Legal market worth $1.3 billion, the top | largest 40 law firms in India

30 November 2017 8 min. read
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A combination of expected foreign investment with a boost in local demand for legal services resulting from the imminent Goods and Services Tax (GST) regime, is set to drive the Indian legal market beyond the $1 billion (Rs. 6400 crore) mark by March 2018. However, growth remains stifled due to challenges that remain in the market, according to a new report. Cyril Amarchand Mangaldas, Khaitan & Co and Shardul Amarchand Mangaldas are the country’s largest law firms.

The Indian legal services market is due for considerable growth over the next few years, primarily on the back of shifting government policy. Business lobbies in India have increasingly been putting pressure on the government to open the legal market up for Foreign Direct investment (FDI), primarily in order to push large Indian law firms out of their comfort zone and pit them against international competition.

As a result, the Indian government opened discussions about the possible entry of foreign firms last year, and negotiations are fairly advanced along the way to FDI in legal services, which would significantly boost the market size. In addition, April 2018 will see the implementation of the GST, which is a comprehensive umbrella taxation system, aimed at streamlining the federal and state-level taxation systems in order to eliminate administrative burdens on businesses.

Alongside a complete reformation of the government tax policy, the GST regime requires restructuring of companies’ internal taxation systems, which has boosted demand for both consulting as well as legal services. A number of companies are turning to major players in the consulting industry for support with internal restructuring, including the Big Four firms of KPMG, EY, Deloitte, and PwC, who have, in turn, opened specialised units to help with the tax regime. For example, KPMG recently teamed up with HP and Vodafone to provide tailor-made GST solutions to companies across India.  

Size of the Indian law | legal services market

Top 10 law firms

Naturally, with a shifting tax regime comes a shift in the legal framework surrounding it, which has driven the demand up for legal services as well. A new report from consulting firm RSG Consulting provides a comprehensive picture of the current scenario in the Indian legal services market. Alongside a list of the biggest law firms in the country, the report provides analysis of the challenges that the market will face in the global scenario. RSG is a legal consultancy that aims to help lawyers across the world keep pace and remain relevant in light of dynamic international trends. 

The biggest legal firm in India, according to the report, is Cyril Amarchand Mangaldas (CAM), operating with 630 legal professionals including 100 partners, operating from six different cities. CAM has retained a sizeable team despite being one half of the erstwhile Amarchand Mangaldas group, which was previously the leading firm in the country, before splitting due to a disagreement between Managing Partners. CAM recently received a substantial amount of business, after being awarded the monumental role of overseeing legal aspects of Air India’s divestment, involving debt of around Rs. 52,000 crore.

The second largest firm by team-size is Khaitan & Co., which is one of India’s oldest law firms, specialising in corporate law and white-collar crime. Founded in 2011 in Kolkata, the firm now operates out of four cities in India with 550 legal professionals, which includes 115 Directors and Partners. 

In third place was the other half of the erstwhile Amarchand Mangaldas: Shardul Amarchand Mangaldas (SAM). While CAM has the better reputation between the two amongst clients and foreign firms, SAM has a better reputation within the Indian legal market. The firm currently operates with more than 70 Partners and 521 lawyers spread across eight offices. 

The top law firms in India - number of lawyers

SAM was followed in fourth place by AZB and partners, a corporate law firm headquartered in Mumbai. Currently, AZB operates with 400 legal professionals.The firm generates revenues of approximately Rs.300 crores, and has worked with the likes of Google and Mercedes Benz in the past.

Rounding off the top five, with a legal team of 350 professionals and over 60 partners, are the Luthra and Luthra Law Offices. The firm, founded in 1990 by Rajiv K. Luthra, has been a consistent member of the tier-1 law firms in India. The firm offers a range of services, from banking and finance to services in aviation law.

In sixth place with a team of 342 lawyers, including 46 partners, is law firm Lakshmikumaran & Sridharan, a firm specialising in areas of international trade, taxation, and corporate law. Following in seventh is J. Sagar Associates with 300 lawyers and around 80 partners, followed by Trilegal in eighth place with 281 lawyers and 50 partners. Completing the top ten, in ninth and tenth place, are law firms Desai & Dewanji, and Fox Mandal, with legal teams of 217 and 216 professionals respectively.

Overall market trends

The Indian legal market stands to grow to a potential $1.3 billion (Rs. 8,400 crore) by March 2018. Of this market value, around $400 million (just over Rs. 2500 crore) can be attributed to “contentious legal work,” which includes practices of complex litigation and arbitration.

The top law firms in India | number of lawyers - part 2

In terms of billing rates, the hourly rate for a Senior Partner at a top law firm averages at around $992 (approximately Rs. 64,000). The hourly rate for a Junior Partner at the same firm would be $612 (approximately 40,000) on average. However, as per the report, these rates have registered a drop of 8% for Senior Partners, and a staggering 39% for Junior Partners in the market. 

Whether due to increased competition or other market factors, these falling rates act as a major disincentive for foreign firms to open local offices in India, despite currently accounting for $600 million (Rs.3800 crore) in the $1.3 billion market. This is because rates abroad are much higher. 

For example, the average hourly fee for a lawyer in the UK stands at $1,200 (Rs.77,000), dwarfing Indian rates. Speaking of foreign law firms doing business in India, Reena Sengupta, the Chief Executive at RSG said, “A majority (75%) said that India was less attractive as a destination to set up shop, even if the market opens, because of the current pressure on fees, “

However, not all areas of legal work are seeing falling rates or competition. According to Sridhar Gorthi, a Founding Partner at Trilegal, “Certain types of volume-based work, like standard banking and venture capital deals, have seen pricing pressure. For more complex work such as restructuring and high-value litigation, we don’t face fee pressures.“