While hourly rates continue to increase and add up, the quality of India’s legal advice unfortunately continues to spiral downwards. Affronted? Well, you should be.
From my now more fortunate vantage point of a senior in-house position, I believe I can look back at my law firm years with a good amount of insider know-how, as well as healthy detachment.
Therefore, allow me to relate; you can reflect and let me know whether you agree (and no, in-house is not where burnt-out lawyers go to die quietly).
In transactions, you typically use a precedent obtained while working with one of the (far superior) foreign law firms, change a few names, rework a few clauses (most likely the miscellaneous ones) and then charge a lot more than a few lakhs for it.
But that’s only for the first draft, mind you. The trick is to send an extremely one-sided first draft. Then spend a few months negotiating those one-sided provisions and circulating various iterations. And once you feel your team’s time spent has guaranteed a sizeable bonus, good sense suddenly dawns and it’s time for signing.
And if you’ve jeopardised the deal in the process, you throw our hands up and leave it to the “principals”. Or worse, blame the other side for being too daft and stubborn. I tend to exaggerate for effect – but believe me, there is more than just a little truth in this.
Diligences are easy. Round up all the interns and a few first year associates and send them to poke holes in a company that has been in business for over 20 years or so. And why levae this vital task to juniors? Because it is beneath a senior associate to be associated with a diligence, and no law firm would want to waste seniors’ precious billable hours on a diligence.
A senior associate will however review the report (without ever having accessed the data room). Some lose all their hair in the process. Many grow thick-skinned and throw it to the partner. If the partner catches on that the report has nothing but summaries of irrelevant facts (which is quite often the case), there’s no one really to blame.
But blame must be placed so a lesson can be learned and so the first years are called in and yelled at. No one really learns anything, but it’s the usual cycle involved with most diligences. The legal fees for all this (including time spent yelling at associates), is anywhere between 20-30 lakhs on average and often far more for the larger transactions.
In legal opinions, there are so many “may be” / “should be” references that the client has to set up various calls just to understand what in fact the opinion finally is.
And then there’s the new trend of sending out “memorandums” which largely have the same content as a legal opinion but are not as pricey. And partners feel they can sleep better at night if it’s just a memorandum. What legal opinions and memorandums both have in common though is the overly lengthy content, excessive references to statutes and case law and irrelevant annexures.
Then there’s the disclaimer – from capping liability to legal fees to excluding liability if statutory authorities adopt an entirely different interpretation.
And what really tips the scale is the partner in charge signing the opinion by simply writing down the law firm’s name. There is some debate on how this is technically the right way to issue a legal opinion as it is the firm that is issuing the opinion and not the partner.
Yes, that’s quite evident seeing as how it’s the firm’s letterhead and the firm’s name at the end of the opinion. So if you can’t sign your name despite all the careful language the opinion is couched in, why bother to issue one at all?
Another trend, which is now part and parcel of corporate law practice, is ridiculous timelines: timelines that clients demand that no one wants to rationalise with. Or worse, timelines that we ourselves promise just to look good.
Today, being available on a Sunday or at 2:00 am for a call is what defines a good lawyer and the quantum of your bonus. 3,000 billable hours = one big fat bonus. Quality of work however has somehow missed the bus. Probably because no one has enough locus to assess it.
Many times, you spend the entire day negotiating lengthy agreements, the entire night revising them and send them out by morning “subject to internal review”. The internal review rarely ever happens.
Often, because the partner believes his / her role is complete by flooding the associate’s inbox with 10 precedents and sending periodic chasers.
The associate’s work is complete by copy-pasting provisions from the precedents. And the junior associate is just someone who stays back to stare at the associate and the screen to watch copy-paste at its best - all in the name of “training”.
That’s if you’re lucky.
Most first year associates find it downright ridiculous to be expected to stay past 8:00 pm. They come dressed to kill, talk their ear off and all they can focus on is their SoP for their LLM. And that’s about it.
But can you really blame them? Who would want to sell their soul to this sorry state that law firms have been reduced to?
This is not some vicious cycle situation that can’t be stopped. If we could only stop to acknowledge what we’re doing, we can work to fix it. But no one wants to. “Let’s increase hourly rates instead,” the partners say. That’s a quicker fix.
In conclusion (as in a much-awaited ending to a legal opinion), this is not the case with all law firms and all lawyers. There are some truly brilliant lawyers in every law firm.
It’s just sad that they’re the exception and not the rule.
The author is currently an in-house head of legal after having spent many years at many leading Indian law firms.
