JSA partner Dina Wadia advised both Essar Steel and Shree Precoated Steels throughout the transaction, although Desai & Diwanji was drafted in towards the final stages of the deal for Shree Precoated Steel.
Desai & Diwanji partners Vishwang Desai and Vihang Virkar jointly lead the team for Shree Precoated Steel.
Wadia was assisted by Mumbai senior associates Rashmi Sharma and Jay Gandhi.
Wadia said: "Our role was to act as joint transaction counsel to draft the transaction documents to capture the commercial arrangements between the parties and to bring it to a successful conclusion.
"The role of a joint counsel is always challenging and calls for treading a fine line to ensure that the commercial interests of both parties are sufficiently safeguarded," she added.
Ernst & Young was the strategic and financial adviser to the transaction and did not instruct external counsel.
A large part of Essar Steel's legal work was handled in-house, with JSA responsible for drafting the sale documentation after the parties had agreed on the terms.
Essar Steel acquired Shree Precoated Steel's fixed assets and long-term liabilities of around Rs 175 crore.
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In this case, I'm not sure how there can be no conflict because every purchaser will like the purchase at the lowest price and every seller would like to sell at the highest price. Hence, the question remains. I have my own doubts
In most jurisdictions, professional rules governing ethics would frown upon such behaviour. This is precisely why we need a regulator in India who can understand law firms.
Aside, this begs the question of whether reputable law firms (the likes of JSA, AMSS and AZB) should start imbibing a more stricter ethical regime and incorporate these ethical rules by way of market practice. Yes there are no rules so there is no breach, however like what we would expect from market leaders in most sectors, I think the these reputable firms ought to set higher ethical standards for law firms in India by way of market practice. This is something which I would urge the Managing Partners of the leading firms in India to think about.
There is no issue of breach of ethics when both the buyer and the seller are aware of the representation by the concerned law firm/lawyer. The question of conflict and dereliction of ethics arises only if the Counsel does not disclose the fact that she/he is also being instructed by the other side to the deal.
The same behaviour (despite the disclosure) would not hold water under ethics’ rules of other jurisdictions (such as NY and UK solicitors). Under these jurisdictions such act, again despite the fact of disclosure, would be sacrilegious.
Hence I ask the question – whether the market leaders in India, should by way of an example, imbibe a higher standard ethics. I ask this only because these firms, in other circumstances (such as opening up equity and associate pay), have indeed lead the market and set higher standards despite there being no regulatory regime requiring them to do so. As the next step I think the Managing Partners at these firms should start giving more thought to ethics, since this would (albeit not in all cases) act as a distinguishing factor for clients who are concerned of such practices.
Till willingness to imbibe higher degrees of ethical practice comes across to law firms or even regulation in this regard come into force things will continue as they are. Thus, it is left entirely to the client to exercise proper diligence before giving instructions to a lawyer or law firm. However,at this stage, law firms may simply be called upon to be honest in making disclosures of conflict or other issues that could have an adverse impact on their representation of any particular client. After complying with the mandatory disclosure, a law firm may act in the matter if the client so wishes.
I wonder how the taxation authorities would consider transfer pricing between entities. Having two physically different located offices, does not mean that the information flow is contained.
Also from a law firm point of view, it is bad business. Just because in India the rules (professional ethics) are not clear does not mean that they are not clear everywhere. This myopic mentality is not good for long term business.
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