Cyril Amarchand Mangaldas (CAM) has significantly underbid competitors Shardul Amarchand Mangaldas (SAM) and Luthra & Luthra to win the final rounds of blind bidding for the mammoth strategic
It is understood that the next highest bids in the final round were in the crores - around Rs 3.5 crores ($539,400) in Luthra’s case, and around Rs 1.5 crores ($231,000) in Shardul Amarchand’s case, according to authoritative sources.
That would mean Cyril Amarchand had bid fees that were respectively 12 and 5 times lower than Luthra and SAM to win the mandate.
One lawyer we spoke to privately doubted that CAM’s quoted fees would even cover lawyers’ salaries on what is expected to be a complex deal, probably requiring partner resources and several fee-earners working full-time for up to 10 months.
We have reached out to Cyril Amarchand for comment earlier today.
The three law firms had qualified for the final round of the disinvestment of the debt-ridden national carrier after the first stage of tenders that assesses on technical skills, which had also seen Crawford Bayley, ALMT Legal, Trilegal and Hammurabi & Solomon throw their hat in the ring, as we had re-reported from a PTI report yesterday.
Air India has debts of over Rs 50,000 crores, with the government looking to sell off the flag carrier and five or more subsidiaries, such as ground luggage handling and others, to private companies.
Consultancy firm EY and investment bank Rothschild also won the bidding process, quoting 0.2 per cent of the total transaction fees, according to the Business Standard.
In 2010 we had reported in Bloomberg on the new tendering process for disinvestments, which introduced the initial technical tendering stage (assessing firms pitches on technical skill, experience and capacity to deliver the work), followed by a stage where shortlisted firms were selected on the basis of the lowest fees (the so-called L1 principle).
In 2010, Luthra & Luthra and DLA Piper had jointly won the bids to handle the capital markets disinvestments of Engineers India for Rs 136 lakh and in Coal India for even less than that - both far below what law firms would charge most private companies.
The reason the government has been able to get such heavy discounts on legal services is manyfold: some may feel that the prestige and experience of these marquee mandates could offset the money lost (or not earned), or that the client and government relationships that can be groomed in such mandates will be worth it in the longer run.
The government's job in managing such low-paid legal work will be to ensure that the law firms continue fielding sufficient resources and partner time in the mandates, even if it may not be financially lucrative for them.
Update 1 November 2017, 15:23: Bar & Bench has reported the technical scores given by the government for a number of law firms in the bid, out of 100 (the cut-off to proceed to the final bidding round being 80):
Crawford Bayley & Co 78
Cyril Amarchand Mangaldas 89
Hammurabi & Solomon Partners 63
Luthra & Luthra 94
Shardul Amarchand Mangaldas 91
Trilegal 79
This news was first reported via WhatsApp to Legally India subscribers on Saturday. To hear about exclusive market information first, please sign up below.
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good luck to all working on this. billing isn't everything.
Btw who will do this transaction for them.. bombay and Bangalore office ? The flight ticket to Delhi will be more than 30l by end of it. Winter has come.
smartinvestor.business-standard.com/pf/Pfnews-492249-Pfnewsdet-EY_Rothschild_and_Cyril_Amarchand_to_advise_on_Air_India_privatisation.htm#.Wfa-_VuCzIU
If someone has any information or thoughts on this report, please do share.
Only way to get work?
its not even 30lacs. 29.90.
But it would be a good experience for the Associates.
It also shows how desperate CAM were to bag the deal & were willing to reduce their usual steep fees, its a win-win situation for Air India.
CAM Delhi is doing remarkably well with steady growth on a y-o-y basis and we'll only do better in the future.
1. Deal size will propel CAM in every deal talley, and also help with ratings at Chambers etc.
2. It keeps associates busy - who otherwise may not be gainfully employed.
3. No work and still have to pay associates v. lot of work at low fee, but with added benefits: No brainer for CAM!
- On behalf of L&L
It will be a huge due diligence exercise and one of the largest disinvestment in the country, I guess that even lawyers from Mumbai and Bangalore will be called for the same. By quoting Rs. 29.90 lakhs, CAM has lost its respect and is behaving like Tier III firm. Kaam ke liye kuchbhi. They still need to build their CV? Aren't they like the biggest and oldest (successor) firm in the country?
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