Photo by Mike Poresky
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1. Most companies have to outsource legal work. “Legal Department” is a necessary evil and it makes no sense to have a huge budget allocation for recruiting good in-house lawyers at every level. Then,
to cover @$$ from regulatorsas a matter of policy, external counsel must be engaged for some risky work where there are no black-and-white solutions. Cost/budget wins over quality and the companies tend to go to cheap lawyers (unless it is a critical matter like a global acquisition or big litigation), who get them cheap results. In-house lawyers then blame every lawyer in the "law firm market" so that their bosses (especially head offices in the West) think it is a “jurisdiction issue” and India lacks good lawyers!2. Sometimes (maybe often?), the GC himself picks poor quality lawyers either to do favour to a friend, or to get a “cut”, or to minimize legal cost so that his performance (budget management) looks good and his bonus is better!
3. Many Indian law firms are “guilty as charged”. Big Tier 1 firms find it difficult to maintain quality across the board and hire some partners who are utter crap like retired regulatory/departmental personnel or some CA-turned-lawyer who wants to get of the CA practice. Then they have some historic junk that they somehow prefer to retain due to “loyalty” (in fact, quality lateral hires have to prove their loyalty before they are trusted). The firms do have great lawyers as well, but there is no consistency - Harvard educated lawyers and [fill name of shady university] educated lawyers are on the same team! Suave lawyers and lawyers-who-pick-their-teeth-at-client-meetings are also on the same team (often, it is the tooth-pickers who shout and add no value).
4. Getting a good team becomes a matter of luck if the client cannot do enough research or cannot be bothered to scrutinize CVs before engaging the lawyers. Truth is, most clients do not have the skill (sometimes, interest) to identify good lawyers or monitor their progress/performance. This is done in the West.
In a nutshell, if you want good lawyers (and compiling due diligence is the most basic legal work and there is much more complex work to be done), then pay top dollar, scrutinize CVs and monitor the progress.
Coming to the bull$hi+ about opinions and memos. I have worked in top law firms in various jurisdictions and also worked in house. No law firm in any jurisdiction gives a one page opinion that is black-and-white on every aspect. To help clients, there is an “executive summary”. In a company, “Business” wants “Legal” to say that there is no risk in doing something and “Legal” covers its @$$ by relying on an external opinion and complaining that it is vague. Truth is, law has grey areas (even our courts change their views e.g. whether shareholders’ agreement must be incorporated in the articles of association) but "Legal" cannot say that to “Business” if they want their bonus. Anyone who has worked in-house knows the business-legal tug-of-war. So just blame the law firm! A$$ covered, job done.
No doubt the big firms in NY, London, etc. are better than our big firms but India has enough great lawyers. Quality also got better with the NLUs. Then there are many lawyers who have studied and worked abroad as well. If in-house cannot find good lawyers, they need to be less lazy and work on engaging those lawyers. But wait, there is no budget to hire the good lawyers! So grapes are sour.
And therein lies the tale ladies and gentlemen. Maybe, in the case of the Anonymous GC, ignorance is bliss (because nobody can deny the facts I've stated).
Trust me... having been on both "sides" for many years and now as a senior transaction lawyer, I agree with both to a large extent.... ultimately business needs to be done and people need to cover their back sides (whether its the law firms or the in-house GC) to save their jobs..... if every thing was so black and white, you wont be needing lawyers, and if each job allowed the senior most persons in each team to be deputed, the legal bills would be a large percentage of the transaction value!
Nobody logs 3000 billable hours! Even brutal US firms set targets of 2100-2400.
Has our GC just written whatever s/he felt like and grossly exaggerated everything?
Dont confuse minimum targets that an associate has to achieve and bonus entitlement targets.
Are you in litigation? In that case 2,100 hours would be brutal in deed.
Clearly you became a lawyer after the recession started...
My limited point is, our GC has gone a bit overboard and has also taken a myophic view of things. His article needs to be read with a dose of reality and some other perspectives should be borne in mind. Bad mouthing other lawyers is not exactly a professional achievement for any lawyer.
