It wouldn’t be unreasonable to assume that breaking up India’s best-known law firm, which boasts a 99-year heritage, would be a time of mourning for the brothers who have run it together for 21 years since the death of their father.

While the tribulations of the past six months have certainly taken their toll on Cyril Shroff, former co-managing partner of Amarchand and Mangaldas and Suresh A. Shroff and Co. (AMSS), he seems more determined and philosophical than you’d expect of someone who has just seen his family and life’s work split.

“I am at peace and looking forward to the new innings," he said. “I am one of the few that gets the opportunity to build two institutions in one lifetime. How many people are that lucky?"

It’s telling that Cyril, 55, has had six months to prepare for last Wednesday (6 May), when he and his brother Shardul Shroff, 59, announced in the Bombay high court the end of a protracted mediation that extended over more than a dozen sessions.

In November 2014, AMSS was a corporate law juggernaut of around 600 lawyers and 84 partners. Then Shardul sued Cyril in the high court over their late mother’s equity stake in the firm, after Shardul claimed she had disinherited Cyril completely in her will. On Saturday, 9 May, AMSS was officially dissolved.

Cyril’s new firm, which was launched on Monday, is called Cyril Amarchand Mangaldas (CAM); his brother’s new firm, called Shardul Amarchand Mangaldas, was launched on Sunday. On 1 June, CAM will open for business in Delhi. “There are 30 cabins (for partners) and all 30 are full," said Cyril about his new 50,000 sq. ft office in Delhi’s Saket area.

Another 12-14 partner-level hires are expected by August or September, in addition to at least 16 such hires made since March, as the mediation was inching towards the inevitable. Cyril has ramped up operations in Delhi at a pace never seen before in Indian legal services, by acquiring independent practices wholesale, hiring from in-house departments of companies and foreign firms. Mostly, he has poached heavily from competitors such as Kochhar and Co., AZB and Partners, Khaitan and Co., Luthra and Luthra, Dhir and Dhir, Clasis Law and Economic Laws Practice. Shardul, too, has made lateral hires and acquisitions in Mumbai.

Conspicuous by its absence from that list of competitors so far is Shardul Amarchand Mangaldas (though poaching from his brother during mediation would have been awkward at best and difficult to structure, considering they were technically a single firm).

To poach, or not

“From my private client practice, having seen a lot of family break-ups, what I’ve noticed is when a settlement happens it may not seem fair, but it does not really matter in the long run," said Cyril. “Those families that have peacefully separated have prospered on both sides, and those that have fought have ruined each other."

Calling the Shroffs’ separation peaceful may be a stretch but at least they appear to have successfully avoided leaving behind only scorched earth.

“It’s just like any other firm. I see them no different from AZB, Luthra or Khaitan," said Cyril about his brother’s new firm, adding that “there are absolutely no contractual restrictions" to competing with each other, “but we will act sensibly".

He added that he did not think the two firms would poach lawyers from each other “for some months at least". “In that sort of a bloodbath, everyone benefits and not us. Both will lose, so we’ll just be mature about it. There is enough talent elsewhere in other firms."

Clients will be trickier: the Delhi and Mumbai regions of the erstwhile AMSS have shared many clients but in the light of existing loyalties and relationships, Cyril speculated that “there will be many" who will end up working with both.

That’s if the Shroffs don’t end up being each other’s own worst enemies.

Colourful anecdotes about Cyril and Shardul not getting along, and undermining and competing with each other have been circulating on the Indian and India-focused foreign law firm circuit for at least a decade; many such conversations were accompanied by predictions that an AMSS break-up was imminent.

And while some competitors were initially rubbing their hands with schadenfreude (German for pleasure derived from the troubles of others) about the brothers’ bust-up, a few spoken to as early as December 2014 feared that instead of one AMSS as competitor, they would now face two Amarchands, which would expand and compete even more aggressively than before.

