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In an especially challenging year, India Business Law Journal’s annual market survey gauges the mood of the country’s lawyers and the health of the legal profession. Gautam Kagalwala reports
As the effects of the first wave of the pandemic were beginning to subside, Indian law firms were making plans to return to the old ways of working. But with the onslaught of the second wave, everything changed. Many lawyers caught the virus themselves. Medicines, hospital beds and oxygen cylinders were in short supply. Countless appeals for relief were made on social media.
The economy faced a slowdown and activity in sectors such as aviation, real estate, entertainment and hospitality came to a standstill due to curbs on travel.
“Covid-19 has fundamentally changed the legal, economic and social order,” says Sameer Jain, the managing partner of PSL Advocates & Solicitors in New Delhi.
But demand for legal services exists in times of adversity as well as growth, and when considering the impact of the pandemic on the business of law, lawyers could view the scenario as a glass half empty or half full. Our annual survey of the prevailing sentiments in India’s legal profession is based on detailed responses provided by 63 law firms of all shapes and sizes, including DSK Legal, Fox Mandal & Associates, Hammurabi & Solomon Partners, IC Universal Legal, Inttl Advocare, J Sagar Associates, Majmudar & Partners, Mulla & Mulla & Craigie Blunt & Caroe, Obhan & Associates, Pier Counsel, Samvad Partners, Singhania & Partners and many others.
We asked them about the impact of covid-19 on working arrangements, revenue, profitability, business outlook and other key issues.
“Economic downturns do not directly translate into a decline for transactional practices,” says Meenakshi Acharya, the founding partner at RMA Legal in Mumbai. “Market difficulties, regulatory responses, stimulus programmes, changes in employment and other stressors provide potential sources of demand for legal services.”
Shantanu Mukherjee, the managing partner at Ronin Legal in Mumbai, says many firms have reduced operating costs and increased profitability significantly as they have “moved away from physical offices and associated costs, renegotiated rents and even moved to cheaper offices”.
Mukherjee’s firm focuses on healthcare and life sciences, and has been busy addressing the increased demand seen in this area on account of the pandemic.
IP firm LexOrbis has seen an increase in litigation around trademark infringement and domain name disputes due to counterfeiting reaching an all-time high with the increase in e-commerce activity. The law firm has also observed an increased workload for patent-related processes from the pharma industry.
LexOrbis took a decision not to cut pay or lay off staff while the pandemic raged. “We provided financial support for covid-19 treatment and two weeks of paid sick leave to employees if they or any of their family members were infected or recovering,” says Manisha Singh, the firm’s managing partner.
The second wave of the pandemic forced law firms to adopt a 100% remote means of working, with staff needing to be provided computer systems for their homes. Employers in India have been traditionally reticent to let staff work from home over concerns of supervision and data security.
This attitude was captured in surveys, with one released by job website Indeed in early 2021 finding that 59% of 600 employers were not in favour of working from home. For law firms, often working with confidential information, the idea of working remotely was also impractical.
“Issues of confidentiality, teamwork and cohesiveness in delivery had never allowed the work-from-home concept to be implemented, except for work at weekends,” says Seema Jhingan, a partner at LexCounsel in New Delhi.
However, the pandemic swiftly changed these attitudes, and out of 63 law firms surveyed, 59% of them said they would continue to offer some flexible working arrangements to their lawyers even after the pandemic ends (see graphic above). Eleven percent of firms said their lawyers could work from home full-time, while just 13% said they would make it mandatory for their lawyers to work in the office all the time.
Working from home was a big adjustment for LexCounsel, says Jhingan. The firm went from viewing it as an unacceptable and unthinkable concept to encouraging its lawyers to have video calls through Zoom or Microsoft Teams in place of face-to-face meetings. The firm’s lawyers resumed working from offices from mid-June, as the second wave receded.
Rodney Ryder, the founding partner at Scriboard in New Delhi, says his clients were supportive of having virtual meetings. “As a law firm specialising in information technology law, we always knew we had to be at the forefront in terms of technological advancement and adaptation,” he says.
Deepak Joyce, the founder of JoyceLaw in Gurugram, also observes that clients and law firms were able to widely adopt remote working. “The earlier inhibitions around remote working and virtual engagement have largely disappeared and we feel that it has led to easier collaboration between teams and organisations,” he says.
