Crisis point

Enduring one of the most challenging periods in their lives, lawyers tell India Business Law Journal how their firms have been managing and how the violent disruption of the pandemic is forcing change. Gautam Kagalwala reports

In our previous year’s state of the market annual review, lawyers were reporting concerns of a slowing economy and in-house counsel becoming more independent. More than two-thirds of respondents to India Business Law Journal’s survey were worried that in-house counsel were handling more work internally.

None of us knew that the trials and tribulations of the market then would pale into insignificance next to the fallout from a health crisis that has since shaken the world. Lawyers in India have gone from a tough time to facing one of the hardest periods in their careers. In the face of economic malaise, traditional practice areas have floundered, but the lockdown has meant that the rescue raft of practice areas in times of crisis have been for the main part unresponsive while the legal system battles with overcoming infrastructural paralysis.

This was reflected in our survey this year of 38 law firms, as 68% of respondents anticipate law firm profitability to fall in comparison to the previous year. Similarly, 63% of respondents see an increase in price competition and undercutting among law firms in comparison to the previous financial year. Only 11% of respondents felt this activity was lower this year.

In terms of headcount, lawyers also had a pessimistic outlook, with 47% reporting that the number of lawyers working at firms in 2020-21 would decline in comparison to the previous year, while 45% felt the number would remain about the same, indicating that firms are not expected to expand. In contrast, only 5% believe the number of lawyers will increase at law firms in 2020.

Between 2019 and 2020, 41% of firms reported a reduction in headcount, with the largest being in the 0-15% range, while 59% of firms reported an increase in headcount with the largest being in the 15-30% range (see our chart: Headcount at law firms).

Number of lawyers

In comparison to the previous financial year, the number of lawyers working at Indian law firms in the 2020-21 financial year will be:

Profitability

How do you think law firm profitability in the 2020-21 financial year will compare to the previous financial year?

Headcount at law firms

Change in number of lawyers between 2019 and 2020

Results based on figures from 30 firms. The median size of polled firms was 25 in 2020.

The news reflects gloomier economic data, as GDP dropped 23.9% in the April-June quarter compared with the same period last year. During economic downturns, litigation is expected to thrive, however, with the closure of the courts, judges are only looking at matters of importance and in the final hearing stage.

With such short notice in announcing the lockdown, one of the significant challenges for law firms was having to quickly transition their staff to a virtual workforce in order to ensure their safety and maintain work continuity.

“It became inevitable to incorporate secure internet facilities for a hack-free environment using the latest technologies for data protection and privacy,” says Abhijit Joshi, the managing partner at Veritas Legal. “The use of the latest applications to secure remote communication and virtual meetings became a prevalent norm in these [past] few months.”

Joshi says the limited physical interaction in this new mode of working has emphasized concerns over the mental health of lawyers. The firm offers its lawyers and their family members access to counselling services. Veritas Legal had organized a grand celebration for its fifth anniversary in March, which was cancelled due to the lockdown.