Cyril Shroff: How he is preparing for India's legal market liberalisation

The question of when India’s legal services market will be opened to foreign competition has been hotly debated for some time. Every few years, members of international law firms and their representative bodies meet with Indian dignitaries to discuss this, following which reports are spread that the market will be liberalised ‘soon’. However, very little comes of it beyond some generous hospitality and nodding indications that some of India’s larger law firms would look favourably on it.

Of course, many international law firms have, over the years, worked with clients on Indian matters by using approaches like liaison offices, ‘best friend’ relationships with local firms, ‘fly in, fly out’ partners and India practice groups based in nearby Singapore, which have not always been well received by groups like the Society
of Indian Law Firms.

With the global economy still recovering from the financial downturn, the pressure to open India’s legal market has dropped. But, at India’s largest law firm, Amarchand Mangaldas, preparations are being made for when demand steps up again – which Cyril Shroff anticipates to be in line with the global economic recovery.

“When the world is in a relative recessionary mood, these pressures are less, but when the boom times come, the pressures to come into the market will increase,” says the Mumbai-based managing partner, who shares the
firmwide role with his brother Shardul Shroff in New Delhi.

“So until we are back to full boom times as existed before 2007/8, I don’t think the pressure is going to exist to necessarily come over and set up offices over here, because they are only going to lose money. But that will change – when the markets are really back, I think the pressure to come over here and set up offices will definitely go up.”

This view has prompted Cyril Shroff to focus on putting in place a strategy to ensure the full-service law firm will thrive after a level playing field is created. “I don’t think we’ve been fully tested by full-scale international competition, partly from a service point of view, but things will be different when the market opens up,” he says. “I think it has to happen when India broadly joins the global economy, because there are barriers in so many sectors still – in the long term, it will happen for sure.”

So what would he like the Indian legal market to look like post-deregulation? The key for Shroff is finding a balance in which both domestic and international firms can co-exist. “I’d like to see it as a healthy mix between global firms and international firms as well as domestic firms, and all have their spaces. Because I think that’s
a balanced outcome.”

The challenge for domestic firms will be finding the capital to achieve the scale needed to compete effectively on their home turf when the barriers for foreign firms are removed. “Even the minimum amount of capital that we need to create a viable scalable outfit is a problem today,” reflects Shroff. “But if there was an avenue by which private capital can come in, with whatever conditions are attached, that might be a great model and it could allow firms to institutionalise very rapidly.”

While indicating a desire for the Indian legal market to ‘leapfrog’ to the latest international practice, rather than evolving through the intermediate stages, Shroff declines to answer whether he would consider external investment for Amarchand Mangaldas. “It’s probably not
a fair question at this point in time because we are still struggling with a framework that is Dickensian,” he says.

Sustainable scale

For Shroff, the best way for his firm to achieve competitiveness is to increase the breadth and depth of its service offerings across the country. “The way that we have constructed our model is to scale up and invest in creating a quality firm where we can stand up to international competition,” he says.

The family-run firm has already achieved significant size, with 625 lawyers and an equal number of support staff across offices in seven cities. Its ambition is to have 1,000 lawyers by 2017, its 100th anniversary. As part of that vision, Shroff wants to develop more
specialised departments, each of which
will have national coverage and
industry-based expertise.

“The biggest thing about the Indian market is that there is so much headroom for growth,” he says. “But it’s a low fee-paying market, and you have to be extremely competitive in terms of how you run your cost model and how you manage your organisation. So the opportunity is immense, but at the same time it’s a much tougher market to make money in.”

Amarchand Mangaldas has been following the example of international law firms in India when building its own practice abroad. Partners work with clients in key markets like Singapore, Japan, Korea and Japan on a ‘fly in,
fly out’ model. The firm has also set
up a loose ‘best friends’ network in
which it works with two or three local firms in key jurisdictions.

“That allows us to have international brand recognition without necessarily opening up offices in lots of places. Opening an office is not an easy business and you can actually end up losing money unless you are able to (a) be of a particular scale and (b) have a loyal clientele that will follow you in those markets,” notes Shroff.

“Indian clients are notoriously not loyal when they go out, so currently it doesn’t make sense for us. And it doesn’t mean that there is any amount of compromising of our international presence.”

Streamlining firmwide processes and systems, along with improved talent management, will be key to creating a more stable and successful firm
in the long run; Shroff readily admits
that “we still have some work to do
on institutionalisation”.

The firm has historically suffered from disparate management structures and approaches. While part of one firm, the Mumbai and New Delhi offices are largely autonomous, with each managed by a husband-and-wife team (Cyril and Vandana Shroff in Mumbai; Shardul and Pallavi Shroff in New Delhi). But, they say that, by and large, the offices are now “aligned with a common vision”.

