Cyril Shroff: My strategy after the dissolution of Amarchand Mangaldas

On Saturday 9 May 2015, India’s largest law firm, Amarchand Mangaldas, was dissolved, bringing an end to its 98-year history.

Effective today, two law firms have been created from the legacy family business: Cyril Amarchand Mangaldas and Shardul Amarchand Mangaldas & Co. The new firms’ brands reflect the names of their managing partners: Cyril Shroff and Shardul Shroff, two brothers who were previously co-managing partners of Amarchand Mangaldas.

In his only interview with a non-domestic publication, Cyril Shroff reveals to Managing Partner his thoughts on the dissolution and his plans for his new firm.

Becoming competitors

The creation of the two firms follows a dispute over family assets which developed after the passing of the brothers’ mother, Bharati Shroff. In her will, she allegedly gave her full equity share and the single largest holding in Amarchand Mangaldas to Shardul, contrary to prior agreements.

With the help of a mediation/arbitration panel, a private family settlement was reached “for the division of family properties, professional practice and allocation of assets”, according to a 6 May statement by the panel, staving off “what threatened to be a long drawn out and bitter litigation”.

Cyril has declined to disclose details of the financial agreement regarding the family business, to provide an indication of the value of client work which has been split between the two new practices, or to provide a projection of his firm’s revenues in the coming year.

In September 2014, not long before the dispute began, the family-run firm had 705 lawyers, including 86 partners, across eight offices. In a statement today, Shardul Amarchand Mangaldas has confirmed that its new practice has “more than 300 lawyers, including 60 partners” across six “major business hubs” in India. Cyril Amarchand Mangaldas has declined to confirm the number of lawyers and partners it currently has, but says it expects to have “91 partners and a total of 580 lawyers as of 1 June 2015”.

Under the agreement, Cyril has retained operational management of the Mumbai and south region offices (Bangalore, Chennai and Hyderabad), while ownership of the New Delhi, Gurgaon, Ahmedabad and Kolkata offices has been transferred to Shardul’s practice. The latter also plans to have three new offices in Mumbai and an office in Bangalore.

“It’s actually quite a simple clean split, like with a surgeon’s knife,” says Cyril.

“I think nothing much changes on the ground because, operationally, till now, we were both managing it separately as two separate firms. We had one profit pool and one firm, but it had been managed as two regions.

“All matters, employees, everything, will just transfer on the ground. So, actually speaking, nothing changes on the ground except email IDs.”

While some clients may continue to instruct both sides of the legacy firm, the brothers have not made any agreement to work together on new client matters. Rather, they will be “full competitors” and plan to not only open offices in each other’s key cities of Delhi and Mumbai, but also to become national full-service law firms.

As each brother’s practice is expected to retain and grow in market standing, Cyril Shroff has no doubt they will work together again – but on opposite ends of client engagements.

“We’ll be on opposite sides of many transactions, but will treat them just like any other competitor, nothing more, nothing less,” he says.

“I think that, in dealing with client matters, there is no place for any personal emotion. We will always just do what is right for the client.”

Governance structures

As part of their intention to serve the best interests of their clients, both firms say they have put in place new structures to ensure they are well governed.

For the first five years of its operation, Cyril Amarchand Mangaldas will have only one managing partner, Cyril Shroff. His wife, Vandana Shroff, will continue to unofficially lead the business from behind the scenes, but without an official title.

“She doesn’t want one,” says Cyril. “I think it’s because she has always believed in leadership without titles. So I think she will be a very powerful influence in the firm, but she doesn’t want a title. I think she wields more than enough moral authority without a title, and is actually much more powerful.”

Decision-making authority will rest primarily with Cyril, as a governance council will not be established until 2021, and then only for two years, after which he plans to “review and refresh”.

Committees “on various topics” will be in place for the first five years, but only “some of the committees will continue” after the governing council is formed.

All practice areas will be national, along with the internal support divisions, with director-level roles for HR, finance, technology and information covering all of India.

A two-tiered partnership model of salaried and equity partners and a modified lockstep remuneration structure is also in place.

Cyril notes that he was advised by consultancy practice BCG on the design of his new firm. He also hired an international law firm to draft “a very intricate and robust” constitution for Cyril Amarchand Mangaldas. This was done as part of a team effort with some of his partners to ensure the constitution was produced in a “very professional and rigorous way”.

“We thought things through very carefully and we have designed it frankly from a perspective that the firm should last another 100 years,” says Cyril. “So, if the firm doesn’t last beyond my lifetime, I think I would have failed.”

As part of those efforts, a succession process for the managing partner position has been put in place. “I have not selected a successor, it’s too early to do that, but what I have put in place is a process which would allow the firm to decide at that stage what is best for it,” he says.

Cyril intends to step down at the end of his 10-year plan.

“I am 55 today, so 65 is when I want to move to perhaps a different role. Because otherwise leaders don’t let go, they become a hindrance to the growth of their firm. If you internalise it properly in advance and you plan for it, it can actually be great fun. There’s a sense of urgency – you don’t have forever, you have only X number of years in which to finish what you need to do.”