“I think we’re both (Shardul and I) focusing on our future, and if we can jointly take the number one and number two spots, that’s a lot more for Zia (Mody) and Haigreve (Khaitan) to worry about than for me," joked Cyril with a nod to the senior partners of his largest competitors, AZB and Partners and Khaitan and Co., respectively.

The ambition is certainly laid out in Cyril’s three-phase roadmap for his new firm. Phase one provides for a five-year “focus India" strategy where CAM will do “whatever we need to do to completely and thoroughly cover the Indian market" and to “ride the era", he explains.

That period will also include expansion in Ahmedabad, where the firm’s pre-existing office went to Shardul after the separation. However, it is also a city where Cyril, other than the Shroff family’s Gujarati origins, has a more recent family connection after the February 2013 marriage of his daughter Paridhi—an associate in the firm—to Karan Adani, the son of billionaire industrialist Gautam Adani.

“(Ahmedabad) is currently only Paridhi’s office because it’s mainly Adani-focused. I think we’ll expand it but it’s not a 2015 agenda for me. After I’ve done Delhi, I’ll do that," he said. “Delhi’s a big elephant, I want to kill that beast first."

Cyril with his de facto co-managing partner, Vandana, his wife, will spend 50% of his time in Delhi every week.

In phase two, five to nine years from now, he said he wants to open offices outside India. Phase three is dubbed “review and refresh", when in years nine and 10 (by 2026), the firm will take stock of where it’s come and who will take over from Cyril.

“We looked at the future with a 10-year horizon. We picked 10 years because 10 years is a good period to plan for. I also thought of my life—I’m 55 and wanted to design the structure in a manner where I could pass on the baton at 65 to whoever we pass (it) on to in the firm’s best interests."

While he’s not explicitly planning his own retirement in 10 years, he’s clearly open to that option. “I don’t want to be a constraint to the firm’s growth," he said. “And, at 65, your body also behaves a little differently. I’ll see if I continue to live that long but I’ll always be a friend of the firm and in some sort of mentor role. I don’t want to do what I’m doing today 24x7. Which means that whatever I finish in terms of my ambitions, I want to finish it off in this period."

Project sunrise

CAM’s new structure and governance—internally code-named “project new dawn"—began its life shortly after the start of mediation. “It sort of really symbolizes how we felt about (the) whole thing," said Cyril about the moniker given to the new strategy. “And, actually, that’s what gave us the strength to withstand the negativity. We were only focused on sunrise and not on the dark night."

“I started this work on redesigning sometime in early December (2014) because I knew where this was headed after the high court hearing," he recounts, noting that he and Vandana had invested “well over 1,000 hours" on the new model.

The Shroffs have always been very interested in management and have made more efforts than probably any other partners in India to set up structures within the firm. Notably, this has included two major reviews by The Boston Consulting Group (BCG) in 1999 and 2011. The more recent one resulted in a report called Amarchand 3.0, targeted at doubling the firm’s headcount to 1,000 lawyers by 2017 (as reported in Mint in 2012).

But to a large extent, that review was as much about international best practices as it was about keeping in check the difficult family dynamics.

“We realize that yes, families can splinter. But we have constitutionally provided for how it should happen, and the consequences of doing it," Shardul told Mint in 2012 about the new system.

The Shroffs had also coined the so-called “bicycle model", where the founder family (more specifically, Shardul and Cyril) represented each of the wheels of a metaphorical bicycle that drives the firm forward, with the rest of the partnership being the frame of the bicycle that holds it all together.

“I don’t want to use the words ‘two wheels of bicycle’ (anymore), because that expression has become a bit dented," said Cyril about it now.

And while CAM’s partnership model is not outwardly very different from the previous one, Cyril’s approach to management now is trying to be more race-car than bicycle.

Behind a single leader

Cyril floated a tender and eventually took the help of a London-based international law firm, which is among the top 20 globally by revenue, to draft the new partnership deed and structure.