Lawyers at Fox Mandal & Associates took the decision to return to the office after the first wave of the pandemic and then went back to working from home once the second wave came. “The chequered working scenario has been quite toilsome on our employees’ overall wellbeing and effectiveness,” admits Shuva Mandal, the firm’s managing partner in Mumbai.
But the inability to travel and have face-to-face meetings did not hamper the firm’s client relationship management and visibility efforts. “Our efforts in digital marketing were substantial even prior to the pandemic,” says Mandal. “Nevertheless, with everyone moving online, our initiatives appeared more effective and we continued our content creation activities including blogs, publications and webinars.”
Juris Corp also deployed digital and emerging technologies to streamline and improve the way work is carried out, as well as performing a wide number of interactions, including face-to-face interactions, client meetings, team meetings, internal presentations and events. The firm observes that reduced physical interactions have given rise to e-stamping and e-contracts, and it has been educating clients on the mechanics and legality of e-stamping through presentations and live virtual assistance in transactions.
“E-stamping has been a boon to the financial sector and eased the process of execution of documents,” says H Jayesh, the founder of Juris Corp in Mumbai. “The way business is done has evolved with the evolution of technology, and e-stamping and e-contracts will change the way business will be done in the coming years.”
MENTAL HEALTH CONCERNS
In addition to the impact of covid-19 on physical health, the virus has also taken a mental toll on lawyers who have had to deal with personal loss, uncertainty and long periods of enforced confinement, in addition to novel pressures from the job.
“By force of habit, physical and mental health is something lawyers tend to ignore and, in many cases, take completely for granted,” says Tania Ahlawat, the co-managing partner at Ahlawat & Associates in New Delhi. “Covid affected everyone’s life globally, directly and indirectly. It was a rude wake-up call for us to re-evaluate our priorities – not just as a professional but also as a community.”
Ahlawat’s firm encouraged its lawyers to work smart and seek a balanced life, prioritising mental and physical health as much as work.
At DGS Associates, a firm that focuses on international trade, work almost came to a halt during the height of the pandemic as the firm’s lawyers were occupied with providing assistance to friends, family and colleagues.
Its resources were channelled towards relief, which took a toll on the firm. “I do not believe that anyone has been left untouched by the tragic events that unfolded,” says Ameeta Verma Duggal, the managing partner at DGS Associates in New Delhi.
Working from home has been the biggest change for the firm, and Duggal introduced a strict “no work on weekends” policy to safeguard her lawyers’ mental health.
Almost every member at Obhan & Associates was affected by the second wave and needed to take some time off to source oxygen, hospital beds and medicines for family and friends. With an emphasis on mental health, the firm hired a long-term rental property in the hills for its members.
“Members were encouraged to go with their families and disconnect from work completely,” says Ashima Obhan, a partner at the firm in New Delhi. “We can see that this has led to a boost in morale and happiness,” she says.
Veritas Legal also focused on the mental health of its lawyers. “We circulated medical questionnaires internally to keep track of everyone’s health and needs, and conducted a webinar led by doctors to guide team members in developing resilience strategies for coping in these challenging times,” says Abhijit Joshi, the firm’s managing partner, based in Mumbai. The firm also arranged for free counselling for firm members and their families to deal with stress or personal disturbances owing to the pandemic.
The pandemic naturally took its toll on law firm revenue, particularly in the early stages, when lawyers were not equipped or mentally prepared to work from home. Ryder, at Scriboard, saw clients put non-critical matters and action plans on hold indefinitely due to the onset of the second wave and resulting economic impact.
“There was a sharp decline in work during the second wave in India,” he says. “Since many of our clients’ businesses had been affected, this in turn is reflected in the amount of work assigned to us.”
However, most of the lawyers who took part in our survey were optimistic about revenue growth in the current financial year, with 59% projecting an increase. Just 13% expected revenues to decrease (see graphic below). In terms of the size of the increase, the most popular view among our respondents was that law firm revenues would rise by up to 25%.
“We have been able to rejig ourselves and understand and accept that this is a new normal,” says Srinivas Kotni, the founder and managing partner at Lexport in New Delhi, who has a positive outlook and says the change in strategy has led him to expect growth in revenue.
Ahlawat, at Ahlawat & Associates, has an even more optimistic outlook, and says her firm is expecting its revenue to grow by “almost 40-50%” this financial year. “The primary reason for this has been because of the relationship we have built with our clients,” she says. Ahlawat attributes this to being there to address her clients’ requests during the pandemic. “This has not just helped us retain clients, but increase our workload now that [companies] have recovered from the effects of the pandemic.”
