Mumbai: Two weeks before Clifford Chance Llp. said it would fire as many as 100 lawyers in London and New York, the world’s largest law firm by revenue announced an alliance with India’s AZB and Partners to expand operations there (AZB and Partners contribute a fortnightly column to Mint).
The firms had said in January that they were establishing a referral relationship that would give Clifford Chance a way to serve clients doing business in India, which bans foreign firms from practising in the country. This month London-based Clyde and Co. and ALMT Legal announced a similar association, saying they would look to merge once it was “permissible”.
In demand: Lawyers at a firm in New Delhi. India is seen as a market where firms can generate more business than in Western economies. Madhu Kapparath / Mint
These alliances and the increased hiring of Indian lawyers come as the UK and the US law firms are fighting a collapse in work from their financial clients. India is a logical countertrend.
For the past five years, Asia’s third largest economy grew at the fastest pace since independence in 1947. Lawyers are betting India will be a growth market for them once they’re allowed in.
“Most international law firms are looking at doing more” in India, said Sunil Gadhia, chief executive officer of London-based Stephenson Harwood Llp. It’s “a market where firms can generate more business” than in Western economies, he said.
“India’s a place you have to be, from a global business franchise standpoint,” Goldman Sachs India head Brooks Entwistle told 66 European and North American law firms attending a Mumbai conference of the International Bar Association in March. Some of the firms, barred from practising in India since a 1995 court order, have set up India teams in nearby locations, including Singapore, to serve companies doing Indian deals.
“Indian corporates are very bullish,” said Sandeep Katwala, India group head of London’s Linklaters Llp., which allied with Mumbai-based Talwar Thakore and Associates in 2007. Since the elections “we’ve seen more mandates in the capital markets than for the last six-eight months,” he said.
Private equity firms’ interest in pre-initial public offering (IPO) investments also has revived from “virtually nothing for a few months”, due to positive sentiment following the United Progressive Alliance government’s re-election last month and a belief in the economy’s underlying strength, he said.
“The outlook for India is very promising—more than any other Jones Day market, in my view,” said Jeffrey Maddox, a Hong Kong-based partner of the Washington-based firm, which works with New Delhi-based P&A Law Offices, which a Jones Day partner set up in 1995.
In February, Jones Day hired Sushma Jobanputra, a Barclays Capital managing director who was previously a lawyer with Linklaters, to join its India practice based in Singapore, Maddox said.
“Most international firms have the same basic problem as us: We service our clients globally, and India is a big market,” said Chris Wyman, the India practice head of London-based Clifford Chance. “If you’re trying to have a global footprint, then ignoring India is nonsense.”
In November, Clifford Chance hired Rahul Gupta from Amarchand and Mangaldas and Suresh A Shroff and Co., the top Indian legal adviser on acquisitions. He works in its India capital markets group based in Singapore.
The London firm and AZB, which has offices in Mumbai, New Delhi and Bangalore, “would want to have a presence working alongside one another as soon as we could”, said Wyman, who plans to spend a few months in AZB’s Mumbai office.
“It’s difficult to operate in a market where you don’t have a base,” said Andrew Harrow, managing partner of the India group at Allen and Overy Llp., which entered a referral, training and joint marketing relationship in 2008 with India’s Trilegal.
The 15 or so Indian firms worth partnering with have been swamped with offers from global firms seeking an advantage over competitors, according to Reena Sengupta, whose RSG Consulting has published a study of the Indian legal market.
“Liberalization of the legal sector isn’t going to be top of the government’s agenda, but with its strong mandate, we may see it in two years rather than five,” she said.
The Reserve Bank of India licensed New York-based White and Case Llp. to set up a liaison office in Mumbai in 1994, when the government at the time was first opening the economy to foreign investment. Chadbourne and Parke Llp. of New York and Ashurst Llp. of London were also licensed.
Indian lawyers opposed these operations, winning an interim ruling in the Bombay high court in 1995 that local lawyers have a monopoly on practising law in the country. Government proposals to allow foreign lawyers in have also been opposed.
White and Case pulled out voluntarily after the ruling, as did Chadbourne, though Ashurst remains in New Delhi. No new licences are being issued.
In 2007, the law ministry filed an affidavit disagreeing with this point. A court decision is pending.