“We actually want to call it a partnership between the founder family and the non-founder partners," said Cyril. “We got a Ferrari of partnership deeds in an Indian context. It’s truly innovative and BCG also did a review of the work that the law firm did, and they all said it was fair, top-notch (and) suited to us, to the international environment and could last a long time. The deed was co-created with many of the partners. All present and future partners commented on the deed in a thoroughly transparent and rigorous process."

He said he wanted “a true meritocracy where the best can come and make a career for themselves".

The pre-split Shroff family—as emerged from court filings during the litigation between the brothers—held 65% of the equity of the old AMSS firm.

That figure was now lower, said Cyril, because there are fewer family member partners in CAM. The family still held a majority but its equity stake would decrease. “We are going to transition for one year to figure out how post-split profitability levels are," he explained, “but the family is committed to go down, if necessary, even below 51%."

“I think we will," he added.

Around a third of the 91 partners who will be at CAM will hold the non-family equity on a modified lockstep-style structure where profit shares are broadly apportioned by seniority but then modified by a number of other factors, including a new 360-degree appraisal mechanism.

Getting the partnership structure right is important to attract and retain talent, and particularly tricky if more than half of a firm’s profits are locked up with the family. But the management side has seen a paradigm shift that could prove to be even more significant.

One of the erstwhile AMSS’s biggest cracks, which required constant papering over to the outside world, was the rift between the Delhi and Mumbai offices, which extended to more than just filial rivalry. Complex management structures were created to ensure that disagreements between the two brothers would not end in a management deadlock or worse.

In hindsight, even those safeguards and months of fevered attempts at internal mediation within the management committee, made up of non-family partners and independent outsiders, proved to be insufficient.

Even more worryingly, while the Delhi and Mumbai regions were outwardly united under the AMSS umbrella, both practically functioned semi-independently of each other, even sometimes competing for the same work.

“It was really two firms running," admitted Cyril. “This is going to be one everything."

Administratively, all functions such as human resources, technology and knowledge management are now united on a national level at CAM (“I think it not only brings a lot of cost savings but also consistency in management").

That also goes for the firm’s practice areas, which will be managed and headed nationally by partners and practice heads, while all CAM offices and five linked partnership vehicles will maintain a single profit and loss account. “We’ll do billing also from one office so we don’t want to create competition between offices," said Cyril. “We want it to function like a location-agnostic firm. It’s the opposite of what has been happening."

One feature that crops up over and over again when talking about CAM is that, in Cyril’s words, “it’s a single-leader model" where “leadership of the firm is currently only me".

Strong and undisputed leadership can be as appealing in law firms as in captaining a 100,000 tonne oil tanker: both are notoriously difficult to steer and at risk of piracy and mutiny.

On the flip side, non-elected leadership carries the risk of alienating the more vocal and independent partners as a firm grows (one insider said that at least Shardul and Cyril acted as a check and balance on each other’s power).

Cyril argued that “quick decision-making" and “consistency" of culture (in light of CAM’s massive lateral hiring and expansion plans) are the two biggest draws in the single-leader model. “I can have the same DNA across the firm... you need to set… the culture properly."

Nevertheless, around 14 different committees, ranging from recruitment, remuneration, planning to screening panels of non-family partners will assist in the day-to-day running of the firm.

The Cyril-centric model also precludes achieving his ambitious growth targets—1,000 lawyers by 2018—inorganically. “If I do a merger with any top-10 firm, I’ll achieve it overnight but it comes with too many complications: matching profitability levels, which is always a challenge, and the second thing is this has to be a single-leader, single-vision firm."

“I don’t want multiple cultures, sub-cultures in the firm. And frankly unless there was another Cyril Shroff, I won’t do it," he said, laughing. “Even if I wanted a merger, my partners would thoroughly reject it. (It’s) not worth the trouble."

It’s nearly impossible that the next 10 years will be entirely trouble-free for Cyril. But compared with the trials the family has faced, perhaps the word ‘trouble’ has been redefined.

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