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Painful but possible: Ex-JSA’s Berjis Desai speaks freely about what he thinks Indian law firms must do to survive the foreigners

Berjis Desai: Foreign firms will take 5+ years. Until then, if you’re not in the top 3 somewhere, you should exit
Berjis Desai: Foreign firms will take 5+ years. Until then, if you’re not in the top 3 somewhere, you should exit

When we interviewed former J Sagar Associates (JSA) senior partner Berjis Desai last month about his new post-retirement life as a private lawyer, he said that one of the advantages with not being inside a law firm anymore, was that “one is freed from the world of conflict of interest - one is free to say what he wants, and speak what one wants.”

So, we asked him...

What do you feel like talking about, now that you’ve left the law firm world?

Berjis Desai: I am saying on any issue, you are constrained by clients, or the firm not having taken a position on a particular thing. Here you are your own person at liberty to talk and write what you want.

I think what fascinates me is law firms and management of law firms and where law firms in India are having to improve, and various issues like the entry of foreign lawyers etc.

So the political correctness which had to be kept so far, now will hopefully will dissipate.

It’s not a politically incorrect view, but whatever [it] is as I see it and as I perceive it, I think now, I will be at liberty to say so.

So, what are your views on liberalisation?

BD: As far as liberalisation talks are concerned, I think that in the last six months or so there’s a slight setback - things don’t seem to be going with the same speed that they were, but I think more and more large law firms will set up surrogate practices.

We already know of some of them.

One or two large firms, like American law firms might set up a practice in future.

That seems to be the way of going about it.

I still believe - I know it’s a contrarian view - that the actual entry of foreign lawyers directly, is still five years away, even for transactional work.

I could be wrong but this is what I believe, the way things are moving, the manner in which they want full liberty to do transaction work, international commercial arbitration and so on.

Yes, fly in and fly out [will be allowed], but actually setting up shop over here to do transactional work like any other Indian law firm, that parity is still a bit far.

What is the biggest impediment there? Silf? The BCI?

BD: A combination of all factors. I’m sure that attempts are always made subtly and not so subtly to slow down things and keep the entry barrier going, which is obvious to all concerned.

Which is mostly in their own interest?

BD: Yes, obviously.

I believe that some of the foreign law firms that survey the market, they believe that they will have to bring their processes and systems, risk management systems over here, they are used obviously to a quality standard to maintain their brand equity.

The cost of doing all this in India, will definitely result in their charging much higher fees, or having the capacity to absorb losses.

[For foreign law firms] to have negative cashflow for five or seven years post their entry - I do believe that English law firms at this moment do not have this kind of an appetite. I don’t know about US law firms, maybe they do.

So I think by the time, if you do a proper risk-reward analysis, it will require some degree of planning and a long term view.

Of course India is a great market, and a very promising market, there’s no two ways about it, and one day everybody will be here, there’s no doubt on that.

But I think in terms of time, we are still a little away from that.

Of course knowing the way this government functions, which is by far the most efficient government we’ve had so far, if really, in the highest quarter, there is a strong push, then doors may open faster.

But the very fact that large firms are thinking about surrogate set ups, that shows that they are not too sure about making a direct foreign entry.

Why surrogates? Strategically foreign firms would want to have a surrogate first for 6 months or 2 years to test the waters?

BD: Maybe, or a little longer.

How many foreign firms could you see opening up here once it’s legal?

BD: At least 10-12.

Of a size of?

BD: It depends, somewhere around 60-80

That would be a big disruption for Indian firms.

BD: Yes.

Do you think it would be fair to foist such a headache onto managing partners of Indian firms?

BD: I think if they [foreign firms] pay top dollar, and the kind of quality they will bring, it will be a very attractive proposition for a young promising lawyer.

And it w ill be a firm obviously where there will be no family ownership, no dominant individual ownership, and the chance of interacting with and understanding the systems over there.

And if they pay top dollar, there is going to be an exodus of top lawyers. It will be hugely disruptive.

Can Indian law firms do anything to prevent that from happening, at a free market level?

BD: The larger law firms are all trying to pull up their socks and do quality, and set up better systems and work more efficiently, and more intelligently and smartly.

Working smartly in the sense, in terms of allocation of resources, identifying areas where you are really good.

If you are not in the 1, 2, 3 [ranks] at the national level in a particular practice area, you may well consider exiting it.

[Right now] everybody is in this game of pretending they’re a full-service law firm and doing everything.

You can’t perform every act in the circus, whether you are a trapeze artist or clown or a ringmaster. So I think, to that extent, I believe that if you give up those pretenses and you really focus on what you’re excellent at, if you’re not 1, 2, 3 in a particular practice area, have the courage to exit, and focus on the practice area in which you’re really good.

That kind of specialisation will come.

That kind of specialisation will come through breakaways or through existing firms?

BD: Some of the existing firms can well achieve that.

But it would be painful...

BD: Yes.

Though it’s not longer my business, JSA is definitely making an effort in this direction in the last year or so.

Are you comfortable talking more about JSA?

BD: I think it would not be proper.

I obviously wish them very well, I have a soft corner.

But I’m going to be absolutely independent of any law firm, including JSA.

Nothing to do with them directly or indirectly or with any other law firm. To that extent it’s a truly independent practice.

My clients will naturally include law firms themselves.

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