international legal community – a community with losses of its own to mourn (Inbox; United in grief). India’s openness to the outside world, in the form of its soft commercial underbelly, was arguably the primary target of these deranged yet calculating and well prepared exponents of asymmetrical warfare.

Resisting temptations to close the country’s doors to foreign elements will take political and electoral courage. As will reining in instincts for vengeful sabre-rattling or worse. India Business Law Journal strongly supports statesman-like restraint in the face of naked provocation. To act otherwise would offer a posthumous victory of sorts to the malicious zealots seeking to isolate and destabilize India.

While India Business Law Journal grieves with its friends within the business community and beyond, it takes heed of warnings from Steve Vickers, president of International Risk, and others, who stress the need for “business as usual”.

India’s legal profession and its supporters overseas have crucial roles to play. Despite having undergone tragic personal ordeals in Mumbai, members of the international legal community such as Baker & McKenzie’s Asia-Pacific chairman David Jacobs and Field Fisher Waterhouse partner Mark Abell offer reassuring words of support. Both remain steadfast in their personal and professional commitment to India. “This has not shaken our confidence or faith in the Indian market or in our clients,” says Abell. “We will continue more than ever to work in the Indian market. We’re doing that because it’s a good business proposition, but also because it’s the very least we can do for all of our friends and supporters who were there for us.”

At the end of a year in which economic woes were cruelly compounded by tragedy, this is a welcome message. India must not shy away from the reservoir of international goodwill; rather it must take advantage of such pledges of solidarity, and in so doing remain open to the world and to internal reform.

One area in which such reform appears to be proceeding is in the banking sector. In spite of the international financial crisis, India has shown no signs of shying away from a second wave of financial liberalization scheduled for implementation in 2009 (Opening the vault). As Shearman & Sterling’s Barney Reynolds and Aatif Ahmad explain, the move will pave the way for greater participation in the Indian economy for foreign financial institutions.

The potential for mutual benefit for India and the international business community is well-illustrated in the Cover story of this issue of India Business Law Journal. Our annual Deals of the Year awards celebrate Indian and international law firms working together at their best to bring to fruition intricate and challenging transactions. Although smaller in headline dollar totals than many of last year’s winners, the 2008 Deals of the Year represent landmark achievements in their own right. Some are firsts-of-a-kind in India. This amid a global financial crisis that presents unique challenges.

The spirit of international collaboration stretches far beyond foreign law firms bringing their expertise to bear on India-related transactions. This month’s Intelligence report (Venturing out) investigates the small but growing number of leading Indian law firms that are opening offices abroad. London, New York and California are the most popular destinations, but some firms are exploring further afield. Amarjit & Associates has opened an office in Switzerland while fellow IP-specialist Remfry & Sagar is the first Indian law firm to have a permanent presence in China.

The motivations for venturing abroad appear mixed. While some firms are clearly aiming to tap India-focused clients at source, there is speculation that others are establishing an international footprint as a means to become more attractive takeover targets to foreign firms, if they are given access to the India market.

Subtle clues as to if and when such a day may come to pass may be garnered from a court ruling due in late January (Verdict due on foreign law firms). Lawyers Collective v Bar Council of India et al was filed in Bombay High Court in 1995 and has sat, largely dormant, for 13 years. The case, brought by pressure group Lawyers Collective, challenges a Reserve Bank of India decision to allow three foreign law firms to establish liaison offices in India in the mid-1990s. Two of the three law firms have since left the country, but the judgment is significant nonetheless. A decision in favour of Lawyers Collective may precipitate attempts to challenge the Indian Advocates Act in front of the World Trade Organization. A result in favour of the foreign firms, however, may well encounter tough opposition from elements within the Indian legal establishment.

With uncertainty prevailing, Indian law firms continue to restructure themselves to best face the potential threats – and opportunities – of international competition. Many are adopting internal structures that mirror those of international firms. But as our distinguished commentator Zia Mody, managing partner of AZB & Partners, observes in this month’s Vantage point, successfully managing a law firm is a “people business” that involves “more heart and less head”.

Mody emphasizes the importance of common values, equality and enlightened leadership. In light of recent events, her words resonate.