I always wondered what caused the clients to pay exorbitant hourly billings, perhaps a stamp of the top tier law firm to show to the top management, investors and lenders. Originality is missing in most large corporate practices today. The focus is on billings and the targets fixed are akin to those fixed for marketing & sales professionals. In the process, hardly few care for originality of thought and research skills. Mechanized templates rule. DDs are left to junior associates, the seniors only assigned to reviewing the summaries. Sometimes, serious issues are buried with the fear that if raised the deal may break and the client may not pay for a failed transaction. Sad but true. Hope clients wake up. It is not the size of the firm or the foreign degrees that the associates possess matters. Effective and sustainable solutions is what actually counts in the long run.
the fact remains that most GCs simply give the work to the big name firms, without consideration of quality, just as a CYA measure... rarely does a GC step up and hire a good lawyer who is not associated with a big brand...
unfortunately, this blog flogs the same dead horse... repeats the same cliches and ends up being as vapid as the law firms portrayed in it...
valid point- the fact is that is a GC trusts his own abilities, understands his transaction and can limit the role of the law firm to things that they are good at doing- for example, rapid turn around time- ability to do standard documentation quickly etc. whilst he controls the overall process and keeps a lid on costs. Further this also gives the GC far more freedom to demand the attention of a particular partner and not have his matter relegated to faceless senior associates.
Finally there are experts outside the big brands, who can do certain transactions equally well (and sometimes better). A good GC should be able to identify the resources and have the confidence of being able to extract good work from them.
Unfortunately, most GCs limit themselves and let the law firms run amuck, It is also not unusual for a client's deal team to not have sufficient confidence in their own in-house legal.
Look I am not saying what is written above is incorrect. All of it is correct. Its just that the GC community needs to look inward as well, which is what I was hoping for in this article.
1. Choosing a good firm and partner is an art and not a science therefore it is very difficult to find a winning combination.
2. The best person to do the work is not always the partner but sometime or most of the times is the Senior Associate who actually does the work .
3. The ability of the GC to appoint the firm is also more often than not limited . This is for the reasons . I) the company or the parent company or the Group has an existing relationship may be for years and you cannot change it easily . ii) the managing partner of the firm is a friend of the promoter and therefore you cannot change the firm ( most important reason ) . iii) Going to one firm or the other makes very little difference they are almost all the same . iii) Even a good choice become bad when the associate dealing with the work moves out of the firm and the partner remains the same . iv) A good associate stops giving priority once he or she is confident that now you are convert client ( change of status from boyfriend to husband).
cheapreasonable rates - one must pay top dollar for top quality advice.Truth be told - snarkiness will get you nowhere. If money could buy me gold plated advice, my company would pay. As it stands, having used every major law firm in India, I have found that no firm can deliver premium value for premium rates. So why would I bother paying premium rates? Just so that you get your bonus?
Wow Kian, I didn't know you had so many years of experience behind you.
And to conclude i quote the author again "There are some truly brilliant lawyers in every law firm.It’s just sad that they’re the exception and not the rule."
If GCs were competent, law firms would be out of business. This is a GC's way of justifying why he/she couldn't make a partner in a law firm. Sour grapes.
Reminds me of my AMSS days..!
Most of the big Indian Law firms get work not because of their quality expertise and experience but for the following reasons :
1. The managing partner is a high flyer and knows the promoter or the GC.
2. Opinion and Due diligence from a big law firm is treated as an insurance by the in house community.
A new term has come about "business lawyers" . Such lawyers neither know business nor law and to my mind most dangerous both to law and business. They are not interested in facts or law they are interested in knowing what the business wants . I thinks with time this profession will mature . We have a long way to go........................
Now, how about we employ that same kinda benchmark to the in-house community? Would most Indian GCs fare any better than the Indian law firm partners when they are compared to their "western peers"? Do Indian GCs and in-housers add anywhere near as much value as their foreign counterparts do? What's your take? :-)
No Indian Lawyer or Law Firm would refuse work, no matter what his or her level of experience or expertise is in that field . That makes the difference you end up charging for research than expertise this makes them expensive and look bad .
It is little difficult for the same partner to be an expert in all fields . Indian lawyers and law firms should also learn to say no to work where they have no experience or expertise .
Ironical isn't it that you speak of partners of law firms not providing their names at the end of opinions and you haven't done so either. Not criticizing you. Just a thought that occurred to me.
- That is exactly what we do (inter alia) – stare at screens (at times, shop online while we are made to wait for reviews or for no reason other than the fact that the partner just likes to stew in office), stare at the associate while he/ she formats and corrects your punctuation, copy-paste, DV compare, hope to God that your senior who has no life except being in office completes the review and doesn’t want you to rot with him/ her in office for some never-ending research or till he/ she completes review, hope your partner gives you some face-time – personally invests in you to teach you something – all this while trying to show 8 hours of work when there isn’t any or which can be completed in 4 hours.
