When lawyers take on lawyers: five of the biggest law firm partnership battles10 min read . Updated: 10 Feb 2015, 08:48 AM IST
When lawyers go to court against each other, it's usually far too late to mend any bridges between them
New Delhi: With the managing partners of Amarchand and Mangaldas and Suresh A Shroff and Co. engaged in settlement talks, following a lawsuit over a family inheritance and control of the firm, we took a closer look at some Indian lawyers who have sued other lawyers (mintne.ws/1xZBZYg).
Law firms break apart all the time but ironically, lawyers don’t end up suing each other often. When they do, they usually try to keep it as quiet as possible to avoid what most in the profession would see as attention of an undesirable kind. Or perhaps, being lawyers, they know how ineffective and slow-moving the legal process can be, particularly when you have two sides with nearly inexhaustible legal resources and their own reputations at stake.
So, when lawyers do go to court against each other, it’s usually far too late to mend any bridges between them and it is guaranteed to send tongues in (and sometimes outside) the legal profession wagging.
The future looked bright for FoxMandal Little after the 2006 merger of old Kolkata-now-national firm Fox Mandal with Little and Co., a Bombay solicitors’ firm with an illustrious history.
FML, as it called itself, was rapidly becoming one of the most well-known Indian law firms, particularly abroad, due to the efforts of Som Mandal, its ambitious and enigmatic figurehead. He single-handedly tried to remould FML from a traditional Kolkata firm into an international legal powerhouse, opening offices all over India and in London, ballooning its headcount and pushing hard at entering the top bracket by offering top-tier salaries and showcasing slick marketing.
However, FML came crashing down almost as quickly as it rose.
As Legally India first reported in 2010 (mintne.ws/16JNL1V), a cashflow crunch meant FML’s Delhi office was unable to pay associate and partner salaries, kicking off a downward spiral of partner and fee-earner defections, a sale and leaseback of office space, lower recoveries, and yet more partner defections, as reported in Mint in 2011 (bit.ly/1af7Vvh).
All this was clearly more than the staunchly conservative Little and Co. partners felt they had bargained for. The dispute ended up in arbitration between the two, with the Little partners ultimately agreeing to buy out Som Mandal and go their separate ways again. (mintne.ws/1IC0wwU).
For a while, JB Dadachanji and Co. was pretty much the go-to corporate law firm in Delhi. But one day, it all kind of fell apart.
The firm itself was an offshoot of one of independent India’s first Delhi-based law firms, Rajinder Narain and Co. (RNC Legal). When its founder Rajinder Narain retired, his son Ravinder Narain was too young for a partnership in the firm and therefore he passed on the mantle to RNC Legal partner J.B. Dadachanji. Dadachanji executed the JB Dadachanji partnership deed with O.C. Mathur and Anjali Verma as partners in this firm.
When in 1979, a new deed of partnership was executed between Dadachanji, Mathur and Ravinder Narain to form JB Dadachanji Ravinder Narain Mathur and Co., a number of other lawyers such as Ashok Sagar, Dinesh Mathur and S. Sukumaran were non-partner retainers in this new firm.
Former Supreme Court judge A.K. Ganguly, who was not a judge at the time, was a counsel with the new firm back then.
In 2000, one of the three partners of the new firm disputed whether the other two’s shares in the partnership’s profits were justifiable, claiming that he was the only one bringing in any significant billings to the firm.
The partnership deed of the new firm contained an arbitration clause that appointed S.P. Mehta, Fali Nariman and Soli Sorabjee as alternate sole arbitrators (in that order) to arbitrate on the firm’s partnership disputes, with the JB Dadanchanji and Co. deed containing a similar arbitration clause with different arbitrators.
Relying on this clause, Dadachanji moved the Delhi high court that year praying for the appointment of an arbitrator to resolve the dispute.
Dadachanji also simultaneously filed an application under the Arbitration and Conciliation Act 1996 to appoint a receiver to take control of the firm’s assets and properties, alleging that one of the partners in the new firm had fraudulently tried to modify the deed of JB Dadachanji and Co. in his favour.
Following Dadachanji’s motion, Ravinder Narain moved court to dissolve the two firms, to render accounts and restrain Dadachanji and Mathur from withdrawing any cash from any of the two firms.
Mathur in turn filed an affidavit in court seeking the appointment of an arbitrator, whereas Dadachanji filed an additional affidavit stating that neither would he support dissolution of the two firms, nor would he press for the appointment of a receiver as he had earlier asked the court for.
On 9 July 2002, justice D.K. Jain of Delhi high court appointed former chief justice of India A.S. Anand as the sole arbitrator to resolve the disputes arising between Dadachanji, Narain and Mathur, out of the partnership deeds of both the old as well as the new firm. However, within six months of this appointment, before the arbitration could be initiated, O.C. Mathur died.
After Mathur’s death, the arbitration was not pursued and in the next few months most of the firm’s lawyers left . This included nine associates in addition to Verma, Sagar, Sukumaran, Mathur’s son Dinesh Mathur and Ganguly.
Ravinder Narain established his own firm again, by the old name of Rajinder Narain and Co., and Sagar joined Narain’s firm; Mathur joined Dua Associates; Sukumaran and Verma went on to practice independently.
Dadachanji eventually died in 2007. And so the legendary Delhi solicitors’ firm, which gave birth to the careers of stalwarts such as Harish Salve, came to an end.