Pushkar Thakur, the managing partner at Corrida Legal in Gurugram, agrees, and says: “Slowly the corporates are getting back on track, undertaking fresh transactions and expediting the recoveries.”
Most of the lawyers surveyed were confident that revenue growth would drop to the bottom line and translate into increased law firm profitability. Of the surveyed law firms, 49% projected higher profitability this financial year than the previous one, while 42% said profitability would be about the same (see graphic above). The reasons cited for greater profitability were increased resilience to working during the pandemic and law firms becoming accustomed to the “new normal”. Lawyers also said that, unlike litigation, which had stalled due to courts being closed, corporate matters and deals were deferred rather than discontinued.
“Pandemic preparedness was almost nil during the financial year of 2020-21 … that phase was all about surviving,” says Singh at LexOrbis. “2021-22 will see firms that have successfully adapted to the new working environment. As a result, businesses will see a bounce back.”
FEES UNDER PRESSURE
Have expectations of increasing revenues and profits given law firms the confidence to raise their billing rates? Perhaps not just yet.
Of the law firms surveyed, 65% said they planned to freeze their hourly billing rates in the current financial year. Just 23% of firms said they planned to increase their fees, and only 6% were planning to hike their fees by more than 25% (see graphic below). The main reason cited for the freeze in billing rates was understandably the pandemic.
“Clients are super sensitive to hourly rates and any increase in this regard,” says Jhingan at LexCounsel, who does not intend to increase rates during the pandemic. “Many clients want a hybrid model of initial lumpsum estimation with the spill over work [charged] on an hourly basis.”
Duggal, at DGS Associates, shares this view and says: “We do not believe that this would be the right time to increase our billing rates.”
Shuva Mandal at Fox Mandal & Associates says the hourly rates of his firm dropped significantly with a corresponding increase in client demands. “There was a sentiment that since attorneys are working from home, there would be quicker response and availability would be around the clock,” says Mandal, echoing Ahlawat’s earlier views of firms needing to deliver, come rain or shine.
The number of court hearings was significantly reduced due to covid-19, which had an obvious impact on litigation. But disputes lawyers reported having their hands full with matters pertaining to force majeure and the frustration of contracts, as clients opted for the alternate dispute resolution route to settle grievances.
While the number of court hearings plummeted, judges and other participants in the legal system were fast to move to online hearings. It is expected that this practice will continue in the post-pandemic period, as lawyers reap the benefits of less travel and the ability to appear in different courts in different cities on the same day.
“Virtual court hearings and document submissions were unthinkable before the pandemic,” says Ravi Singhania, the managing partner at Singhania & Partners in New Delhi. “But the Indian legal industry and clients have adapted to it like fish to water. This has led to improved efficiency for a lot of procedural activities in litigation and arbitration.”
Jain, at PSL Advocates, says dispute resolution is the one practice area that has helped his firm and others to grow during the global health crisis. “The arbitration community has unwaveringly adapted to changes in technology,” he says. “For instance, it is a fairly common practice for the arbitral institutions to hold the cases via video-conferencing for a speedy dispute resolution mechanism. This has made it easier for us to keep going when the courts demanded a sudden change in their functioning.”
Rajesh Ramanathan, a partner at Factum Law in Chennai, agrees. “Virtual hearings have a huge impact for reducing costs and expenses for all litigants, and assists the lawyers and the judges to plan their work more efficiently,” he says.
Acharya, at RMA, also observes that clients in the past year have become increasingly open to holding arbitrations via a video call.
“The online dispute resolution method is able to settle the cases in less than 30 days with values up to INR2 million (US$27,000), which is largely streamlined, and will probably continue to see a rise in popularity even after the pandemic.”
Finally, when asked about their business sentiment for the rest of the financial year, India’s lawyers demonstrated a “glass half-full” attitude, with 38% of respondents saying they were optimistic, and 55% saying they were very optimistic. Just 2% had a pessimistic outlook, and none of our respondents reported being very pessimistic (see graphic below).
“Increased vaccination efforts and better pandemic preparedness can see a boost in India’s legal market,” says Singh at LexOrbis. “The uncertainty lingers, but we are hopeful of better days ahead.”