Mumbai: Shardul S. Shroff, managing partner, Amarchand Mangaldas, comes from a family of lawyers that’s been practising for more than nine decades. The 93-year-old firm started by his grandfather is the most sought after by Indian business houses. Over the years, the Shroffs have professionalized the family-owned firm by sharing ownership with partners. The 54-year-old Shroff said in an interview that the firm led by his father evoked such trust that it could work for rivals Dhirubhai Ambani and Nusli Wadia. Edited excerpts:
Your competitors often say that Amarchand Mangaldas is a family- run business.
Sadly, our competition knows little or nothing about us. There are five Shroffs in 50 partners and nine Shroffs out of 470 lawyers in the firm who are locationally spread out. We used to be a family-owned firm till 1995 but we evolved after we added non-Shroffs to the equity partnership and opened out. The Shroff family looks upon itself more like entrepreneurs who provide the vision and direction of the professional services rendered, similar to what a Tata or a Birla or an Ambani family does. As in the case of Azim Premji’s son, or in the case of Bharti telecom, if a Premji or a Mittal is “blooded” and brought into the upper reaches of management, you cannot call them family businesses. Just as much as these manufacturing and service firms are professional, so are we.
What persuaded you to move away from being a family firm?
The firm hired BCG (Boston Consulting Group) in 1998-2000 to do a transformational exercise. Eleven years ago, they gave extensive report on the constitutional changes needed to thrive and change. Based on the report, we implemented every single suggestion necessary for augmenting and strengthening the firm and its transformation from a family firm to an independent national firm.
If we had not gone in for such advice, we would not have grown and prospered as we have. We are twice the size of any other domestic national law firm. Today, the firm through its branches has worked and does work for almost every world-class firm. We will have 500 lawyers working with us by November 2010.
What is the key to Amarchand Mangaldas’ success?
Trust and being a trusted adviser was always a forte of the firm. The Shroff family has walked the talk as far as the ethical, upright and moral practice of the law is concerned. The firm led by my father could work both for Dhirubhai Ambani and Nusli Wadia on different transactions at the same time in different rooms of our Mumbai office. They may have been bitter rivals but both their organizations still trusted my father. We have retained that quality till date. My brother Cyril is perhaps the only lawyer who is trusted to work for both Mukesh Bhai and Anil Bhai of the Ambani family. He helped them settle and still carries their trust.
Your competitors say the firm has a high attrition rate.
It’s a myth and a canard; our competitors have a higher attrition rate. Making and breaking away from a firm is in the ordinary course of the growth and re-creation of firms. If we lose two, we gain six. People leave and people come, but on balance we are always growing. Our attrition rate is the lowest among law firms when one considers the total intake versus the total outgo.
Do most of the profits go to the Shroffs?
Despite knowing our asset strength, we have not sought capitalization on market value principles. When we opened up the partnership in 1995, we started with a high profit ratio being with the Shroffs but we have diminished that progressively year on year. The Shroffs took the entrepreneurial risk and consequently it has entrepreneurial share, besides its share arising from the family’s client relationships and its execution profits. Every year, the Shroff family dilutes. We are not augmenting our share and are increasingly sharing the pie with new entrants to the partnership.
What’s the work culture like at your firm?
Amarchand Mangaldas is a meritocracy. We have not adopted a sifarish (recommendation) culture. Quality and merit is paramount. I have had occasion to refuse direct entry to the daughter of a judge of the Supreme Court. Each entrant has to undertake a rigorous process before joining so as to fit in the culture of merit and excellence of the firm.
Foreign law firms will soon open office in India.
We have a price and talent advantage over foreign firms. We are in the Asian region, which is growing much faster than the West. Our costs are much lower than a foreign law firm’s costs. That is why they are seeking to enter our markets. That is why they have resorted to outsourcing their legal services.
The clients serviced in India are not going to pay four to six times for a task that can be done at one-fourth or one-sixth the price in India. They will be in a foreign market as far as India goes, where the regulatory regime and disciplinary principles are fundamentally different. Their insurable risks will be completely different. The Davids will fight the Goliaths.
When will you go global?
Once the firm is of an appropriate size we may consider expansion overseas. We aspire to have 600-800 lawyers in our organization at least. If we are to have a foreign location practice, we must have at least 40 lawyers duly qualified in that foreign jurisdiction.
What has been the toughest assignment for you?
Satyam was incredible work to do: right from ministry of corporate affairs to commerce ministry to Serious Fraud Investigation Office, everybody was involved. It was the most comprehensive challenge. There were serious legal issues arising from the dual jurisdiction of the securities regulators in India and the US like Sebi (markets regulator Securities and Exchange Board of India) and SEC (US capital market regulator Securities and Exchange Commission). It is the only case in world corporate history where even with a $1.8 billion hole, with no government aid, a company turned around in 90 days.
What is the succession plan at Amarchand Mangaldas?
We have it in our structure on how to go about with succession planning. The Shroff family as entrepreneurs has to have a competent professional that can run or make decisions for a large firm of several professional lawyers as we cannot allow the firm to go downhill after such a major effort to create an institution. The firm is not a shop and clients will not come to our children just because they are a Shroff son or daughter. We are very conscious that they are highly qualified, confident and will prove their worth before my generation retires.