Any inconsistency or larger strategic decisions that cannot be agreed between the two managing partner teams are referred to the executive committee, which comprises nine people, including three family members and two independents (George Goulding, formerly of Slaughter and May, and James Abraham, previously
of Boston Consulting Group).

With inadequate succession planning threatening to undermine the firm’s stability, long-term talent management is a key priority. Shroff notes that a weakness of Amarchand Mangaldas, as is the case in many other owner-oriented/family-run Indian firms (which make up the majority in the market), is that a few “star individuals” hold it together. “Creating a sustainable partnership institution that will hopefully outlast some of the current core leaders
is a big challenge,” he says.

“In five years, if I could have more individuals and more talent being recognised in that time, it would make the firm more stable. Eventually when foreign competition happens, we will be in a much better position to defend ourselves.”

A regular talent drain is a key challenge to the firm’s succession plans, with many of its junior lawyers snapped up by clients a few years after joining. But, Shroff looks on this in a positive light. “It helps us to build a terrific alumni network – we have somebody in almost every major organisation in India.”

Another issue facing the firm is a proclivity among some of its younger lawyers to move away from the more commercial aspects of legal practice.
“One of the problems that we see in younger lawyers is that they get bored
very fast, particularly the brighter ones,
and at some point I think some of them
get a bit disillusioned that the whole practice is becoming too commercial,”
says Shroff. “So, they like to remain involved in the more academic side.”

Shroff says Amarchand Mangaldas has addressed this issue by emphasising that academic orientation is a core value of the firm. “We invest heavily and work to continuously keep that academic undertone as a core principle, even while continuing to practice commercially.”

The firm has also created a transaction support group which provides a separate career path for some of its legal staff. “They don’t have a proper paralegal qualification, they are qualified lawyers, but it’s just that from a career point of view they’re happy to take a seat in the backroom and work on some routiniseable things,” he says. “And I think that’s actually helping both the front end as well as in managing costs.”

Members of this group would not be on the partnership track, which is available only in the firm’s traditional legal career path, but “the occasional bright spark” may get through, he notes.

The in-house resource also fulfils part of the firm’s broader ambitions with regards to scale and profitability. Shroff says that it gives the firm “a more predictable standard of quality” on some products. Currently staffed by 35 lawyers, he expects it to grow in size over time until it constitutes about 20 per cent of the firm.

Interestingly, Amarchand Mangaldas has achieved a higher level of gender diversity than many international firms, with more than 50 per cent female representation at every level, including the partnership. Shroff says every state and religion is also represented in the firm, and most are visible in the partnership. “It might have happened by accident – we didn’t plan it consistently that way – but I think it really speaks for meritocracy; it doesn’t happen otherwise,”
he reflects.

Building loyalty

At 54, Shroff recognises that his plan to retire in his early to mid-60s will present problems unless a next generation of firm leaders is created. He says he is addressing this by personally grooming several
“younger leaders” in the firm to eventually
“do what I am doing today”. His work is broadly broken down into the three categories of client work, business development and internal administration.

Shroff characterises his leadership approach as “constantly pushing the firm to new frontiers” in fulfilment of his ambition and vision for the firm. “I think that is something which I bring to the table more than anyone else.” Commenting that, traditionally, Indian law firms have been “really badly managed,” he says that “I think I also bring to the firm a more modern approach to management”.

For him, it’s important to lead staff and partners on several levels. “You’ve got to be their boss, their mentor, their friend, their schoolteacher, their partner, their student – and you’ve got to be all of the above to all
of them.”

He describes his management style as consensual, balanced with asserting his own authority when needed. “I consult a lot of people and take in a lot of views and accommodate as many as possible, but when it comes to it and I have to take a decision, I don’t hesitate at all, and if I have to impose my will I do,” he reflects.

At the same time, Shroff recognises the importance of engaging with partners and staff across the firm to get them on board with organisational change. “You really have to connect with people who you want to lead at both an intellectual and an emotional level if you truly want to get their buy-in – and to continuously look at and raise the subject with people if not,” he says.

Emotional and intuitive intelligence are key tools in managing these relationships, which Shroff recognises. “Sometimes leaders are very blind, so you have to have extremely sharp instincts. And if you can actually figure out the subtext to what people say and actually think, you’ve got the key
to guiding and leading them and getting
their loyalty.”

Juggling priorities

As Shroff looks to build a strong and sustainable foundation for Amarchand Mangaldas’ future, he will have to juggle many competing priorities. Perhaps the
most challenging of all will be embedding more than a third of new lawyers in the firm by 2017. His hands-on approach may work
in the Mumbai office, but will he have the time to be all things to all people in all offices in future?

Investments are being made in systems, processes and people to manage the new intakes, which will help, but the key will be ensuring that they are used to maximum effect. Without this, Amarchand Mangaldas risks imploding as a direct result of its rapid growth – and well before the Indian legal market is opened to foreign competition.

Manju Manglani is editor of Managing Partner (www.managingpartner.com)

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