Indian law firms face a daunting pace attack from big accountancy firms amid a slow-wicket economy. On top of this, in-house counsel are facing up to more work internally, leaving less for law firms. Can a flurry of litigation and insolvency boost their run rate? Gautam Kagalwala finds out
To coincide with the publication of India Business Law Directory, India Business Law Journal polled 38 Indian law firms of all shapes and sizes for their thoughts on the state of, and current trends within, the legal market. As in previous years, the legal market in 2018-19 saw both law firm fragmentation and the merging of practices. But what is worrying managing partners is the growing independence of in-house counsel and their ability to handle greater amounts of legal work without outsourcing.
The results of our survey reflect this, as 66% of law firms either expressed agreement or strong agreement with the statement that in-house counsel are taking on more work internally. This squeeze on demand is impacting the ability of law firms to source new business, maintain fees and hire new talent. Similarly, 69% of law firms predicted that competition and price undercutting will intensify in 2019-20, with only 10% disagreeing with this outlook.
Despite these findings, 50% of firms still say they are experiencing greater profitability in comparison to the previous year, while 37% are not.
“Companies are now approaching law firms mostly for tricky opinions,” says Mahua Roy Chowdhury, the founder of Royzz & Co. “Thus, the dependency of companies on law firms for day-to-day activities has reduced, leaving space only for dynamic lawyers to interpret new legislation and provide pragmatic business solutions.”
Traditionally, in-house counsel have acted as the interface with law firms and played a smaller role on the company’s deals, but as costs are trimmed this role has evolved.
“The companies have started attracting better-quality lawyers as in-house counsel and are compensating them well,” says Ravi Singhania, the managing partner at Singhania & Partners. “They have taken up a significant role in providing legal services to the company versus most of the work being outsourced to law firms.” He agrees that there is now an obligation on law firms to provide better-quality services.
Prem Rajani, the managing partner at Rajani Associates, says he has observed in-house teams being expanded in sectors including banking, non-banking financial companies, insurance, telecoms, and other larger businesses. “[The hires] mostly cater to day-to-day affairs and senior experienced lawyers [are hired for] regulatory-related issues, compliance and large M&A deals,” he says.
Along with good pay, the quality of work and the promise of a less stressful environment is attracting private practice lawyers in-house. “We can see a shift taking place where working in-house is becoming as attractive as, if not more than, joining a law firm,” says Rajesh Begur, the managing partner at ARA LAW. “In-house departments are becoming the primary service providers for most companies, expanding in status, variety of expertise, exposure, and even the complexity of the work. Many companies, especially in the information technology and pharmaceutical sectors, have expanded their in-house legal teams.”