Exclusive: Almost half of a sample of India’s fastest growing companies still relied on domestic law firms to introduce them to foreign law firms, according to a report.
Sustained marketing from foreign law firms to India’s fastest growing companies yields instructions but 85 per cent still relied on domestic referrals to introduce them to non-Indian law firms, according to research by RSG Consulting, with almost half going by Indian law firms’ recommendations.
London-based RSG interviewed legal decision makers at 20 out of India’s 350 fastest-growing companies, of which 40 per cent said that foreign law firm instructions were the direct result of a referral made by an Indian law firm or its international referral network. One head of legal at a mid-sized media company even told RSG that he only knew of those foreign firms with tie-ups with Indian law firms.
A total of 85 per cent of the sample said that they relied on domestic intermediaries such as auditors, court advocates, investment bankers, entrepreneurial networks, trade bodies, other Indian businesses and Indian law firms to pick their overseas legal advisers.
The financial controller at an $800m public company told RSG that they were “not very familiar with the practices of foreign firms”. “When we do a deal we speak to other Indian companies and ask for their experiences and make the decision based on that.”
According to RSG’s findings, some of the youngest companies had not have any exposure to foreign firms. Chairman of five-year-old BPO provider Desicrew Solutions Rajiv Kuchhal said: “If and when we need to appoint foreign lawyers, we will ask for a reference. But it’s no good asking the same small businesses we go to for Indian law firm references. We will go to companies with international experience… or trade bodies such as Nasscom or UK Trade & Investment in India.”
However, according to some interview subjects, consistent face time and long-term efforts could yield profits for foreign firms. Sivaram Nair, who is the senior vice president, company secretary and general counsel at technology and BPO provider MphasiS, said that the company had instructed a UK law firm on the back of sustained marketing: “I was introduced to them at a conference and I saw a lot of proactivity in them. I didn’t use them for the first two years but they were always on the radar, updating me on the European market and meeting me when they were in town. I have been using them now for three years.”
Average growth rates of the 350 fastest-growing companies were 99 per cent, between 2009 and 2010, with an average revenue of $422m with 228 being listed publicly and 15 having floated on foreign stock exchanges.
Of those only 10 per cent had business operations in the UK followed by continental Europe with 9 per cent, but the most important jurisdiction outside of India for them was the US, Asia and the Middle East where between 19, 14 and 11 per cent had offices respectively.
RSG executive officer Yasmin Lambert said: “With an average turnover of half a billion dollars, most of these companies only have a listing in India but over a third already have operations abroad. These clients do not have established loyalties to foreign law firms as yet so represent a great opportunity for foreign law firms to get in at the ground level.”