A rather different governance structure has been put in place at Shardul Amarchand Mangaldas. A management board has been established comprising both the firm’s founder and his wife, Pallavi Shroff, who takes on the role of managing partner for the northern region of India.

“At commencement, she will have overall charge of all the regions until the other regional managing partners are inducted. She will be supported by Jennifer Milford, the chief operating officer of the firm,” the firm says in a statement.

Two other equity partners, Gunjan Shah and Jatin Aneja, are also on the board. The ex-chair of SEBI, M. Damodaran, has joined the board as an independent member, and John Handoll, a senior advisor on European and competition law, acts as an advisor to the board. More independent members will be added to the board “shortly”, according to the firm.

The Delhi-based firm will be supported by an operations committee comprising the managing partners, the chief operating officer, the chief financial officer, and the national practice group heads.

Talent development has been highlighted as a key area of focus for Shardul Amarchand Mangaldas. “We are investing in and empowering our people with continuous learning, career development and growth opportunities,” says Pallavi. “We have put in place a meritocratic system that rewards excellence to ensure we attract, develop and retain the best talent.”

As part of that process, the firm is making new partner promotions across India, in addition to new lateral partner hires.

New legacies

Prior to the dispute between the two brothers, Cyril had planned for Amarchand Mangaldas to have 1,000 lawyers by 2017, the firm’s 100^th anniversary. In a December 2013 interview with Managing Partner he said he was “scaling up” the firm in preparation for India’s legal market liberalisation. Between that time and September 2014, the firm’s headcount had increased from 625 to 705 lawyers, suggesting that it may have been able to reach his ambitious target.

While the legacy firm did not survive and Cyril’s firm is expected to have 580 lawyers by 1 June, he is keen to meet that target anyway.

“We are still aiming for 1,000 lawyers by 2018,” he says. “The interruption of the proceedings has given us a year more – we’ll see how fast it goes!”

While Cyril admits that this would no longer be the firm’s centenary, he believes that his practice will still carry that heritage “from a legacy value point of view because, in some form, the brand still continues”.

Hinting at one of the other sources of disagreement between the two sides of the family, Pallavi has indicated that the Delhi-based business is taking a different approach to growth.

“We are very clear, we do not want growth for growth’s sake. We want to focus on delivering quality service to all our clients,” she says.

As part of that focus, Shardul Amarchand Mangaldas has launched a new brand identity today “inspired by Emperor Justinian I, who codified Roman law, the foundation of modern law,” according to an announcement by the firm.

A new brand image for Cyril Amarchand Mangaldas will be unveiled in June or July.

In the short term, Cyril plans to focus his efforts on building up his first Delhi office, for which he has already started recruiting lawyers. The new office will launch on 1 June 2015.

“We’re starting off with about 90 lawyers on day one in Delhi, with about 30 partners, and the idea is that, within three years, the Mumbai and Delhi regions should be approximately equal,” he says.

Because of the importance of Delhi to the firm’s strategic growth, Cyril says “at least 40 to 50 per cent of my time will be Delhi-oriented” over the next one to two years.

Delhi is not the only focus for growth. Over the next five years, he plans for Cyril Amarchand Mangaldas to become a full-service firm, with offices across India.

“The new firm is going to be a single national firm with one identity and one P&L; Delhi will be a sizeable part of the combined firm.”

As part of that, he will be looking to build new capabilities in intellectual property, pharmaceutical and white-collar crime law. He will also be looking to develop the firm’s corporate, litigation and finance practice groups, which will be its “big engines”.

This growth will be achieved primarily through lateral hires and team acquisitions; Cyril is adamant that he will not consider mergers.

“We want to stay independent, it allows us the flexibility to work with whoever we want.”

His growth ambitions are not confined to India: from 2020, Cyril plans to expand abroad and create a new Asia law firm which will be a market leader by 2025.

“We want to build the best firm in Asia. In terms of practice coverage and league tables, we want to be the top firm,” he says.

As part of that vision, he is keen for all lawyers to think firm-first rather than me-first.

“It has to be a culture of a national firm with people working as a team rather than as a bunch of solo practitioners going out and hunting on their own.”

He wants the culture of his new firm to be “client focused, entrepreneurial and built on confident humility”, drawing on what he perceives to be the best attributes of the legacy firm.

“Frankly, the culture that we had, that brought Amarchand Mangaldas to where it was, had a lot of things right about it, so I would like that to continue. What got us here was lots of great things, so we have picked the best of those and will build on them.”

The end of an era

In some ways, the dissolution of Amarchand Mangaldas was inevitable. The firm had historically suffered from disparate management structures and approaches, with each brother operating largely autonomously in his own respective region.

In December 2013, Cyril and Vandana told Managing Partner that, by and large, the firm's offices were “aligned with a common vision”. However, it appears that this newfound familial harmony over the firm’s direction was irretrievably damaged by the will of Cyril and Shardul’s late mother.

The ensuing financial dispute ultimately led to the destruction of a firm with a near-100-year history. From its ashes, two new firms have arisen, full of promise and grand expectations. The question is, will they rise to great heights, or will the brothers’ competitive spirit lead them to put all of their energy into destroying each other?

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

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