Nishith Desai Associates (NDA) has revised its base pay for freshers to Rs 17.4 lakh, including a guaranteed annual bonus of Rs 1.2 lakh, from the previous total level of around Rs 15 lakh, which had last been revised around four years ago.

In a major change, the time period that the guaranteed bonus is paid out to freshers has been reduced from three years previously to only 12 to 18 months now.

NDA’s financial year runs from 1 January until 31 December, unlike most other firms.

Effectively, this means that with effect from January-end 2021, NDA freshers will get a base salary of Rs 16.2 lakh annually (working out to Rs 1.35 lakh per month).

Newly-joined freshers in autumn 2020 would only become eligible to receive their bonus after a probation period of six months with the firm, which means that they would not immediately receive the first fixed Rs 1.2 lakh bonus payment in January. However, by January 2022, those 2020 freshers would receive the aggregate of two years’ fixed bonus, coming to Rs 2.4 lakh.

NDA is also unusual as paying its fee-earners a salary. The model that most other Indian law firm follow is that fee-earners are independent retainers to the firm on paper, which might allow them to set off more of their taxes, though de facto they are treated as employees.

NDA also does not rely on direct campus interviews or recruitments much, and instead its freshers come primarily via post-internship job offers and pre-placement offers (PPOs).

The firm had welcomed four freshers in its 2020 batch (on time without Covid-19 delays, said NDA leader Gowree Gokhale, due to NDA having already had strong technology and virtual working systems in place, even before the pandemic).

In 2019, the firm had hired three freshers.

Across the board in 2020, NDA had hired 14 fee-earners across all levels, confirmed a spokesperson.

Senior PQEs revamped

Together with the fresher increase in pay, NDA has also increased the remuneration for fee-earners at more senior levels up to around five years of post-qualification experience (PQE), roughly in line with the 16% bump at fresher level.

Also unlike most other Indian firms, there is less base pay discrimination within a PQE level and the majority of variation at a level would come via the variable bonus structure after three years of PQE (which is also the way most global law firms operate with a lockstep system of pay bands for fee-earners for the first few years).

In a press release, the firm said that in 2019, bonuses had “averaged 56% and at individual level went as high as 98%“, though that could vary every year, with bonus compensation determined by the firm’s “PAL system (performance, attitude and loyalty)“.

How bonuses are PAL'd

Explaining the PAL system, NDA leader Gowree Gokhale who heads up the IP, technology, media and telecom (TMT) law practice, said that “performance” evaluation was partly objective, driven by data such as the overall time worked by a fee-earner, which includes also non-client work. “As you know, in our firm, we give a lot of importance in education, learning and training others, and research output - we do a lot of research writing papers,” she said. “All these elements are taken into account.” In addition, subjective criteria such as work quality and expertise were also taken account.

At a senior level, performance also included “client acquisition”, “retention”, training and “thought leadership initiatives”.

The “attitude” metric included interpersonal skills and ability, assessed via a “very detailed feedback form” in writing and “extensive talks” by the compensation committee with the firm’s members, according to Gokhale, such as including “mentors telling us about their juniors”.