Indian companies expand their internal legal teams

Major Indian companies, such as JSW Steel, are strengthening their in-house legal teams. Photo: Reuters

Recently, when a consortium led by JSW Steel Ltd. The bankruptcy court insisted on also including small operational creditors, which had not been considered before. JSW Steel's in-house legal team, headed by the group's general counsel, Rajiv Bakshi, intervened. , helping the consortium make a quick decision and increase its offer by 30 billion crowns. JSW eventually won the Monnet Ispat deal.

Like JSW, several large corporate groups are strengthening their internal legal teams making decisions by navigating the legal and regulatory shifting sands.

When Tata Sons appointed Shuva Mandal as Group General Counsel last July, management was looking for someone to lead the transactions, restructuring and joint ventures. m the front. The Tata group has since made many transactions.

Last year, after the induction of Mandal, Tata Steel Ltd and the German steelmaker ThyssenKrupp AG decided to merge their European steel activities and Tata Sons sold its consumer telephony business to Bharti Airtel Ltd.

In May, Tata Steel acquired Bhushan Steel Ltd (BSL) through its wholly owned subsidiary Bamnipal Steel Ltd (BNPL) as part of the insolvency process. Earlier, in February, the group also decided to merge its Tata Housing Development Company subsidiaries with Tata Realty and Infrastructure Ltd. (TRIL). According to industry observers, Mandal's participation has been crucial in saving time and money for the group.

Transactions, particularly those relating to badets under stress, become more complex as a result of changes in the Bankruptcy and Bankruptcy Code.

Simultaneously, India Inc is also learning to deal with new laws and provisions, including the Goods and Services Tax (GST), the 2013 Workplace Sexual Harbadment of Women Act (Prevention, Prohibition and repair) in the Arbitration Act

At the same time, the high hourly billing rates charged by leading law firms resulted in increased legal costs for most firms. As a result, there is a sharp increase in the demand for internal advice that can execute faster or provide legal advice in record time, helping boards of directors to make decisions faster. This differs from the previous generation of in-house counsel who were primarily the liaison between the firm and the law firm. Former in-house counsel also rarely participated in live transactions or live transactions.

During the last quarter, six law firm lawyers moved to internal functions. Shaswata Dutta, former Trilegal Board, recently joined Asia Situation Group as Executive Director. Similarly, Godrej & Boyce Manufacturing hired Amit Kolekar, a partner in Rajani & Associates' Mumbai-based law firm, to lead the real estate advisory service of his legal team.

When the new Zomato agribusiness company, which became part of the so-called Unicorn Club in February, felt the need to hire a lawyer, it chose GT Thomas Phillippe, a partner in the law firm. Khaitan & Co., which is a law firm offering a wide range of services, is a general advocate rather than masquerading as a rival.

"Companies are looking to expand their legal teams primarily at the middle and upper levels. Expert lawyers in mergers and acquisitions, joint ventures and restructurings, among others, are the most sought after, "said Karl Fernandes, partner and head of the internal practice group at law firm Vahura.

"Most companies are looking for specialists or specialists in certain fields. In addition, there is a need to build a strong and active in-house team, "said Fernandes.

All companies listed on Indian stock exchanges collectively spent about 33,941 crore (over $ 4.7 billion) in legal fees and professional costs for the 2018 fiscal year, according to data compiled by Capitaline.This represents an increase of 5.6% (32,322 crores) compared to the same period of last year but nearly 20% more than the crore of 28,328 crores spent by all publicly traded companies during fiscal year 2016. The sharp increase in legal fees over the past two years can be attributed mainly to the GST and IBC.

JSW did not respond to a request for comment by email, while Shuva Mandal declined to comment. At present, most conglomerates, including including the group Tata, Reliance Industries and Bharti Airtel are looking to hire more local lawyers as well as many multinationals with a large presence in India, many industry observers said.

Rajiv Choubey Ltd, a subsidiary of Lafarge-Holcim, stated that the role of the internal legal team is becoming increasingly important for all large companies and especially for highly regulated activities or for companies operating in the infrastructure sector. "Today's businesses are exposed to a variety of risks. Compliance risk, regulatory approvals and contractual disputes have recently had a significant impact on corporate performance, aside from reputational aspects, "said Chaubey, adding that more and more companies focus on internal competence to reduce legal costs. 19659003] During fiscal year 18, Dilip Shanghvi promoted Sun Pharmaceutical for 1.615 billion rupees, the highest level among listed companies in terms of legality and compliance. Next are Reliance Industries (Rs.1,187 crore), the main computer specialist Infosys Ltd (1 crt 1,043 crore), Kotak Mahindra Bank (Rs 823 Crore) and Larsen & Toubro Ltd (Rs 730,79 Crore).

"Indian companies are following more and more the Western model and internalizing repetitive tasks. We go to law firms for specialized advice or work. The nature of the business has changed a lot in recent years with the strengthening of regulation and compliance, "said Naveen Raju, General Counsel of the Mahindra & Mahindra Group. "From the point of view of governance, internal law becomes very important to ensure management that everything is in order. We have separate teams for litigation, mergers and acquisitions, intellectual property and trademarks among other practice groups, "Raju said.

The Tata group employs approximately 700 lawyers, while Mahindra & Mahindra has approximately 60 lawyers in the parent company and more than 400 lawyers at the group level. The ICICI group, which includes the banking, insurance, securities and ICICI Venture sectors, employs approximately 300 lawyers. In comparison, Cyril Amarchand Mangaldas is the largest law firm in India, with a staff of about 650 lawyers.

According to Ravi Singhania, managing partner of Delhi-based law firm Singhania & Partners, internal services have become more sophisticated than they were three or five years ago. In addition, companies have now begun to pay their in-house lawyers at almost the same price as law firms, which has also resulted in the migration of talent from law firms to listed companies.

"Companies have now started recruiting partners in law firms, which was very rare only a few years ago, and these partners bring to society the sophistication and quality of law firms." Singhania said, adding that law firms business, but only for residual work. "Even in mergers and acquisitions, companies do the initial work internally and only contact law firms for specific tasks, such as approvals from the Competition Commission or Sebi, in accordance with requirements of the operation, "said Singhania.

"The establishment of an in-house legal team creates true partnerships, which translates into quality, timely and cost-effective advice," said Sree Patel, Executive Director, Legal and Governmental Affairs at Mondelez International (India). "In-house legal teams have deep knowledge of the company, allowing them to sit at the table rather than acting as mere advisors," Patel said.