The salaries and bonuses paid by India’s top corporate law firms to graduates from premium law schools have in many cases doubled in the last five years and now often top Rs 14 lakh per year if bonuses are included.
One reason is that with the growth of the corporate legal sector, salaries at the top and also the bottom have soared.
Five years ago, law firm Trilegal used to pay law graduates around Rs 5 lakh per year; now the firm offers a base package of Rs 10.8 lakh per year with potential bonuses taking this up to Rs 12.8 lakh a year.
In 1991, Anand Prasad, the co-founding partner of Trilegal, started his career as a junior lawyer in the courts on Rs 750 per month and those earning Rs 2,000 per month were “considered to be doing brilliantly”, he said.
A joke used to make the rounds in the courts back then about the effect a husband’s job would have on the dowry paid, he recollected. Indian Revenue Service (IRS) officers would come in at the top being offered the biggest dowries, followed by doctors and engineers. The punchline was that lawyers were at the bottom of the table and a groom’s family would have to pay the bride’s family a dowry.
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But more recently corporate lawyers have moved up the proverbial marriage table, according to Prasad. “People who had nothing else as an option would end up doing law. Now it’s become a profession of first choice for many people.”
“It is just about making sure that we continue to get good talent when we hire people,” said Prasad. “But what we also realized was that a difference of Rs 5,000 or 10,000 at the fresher level made a big decision when they made a choice which firm to go to.”
Similar trends and figures are reflected throughout India’s growing corporate law industry, which is largely removed from conventional litigation in courts.
The Mumbai office of AZB & Partners currently offers the highest base package at Rs 11.4 lakh to fresh graduates—around five years ago it used to be closer to Rs 6 lakh.
At Khaitan & Co., graduates are on Rs 10.8 lakh, increasing to up to Rs 14.8 lakh per year with a bonus—in 2006 it was Rs 5.4 lakh.
At Amarchand & Mangaldas & Suresh A. Shroff & Co. the 2004 package excluding bonuses was just over Rs 4 lakh; now it is Rs 10.48 lakh and with bonuses this is sometimes advertised to students to reach nearly RS 15 lakh.
Other firms such as S&R Associates, Talwar Thakore & Associates and Luthra & Luthra also all attract graduates with pay above the psychological Rs 10 lakh band.
Corporate entities have played the same game. ICICI Bank Ltd’s in-house legal team, which employs more than 400 lawyers across India and hired 16 lawyers from five law schools earlier this year, hiked its cost-to-company salary including benefits packages for the latest intake to Rs 10.5 lakh per year. In June 2010, before two pay-hikes, this was only between Rs 8.35 lakh and Rs 8.8 lakh.
The trend is linked to the gradual improvement in the quality of legal education and law students, which began in earnest after the first young lawyers entered the workplace from the National Law School of India University (NLSIU) in Bangalore in the mid-1990s, followed by other institutions such as Nalsar University of Law, Hyderabad; The WB National University of Juridical Sciences (NUJS), Kolkata; and National Law University (NLU), Jodhpur.
Between 2010 and 2011 alone, the numbers of law school aspirants taking the Common Law Admissions Test (CLAT) increased by 38% to nearly 24,000, competing for fewer than 1,000 seats at 11 national law schools. In 2008 only around 12,000 candidates took the CLAT.
Salaries rocketed following the availability of bright young lawyers and the increasing need of corporate law firms to attract them to staff their transactions in a booming Indian economy.
In 2007 Luthra & Luthra started offering around Rs 7.5 lakh per year to law students from the top school, beginning a minor salary war with Amarchand Mangaldas that had until that point been the unrivalled top paymaster.
Amarchand would retaliate, as would others.
“The thing that happens with alarming frequency is that firms actually wait for the best time to raise their salary to see what everyone else has done,” said one partner at one of the top-paying firms, describing the often secretive and strategic world of law firm salary chess.
The law schools, too, have directly encouraged this. Most invite law firms to recruit on campus depending on the remuneration on offer and those firms with the highest salary offers are allowed to come on the so-called “day zero” of the recruitment season and get the first pick.
“If you’d like to have a day zero rank you can definitely not afford to pay much lesser than competitors pay,” said Upendra Joshi, a Mumbai-based partner at Khaitan & Co.
And the demands in the profession have increased.
“You can’t really turn around to your associates and say, we expect you to perform at X level, in quality and not just hours, but at the same time we’re not willing to pay for it,” said one partner at a firm paying more than Rs 10 lakh. “That’s not a consistent message.”
Finally, international law firms, unable to open offices in India due to local restrictions, have also been recruiting from Indian law schools to build up India-related expertise abroad.
This year, London-headquartered so-called magic circle firms Allen & Overy and Linklaters, which offer more than Rs 30 lakhs to new recruits, hired four students each from the top law schools. Other international firms such as Norton Rose, Herbert Smith and Ashurst have hired between two and three graduates each, although before the global economic downturn those numbers were significantly higher.
Luthra & Luthra senior partner Mohit Saraf denied this has forced the hand of Indian law firms in increasing their packages despite the disparity in pay abroad and domestically.
“Even if you match salaries you simply couldn’t match the experience that people are looking for internationally,” agreed Prasad. “Clearly matching salaries of international firms is not going to help you hire some of the guys you want —if you (as a student) have offers to go international almost everybody would go international.”
And while even during the global recession some Indian firms would raise salaries, some also deferred the starting dates of new recruits or quietly trimmed their fee-earner headcounts. In future there may not be as many big salary jumps as in the past.
But another senior partner at a top-paying law firm, talking about why associate salaries have continued increasing so fast, claimed. “We were underpaid. And to an extent we are still underpaid.” He declined to be named.
Graphic by Yogesh Kumar/Mint
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