I am presently in law school and follow industry discussions largely here on LegallyIndia. I have noticed a recurrent theme in many of the threads: that sometime in the early 2010s, the legal services industry stalled in a manner from which it has never seemingly recovered as such. Salaries seem to have stagnated and foreign offers have all but dried up.
I was wondering what the causes behind the same are. Is there something specific to the legal market, or is it just a symptom of the wider economic slowdown in India, or perhaps both?
Salaries have stagnated for the same reason that pretty much anything happens at a law firm: pure greed. Demand for law firms has exploded in the Indian market and every year, including the Covid year, has been more profitable than the last in every law firm. But why pay more to your slaves when people will line up in the hundreds for a job anyway? The Tier-1s can continue for another decade at the same pay and students will line up for jobs regardless.
The answer to why has demand gone down cannot be that demand has gone down, right? Or are there still parts of your sentence that I have not understood?
Wow! You got three people to up vote you out you up voted from three IPs. In any case, the demand for Indian lawyers in London went down as demand (need) for lawyers itself went down due to a slowing economy, Brexit related fears etc. Therefore, demand went down as demand went down!
Any answer will be only give you a partial picture. However, one meta level reason is that the Indian economy grew tremendously in the 2000s - first under Atal ji and then Manmohan-I. But, that decade ended with a crippling recession globally and the new decade began with a corruption riddled Manmohan-II. This was then followed by a stop and start Modi-I and has now been followed by a pandemic affected Modi-II.
All in all, world and India was growing faster in the 2000s than in the 2010s - for one reason or another.
Plus, the NDA government under Bajpayee actually had a clue about the economy. The one under Modi runs around like a headless chicken and clucks in an injured fashion at the actual experts.
We can blame the law-firm owners, but these were the guys who “owned” the firms even in the 2000s. In short, economy stagnated, fee rates stagnated big time, hourly fee became exception than the norm, supply of lawyers increased, and there is no real pressure to increase salaries.
Economy did not stagnate for law firms. These firms are have witnessed multifold increase in their revenue. Its just that they dont want to pass on to their employees.
The question still remains though: What made these firms want to pass on some of the benefits until around 2011ish, and what has made them reluctant now?
A speculative answer: perhaps less pressing competition from foreign firms? For a while, Indian law firms were maybe more worried about more foreign firms snapping up the best grads and eventually opening offices in India? That maybe 'concern' appears to have receded somewhat...?
This idea that entry of foreign law firms will fundamentally change Indian commercial legal sector is absurd. Yes, there was a round of salary hikes in 2006-2008 as a result of foreign law firms hiring Indian lawyers and law grads. The foreign Law firms would have eventually opened offices in India if they were allowed in 2006-2008 phase, but their driver to open office was to capture the outbound work from India, which has dried up significantly. If foreign law firms are allowed in today, I don’t see them hiring in huge numbers or opening offices with massive headcounts - at best they will have liaison offices/very small offices in India with 5-6 lawyers – the foreign law firms will never compete for the mid-market domestic work, which accounts for substantial chunk of revenues for most law firms, so I fail to see how the Indian law firm owners will be bothered.
Liberalisation of economy changed the economics of the country fundamentally and for good.If foreign law firms are allowed,it will definitely raise the standard of the bar and our legal processes for the better. And will fundamentally change and end once for all this whole process of treating lawyers as disposable staff or employees by law firms.
There's also the factor that a lot of new law schools mushroomed, and there was an explosion in supply. Law firms know that if some associates leave today because of bad working condition or stagnated salary, there will always be many more to take their place.
Supply of lawyers increasing may be a significant reason imo. A lot of new NLUs came up, and quite a few decent private law schools as well. And they could generate decent graduates. I know people here like to shit on the quality of education at law schools and the quality of freshers who come in at the firms, but I don't really think that's a big problem for law firms, and is rather quite an advantage. I don't think corp lawyers in their initial 3 years at least do any work that is actually intellectually demanding. They can pretty much learn the work on the job itself, without needing any training. This explains why no law firms actually have trainings for their incoming freshers. Contrast that with fields like engineering (or the sciences in general), where even the graduates (and masters) from the best universities have to undergo a rigorous training for at least a month or two. Also explains why those employers have those monetory bonds in their employment contracts, while law firms don't.
I am presently in law school and follow industry discussions largely here on LegallyIndia. I have noticed a recurrent theme in many of the threads: that sometime in the early 2010s, the legal services industry stalled in a manner from which it has never seemingly recovered as such. Salaries seem to have stagnated and foreign offers have all but dried up.
I was wondering what the causes behind the same are. Is there something specific to the legal market, or is it just a symptom of the wider economic slowdown in India, or perhaps both?
Any views would be appreciated!
All in all, world and India was growing faster in the 2000s than in the 2010s - for one reason or another.
CPI 2016: 79
CPI 2020: 86
In short, economy stagnated, fee rates stagnated big time, hourly fee became exception than the norm, supply of lawyers increased, and there is no real pressure to increase salaries.
Yes, there was a round of salary hikes in 2006-2008 as a result of foreign law firms hiring Indian lawyers and law grads. The foreign Law firms would have eventually opened offices in India if they were allowed in 2006-2008 phase, but their driver to open office was to capture the outbound work from India, which has dried up significantly. If foreign law firms are allowed in today, I don’t see them hiring in huge numbers or opening offices with massive headcounts - at best they will have liaison offices/very small offices in India with 5-6 lawyers – the foreign law firms will never compete for the mid-market domestic work, which accounts for substantial chunk of revenues for most law firms, so I fail to see how the Indian law firm owners will be bothered.