One ex-Dadachanji staffer commented, speaking on condition of anonymity: “One positive which I see from this situation—India’s largest law firm, it had everything going for it in terms of infrastructure and involvement, and now it is no more—is that people who joined at that point of time have done very well. They got a lot of exposure. All of them raised the bar. People got to work on matters they would have otherwise got only after five to six years of experience. They went on to set up their own firms."
Citation: J.B. Dadachanji vs Ravinder Narain And Anr. on 9 July 2002 (mintne.ws/16JUVmK)
Seven years later, when Jhingan, Adebare and two other Titus lawyers, Alishan Naqvee and Dimpy Mohanty, left Titus to set up LexCounsel, Titus filed a criminal complaint against them under the Information Technology Act, 2000, for alleged data theft.
Titus alleged that the four were criminally liable for stealing “various proprietary drafts of precedents, agreements, forms, presentation, petitions, confidential documents, legal opinions, legal action plans, computerized database containing client information, proprietary client list, proprietary potential client list and other related information" from a computer in his law firm’s office.
According to the judgment in the case: “Just a couple of days before leaving [Titus], [Adebare] is stated to have visited the office of [Titus] after office hours and requested the security guard to allow him to enter the office on the pretext of downloading some information from the computer for a project handled by him. The guard had no reason not to permit [Adebare] to enter [Titus’] office, who brought a CD-Writer with him and connected the same to the computer in [Titus’] office, which was inter connected with [Titus’] Local Area Network (LAN) with Windows Server having 7.2 GB of data. Thus, all the confidential information was copied using the CD-Writer."
The four LexCounsel founders in turn filed a counter claim against Titus in the Delhi high court, challenging his copyright to the allegedly stolen data, based on the ground that, as partners and not employees of Titus and Co., they had as much propriety over the data as Titus. They also filed an anticipatory bail petition and were granted bail by the Delhi high court on a personal bond of ₹ 1,00,000 and a surety of ₹ 1,00,000 each, reported Tehelka at the time (mintne.ws/172FF5f).
Delhi high court judge Sanjay Kishan Kaul, on 8 May 2006, restrained Jhingan, Adebare, Naqvee and Mohanty from using Titus’ data for their own benefit or disseminating or exploiting it in any other way.
Kaul ruled that they were not partners in Titus and Co. but were employees of the firm, getting their salaries as a fixed percentage of clients’ fees, having had no written partnership arrangement with Titus, maintaining time sheets in the name of the firm and not in their own name, and going through no legal separation of assets at the time of exiting from the firm.
“As an advocate or a law firm develops its work and relationship with other law firms or clients, the details about the particular persons in such law firms handling certain nature of work or as to which officer in a client company is material for getting the work becomes of great importance. Such a list is of great importance to an advocate or a law firm. The mere fact that defendants would have done work for such clients while being associated with the plaintiff would not give them the right to reproduce the list and take it away," wrote justice Kaul in his judgment.
Titus and Co and LexCounsel are still around and independent.
Citation: Mr Diljeet Titus, Advocate versus Mr Alfred A Adebare and Ors (mintne.ws/1xX10SU)
Rohit Kochhar, managing partner and founder of Kochhar and Co., was not happy and went after Chawla in the Delhi high court claiming that she took the firm’s client contacts and database. Chawla argued that she had a right to the data, and promptly counter-sued, seeking the partnership monies that she claimed were due, as well as the right to use the data and contact her clients.
As the case dragged on amid further complaints and counter-complaints, Chawla, with three Trilegal non-equity partners, set up Phoenix Legal in 2008.
The dispute eventually came to the attention of then-Delhi high court chief justice A.P. Shah, who clearly wanted the feuding lawyers out of his courtroom, and encouraged them to settle.
On 8 February 2010, they finally did settle and Shah and justice Rajiv Sahai Endlaw ruled, in order to “put a quietus to all rival contentions", that Chawla would delete all emails in her possession from her time at Kochhar and Co. and the bench then sent off the lawyers with the order not to “defame each other" and that no one “owned" any clients.
Kochhar and Co. and Phoenix Legal are both in good health.
Gagrats and Co. was another of those old school Bombay firms, where none other than former Supreme Court chief justice S.H. Kapadia started his illustrious legal career. Gagrats was a firm at the right place at the right time and grew big as India’s economy liberalized.
In 2005, that growth ended abruptly, over a dispute around equity and ownership in the firm.
Eleven of 13 Gagrat and Co. partners defected to form Vigil Juris, leaving behind the father and son duo, of J.R. Gagrat and Rustam Gagrat. The Vigil partners had a number of complaints, including the allegation that the Gagrats were basically hogging and fudging the profits of the firm.
J.R. Gagrat, in turn, told the Times of India on 13 April 2005 that he told them to leave because of his 11 former partners’ poor performance (which the Vigil lot obviously denied) and that he was “compelled to dissolve the firm because I had no other option" (mintne.ws/191SjCl).
They ended up in the Bombay high court, with senior counsel Iqbal Chagla appearing for Gagrats, and Rajni Iyer acting for the Vigil partners.
Chagla had claimed that the Gagrats brought in 48% of the net income, while the partners who left contributed “negligible amounts". Iyer argued that clients’ interests should be protected first and foremost and that client files should be safeguarded.
When Gagrats and Co. was dissolved, the father and son reformed it as boutique aviation firm Gagrats and Partners, which was later rebranded simply as Gagrats.
Vigil Juris continues as an eight-partner litigation and corporate firm in Mumbai that has kept an intentionally low media profile.
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