Another trend, which is now part and parcel of corporate law practice, is ridiculous timelines: timelines that clients demand that no one wants to rationalise with. Or worse, timelines that we ourselves promise just to look good.
Today, being available on a Sunday or at 2:00 am for a call is what defines a good lawyer and the quantum of your bonus. 3,000 billable hours = one big fat bonus.
- Make that 5:00 AM. Get this, you pull off all-nighters continuously and work till the wee hours of the morning. Then what? Nobody is alert enough to analyse or even understand the stupid documents. But yes, we are there to “serve” and “pander” to clients, always, because, as we are often told, we are a client driven service firm.
Perhaps this is why some new / small firms (and I am thinking here of Platinum, TTA, S&R, Pheonix) have been rated so highly on client satisfaction scores in the RSG survey, getting more points than the more established firms that have been mentioned in the comments section above.
My own two bits on this - it is entirely open to GC's to stop using law firms that do this. While limited, choice does exist in this market. And sometimes it is more expensive than the existing large law firms, but surely, not by that much and not always.
Well written and interesting article with many useful comments. Well done Kian!
It is time that the Bar permits these law firms to publish their rates .
If an associate is paid 10 Lakhs his direct cost comes to about Rs. 500 an hour . This is the simplest way to calculate what the hourly rate of the advocate should be .
It is this scale of money that a 35-40 year old partner sees which just pushes him to treat his/ her associates as commodity.
agreed
this post was only to highlight the practices of some lawyers in some law firms while fully acknowledging the brilliant ones out there. why so serious folks? or rather, why so defensive?
1. In the article you said there are some good lawyers; now you say that the problems you’ve highlighted relate to some bad lawyers. Quite contradictory and very much a volte-face! It is absolutely incorrect and inappropriate to state in an article that most lawyers are lamentable and only a few are "brilliant" when you state the reverse in a follow-up comment a couple of days later!
2. When you take a shot at a profession, you have to justify your stand and clarify what exactly you are talking about. Vague statements and half-truths are not only unprofessional, they may even be unethical and defamatory. My response at 1.1 above may indicate what I am trying to say (for example, see my point on legal opinions).
3. Some of what you say is true, but neither properly explained (i.e. misleading) nor, when true, inapplicable to the Western firms (they issue lengthier opinions with more carve-outs and also have better templates to minimize reinventing of the wheel and maximizing revenue).
It is very surprising that you question why people are so serious, after you've generally bad-mouthed all of them, in an ill-advised article full of half-truths (notwithstanding what you think, there is neither anything "hilarious" in your article, nor anything defensive in what the law firms' camp is saying). One would expect a GC to know better!
Bottom line: As the saying goes, there are three kinds of lawyers: able, unable and lamentable. This true for London/NYC as well as New Delhi/Mumbai.
So, client satisfaction is short lived if the associates run away. One associate cannot work for eighteen hours a day and weekends even if paid decent bonus because that's just inhuman.
Quoting Please:
This is rubbish. Most in-house counsel salaries are certainly 20 to 50 % lower than comparable law firm salaries, especially in the 1 to 5 year band. THE GC of a mid sized company may get paid equal to a salaried partner at AMSS but the rest of his juniors get jackshit.
On top of that pay increases within companies is so slow its like watching paint dry. 7-10% of 'Basic Pay' is increased. Plus bonus are generally limited. It's no secret that legal departments are essentially cost centres for companies and their staff get treated like dirt.
When I complained about the pay I was flat out asked to leave.
And yes, CYA is required by GCs. If the GCs had the balls, they would not go for a CYA opinion. Its because GCs are unsure of what they are advising to their Board of Directors. The Board can easily tell the GC to put it in writing, but in most cases you will see that the Board will resolve that an opinion be obtained from a top law firm on an issue...why not from their own GC to whom they are paying salary...? Its because even the promoters/directors have little confidence in their GC. The Promoters have nothing to do with CYA as the risk lies entirely with them, but they will still not rely on their GC. I wonder why?
Clearly GC-Ha has no idea about how the Indian legal system is organised, and how it is a closed shop, where clients have to continue using underperforming lawyers through lack of choice. Also, there exists certain rules GC-Ha would like to know about - rules which require advocates to give up their right to practice if employed by a company. As such, the opinions of in-house lawyers in India would not count as counsel opinion. Lastly, both in India and, more pertinently, overseas, there are regulations which require independent counsel opinion. Clearly lacking attention to detail but not the eagerness to mouth off someone making a valid critique.
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