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Anand Desai interview: DSK plans big growth • Hires ex-CAMmer Padmini Rathore as CEO • To convert from eat-and-kill after two-year equity freeze

Anand Desai explains how DSK intends to grow
Anand Desai explains how DSK intends to grow

DSK Legal has hired former Cyril Amarchand Mangaldas director Padmini Rathore as its chief executive officer (CEO), in tandem to introducing a lot of internal changes targeting internal growth and a Bangalore office.

After having frozen all equity partner’s compensation two years ago, DSK transitioned to a practice-group-led internal structure eight months ago, as a precursor to overhauling its partner compensation structure from an eat-what-you-kill-style to a modified lockstep model.

Rathore had been at Amarchand Mangaldas from 2010, as it then was, as director strategy, in 2013 moving into the managing partner’s office of Cyril Amarchand Mangaldas as business planning and compliance director. She left Cyril Amarchand in August 2016 to join Rainmaker Online Training Solutions as head of consulting.

DSK Legal managing and co-founding partner Anand Desai commented: “Her role is going to be coordination, guidance, and sharing of ideas, and ensuring things happen. The easiest thing is to talk about things and the most difficult is to implement it.”

The aim of these exercises, was to grow, he said: “What’s happened is that the volumes of work for ourselves has gone up and I’m finding it stressful to deal with what we have.”

“The opportunity we see, is tremendous,” he said, particularly with the government having instituted valuable reforms from FDI, GST, the insolvency regime, the Arbitration Act, to things such as parliament’s approval of the Specific Relief Act, where he had been chairing the expert committee.

The current headcount of DSK Legal was 115 lawyers, including 11 equity partners, 6 associate partners and around 15 senior managers, who are the equivalent of principal associates at other firms.

When prodded about whether that could mean becoming a 5,000 lawyer firm or some such, he said DSK was not looking at becoming a “5,000, or 3,000 or not even a 500-lawyer firm”.

“The plan is to expand in Delhi and Pune and probably start something up in Bangalore,” said Desai.

The Delhi office was down to two partners now, after partner Balbir Singh became an independent and then senior counsel in 2015, he said, adding: “I’ve been talking to various people and a couple of them seem to be keen to join in the next two to three months.”

Interviews were also ongoing in Bangalore and Pune. “In Pune work has also picked up - one of the Bombay partners will probably go and live there soon.”

Practice-led approaches

All that is underpinned by a slew of internal changes.

Padmini Rathore joins in CEO role
Padmini Rathore joins in CEO role

While chief executive officer (CEO) Rajesh Iyer had left in 2016, after he was hired in 2015 from management consultancy Palladium Group to free up Desai’s time, new support talent has joined since then.

Other than Rathore first having begun working as a part-time consultant eight months ago, the firm had hired new HR head Priya Sawant, knowledge management personnel, as well as business development head Sachet Singh, who was previously an associate at Cyril Amarchand.

And internally, until eight months ago, DSK had operated pretty much as a firm where every partner was running their own show. In combination with its equity structure (see below), that has had several drawbacks, which is why most large firms have long-moved to a practice-group centric approach.

Part of the reason that it had taken so long to move to a practice group-led system was complacency that inevitably sets in when things are going well, he said, adding: “The good part is all the partners get on with each other well, that’s a nice thing. But having the comfort level, may have led to some complacency also, when no one is pushing you, that’ll lead to some complacency.”

The new system will see several new practice areas created, where partners would work together towards the overall good of the firm, rather than individual bottom lines.

  • corporate commercial, M&A and private equity (under co-founding partner Satish Kishanchandani)
  • dispute resolution (under Desai, which also includes insolvency),
  • real estate (under partner Sajit Suvarna),
  • media entertainment, and
  • projects and regulatory (under partners Ajay Shaw and Ravi Prakash).

There’s also a smaller subsidiary group dealing with intellectual property and technology, and the firm has also been doing some capital markets work though that wasn’t treated as a full practice area for the firm at the moment, explained Desai.

Work coming in for other practice areas that are not core would generally not be taken on, he said.

When starting the firm in 2001, litigation made up nearly zero percent of revenues. But nowadays, corporate and litigation were currently the largest practice areas and together made up 65-70% of revenues at the firm, followed by real estate, projects and media entertainment.

Desai himself had re-specced himself as a litigation lawyer only four years ago, despite having begun his career with 6 years in litigation. “I see huge growth in dispute resolution – most firms are seeing that. And projects may not necessarily be as profitable on a cost to revenue basis, but is larger,” he said.

That said, he said he had not plans of becoming a senior counsel, unlike others. “Also I’m quite old now – I don’t think that’s my plan,” he joked.

Two year equity freeze

But this kind of change would be hard to make overnight: two years ago, the firm had laid the foundation stones in the long process of revamping its equity partner remuneration structure by hitting the pause button.

“Currently one of the things we are doing – with Padmini and maybe an external consultant if appropriate - we want to get proper compensation in place for the partners, which is not going to rock the boat but has an element which is feeling fair to everybody,” Desai said. “There should be a feeling of fairness in people’s minds, for everybody’s benefit.”

Associate or non-equity partners are essentially compensated by the firm on a salary basis, the equity partners had been operating on an eat-what-you-kill style model (where profits due to a partner are proportional to the amount of work that partner has brought into the firm).

While an eat-what-you-kill model can be a great motivating tool for partners to make rain and bring in more clients and work, it can result in internal competition between partners and a structurally inherent disincentive to sharing clients with other partners.

“That’s why people were doing practices that they were not good at doing, which seemed to hurt us from a reputation point of view,” explained Desai. “So, exactly two years ago, we decided, let’s freeze the take home pay for two years and move towards a compensation plan that makes sense.”

That effectively meant that each partners’ profit share would have been fixed at whatever level they were two years ago and not directly affected by billings or new work they brought in.

“That’s worked reasonably well,” Desai said. By March of this year the new structure should be in place.

“It won’t be eat-what-you-kill for sure – that was the whole purpose for moving into practice groups,” he predicted. “It’ll be a modified lockstep, with the intent that people who are doing well on various parameters will get rewarded, but building the firm, doing things that are necessary for the firm to continue for the firm to be successful – we are going to put weightage on those things.”

When asked whether the two equity partners currently taking home the biggest profits – himself and Kishanchandani – would be taking a haircut under the new model, Desai said: “The hope is the pie grows, so everybody gets more, including me. The aim is not that anyone is going down [in profits].”

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