The 2009-10 Union Budget received a frosty reaction from the business community this week: investors reacted by selling and lawyers reacted by doing what they do best: threatening to file law suits and, err, going on strike.
Most lawyers were displeased that the Finance Minister decided to tax lawyers' fees. Once the budget is passed law firms will officially be deemed to be providing a "service" to clients. Some clients may beg to differ on that point, especially if paying 10 per cent more for the same "service" they were receiving earlier.
But arguably lawyers' exemption from service tax has long been an anomaly, which was sustained in no small part through lobbying and the marketing of law as a profession - and a "noble" one at that.
This could explain why many of the bar's brethren will be exempt from the tax. But it explains less well why the Delhi and Lucknow bars have gone on strike over the issue.
They could be showing solidarity for corporate law firms in a year that has not been easy. Mergermarket's deal figures show M&A deal volumes in the last six months down by 62 per cent against the same period in 2008.
But lawyers are an indomitable lot as a handful of firms still managed to tally up respectable deal volumes, with Desai & Diwanji, Khaitan & Co, AZB and Amarchand leading the charge. Most foreign firms, by contrast, have lost visibility.
And some hot deals are continuing to take place: AZB and Kanga have found themselves in the middle of a hostile takeover battle for oilfield services company Great Offshore.
And at the end of the day, the budget provided law firms with another green shoot: the tax rules on LLPs are now clear and favourable. The only real stumbling blocks remain the Bar Council's approval and the willingness of law firms to disclose their profits to the world at large, rather than just family members and the tax man.
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