Exciting times for law firm evolution by Sonal Makhija | January 12, 2012
Originally published http://www.mylaw.net/Article/Exciting_times_for_law_firm_evolution/
Pingal Khan, the youngest partner at PXV Law Partners (“PXV”) spoke with myLaw.net in an interview via email. The first part of the interview, where he spoke of the environment that awaits lawyers who want to start their own practices, has been published here. The interview continues below where he discusses the market for Indian lawyers. PXV’s Bangalore office.
Sonal Makhija for myLaw.net (ML): Which Indian cities respond favourably to young law firms?
Pingal Khan (PK): For national-level law firms, it is always the usual places like Mumbai, Delhi, Bangalore, and Kolkata. However, amongst them, I would pick Bangalore, due to its general entrepreneurial culture and comparatively lower cost of establishment as the best place to start.
ML: Where is this law firm evolution leading? Will we see a Western-style legal market in the years to come?
PK: We are already seeing a lot of westernisation in the legal market. It started with the liberalisation of the Indian economy in the early 1990s. Going forward, some two or three top corporate law firms were established which mostly dominated the market. However, for the last five years, we have seen the market accommodating a lot of niche and aggressive law firms, apart from the big ones. Today, I believe there is a healthy competition in the market and we are going through very exciting times in terms of law firm evolution.
ML: Are large Indian law firms feeling the competition from niche, young law firms like yours?
PK: Like I mentioned, the market has space for both the giants as well as the niche young law firms. The client is much more open to changes and conscious of the quality of work. Just like in any liberalised set-up, there is competition, which is good for the Indian law market.
ML: What is the fee structure used by law firms? Do you see any trends towards standardisation in the industry on cost methodology?
PK: There can be hourly fee quotes, lump sum quotes, as well as blended rates. There can be an upper or lower cap on the quotes as well. As a firm, we offer different types of fee quotes depending on the nature of the matter. The market is the best determinant of the fee quotes and the biggest influencer of the cost methodology. It would always be dynamic and I do not see any long-term standardisation in this field.
ML: Would you agree that Indian law firms are veering towards the small and independent law firm model as opposed to the family model? If yes, what has led to this change?
PK: There is scope for both these models. And there can be large and non-family law firms as well. Family based business is a traditional trend in the Indian market and therefore, in the law firm market as well. The reason behind it is the level of trust and confidence that you can have over the management of the firm. In our case, while setting up PXV, our mutual trust came from our friendship from the law school days. However, neither family nor friendship should affect the transparency and fairness in the firm or its growth prospects. That is why I would like to give more stress on the values and ideals of the organisation rather than the individuals involved.
ML: How would you describe the current legal environment, especially from the perspective of a young firm like yours? Has there been any change in the demand for legal services?
PK: The demand for legal services has grown exponentially in the last few years, which gives a lot of firms the ability to survive and grow in this environment. Ultimately, for the client, it comes down to the quality of legal service offered and as long as any firm can keep that right, it would do well.
ML: Has the global financial crisis affected Indian law firms and if so, in what practice areas?
PK: The last global financial crisis of 2008-09 had a different impact on different practice areas. I would say capital market and F.D.I. were the worst hit, along with cross border mergers and acquisitions. However, dispute resolution remained strong and unaffected, thus absorbing the shock for many law firms who have a good dispute resolution practice.
ML: Do you see a shift in the billing model adopted by law firms in the current economic market?
PK: As mentioned earlier, the billing model would be definitely influenced by the market economics. However, I do not see scope for too much of change in that.
ML: The current legal environment demands greater use of technology. Indian law firms, however, seem slower to adopt the technological advancements. Comment.
PK: I would say that the younger and smaller law firms have adopted better to the technological advancements due to higher level of flexibility. It is comparatively more difficult for firms that have hundreds of lawyers and staff who have been used to working in a different environment for decades. The transition issue becomes greater for them and also lawyers as a community tend to be slightly more resistant to change world over.
ML: We have witnessed a shift in the in-house legal departments of corporations from the role of a company secretary to a legal counsel. Has this shift affected law firms? If so, how?
PK: Having an in-house lawyer in a client company, who has knowledge and understanding of the law, definitely makes the job of law firms easier when it comes to communication and explaining the legalities of every matter. However, there are companies who primarily focus on their core strength and rely completely on external legal advice. Therefore, our role depends on the specific requirements of our clients.
ML: Different parts of the legal profession complain about the gap between the products of legal education and the demands of industry. Are law firms doing enough to help reduce this gap?
PK: I agree when it is said that getting a law degree merely gives you the licence to learn. The real learning starts after one graduates. However, the internships offer law students the opportunity to learn the practice of law. We as a firm have been rather proactive in our attempt to close this gap. Many of our partners, including me, often go to law schools as guest lecturers. We train our prospective recruits during their mandatory internships with our firm so that they are in a better position to join us by the time they graduate. I must also take this opportunity to point out that I see a certain degree of social homogeneity in the pool of law students in India. I hope efforts like I.D.I.A. will help create greater social diversity in law schools in India, which will then automatically lead to greater human resources social diversity in the law firms. This is an important aspect as law is a profession focused on resolving concerns of society at large. Encouraging diversity would also increase the diversity and depth of Indian law firms.
ML: What has led to the current growth and clout of Indian law firms?
PK: It is difficult to point out any single reason for this growth. The liberalisation of the Indian economy, development of the service sector, and setting up of the national law universities would be some of the important factors that have contributed to the growth of the Indian law firms.
(To be concluded.)