By Abhyudaya Agarwal
The Income Tax department’s notice to Vodafone was close to Rs 11,200 crore.
In the Kingfisher’s debt restructuring, banks case had over Rs 6,000 crore of unpaid loans (without interest).
Nokia was required deposit Rs 2,250 crore in December in an escrow account before its deal with Microsoft could be cleared by Indian courts.
Litigation can be quite exciting. Imagine arguing complex constitutional law cases, high profile criminal trials or working on environmental, public interest, property or family law matters. It makes for a good mix of things – you are always on the edge and never get bored. Moreover, you end up learning a lot about a variety of legal areas.
This symbolized 90 percent of the life of a litigator a few years back.
It takes at least 5-10 years to establish a thriving litigation practice – and young lawyers face a huge financial crunch during this period. This is the most difficult phase of litigation. Those who survive this phase have drastically higher chances of succeeding in the long-term.
Not anymore. Litigation is changing fast, and is assuming multiple dimensions.
Consider the Vodafone case, Kingfisher’s debt worries or Nokia’s tax dues – commercial disputes of such importance were relatively uncommon 20 years back, and would rarely fall in the hands of an ordinary litigator (unless he was Soli Sorabjee or Gopal Subramaniam).
Today, such high-value commercial disputes are rapidly increasing, and large companies actively seek the help of litigators for advice on litigation strategy and to represent them in various legal forums.
While the long ‘dip’ in a litigator’s career was acceptable as the norm ten years back, today, lawyers are reinventing themselves to tap into newer opportunities to stabilize their earnings in their initial years and create newer opportunities through their unique experiences, which they can extensively leverage in future.
So, what emerging opportunities are available to litigators?
#1 Corporate retainerships and consultancy work
Clients often approach litigators for commercial consultancy work. You will notice that many successful lawyers with a flourishing litigation practice also do some corporate consultancy work (in fact, some of them specifically establish large teams for the consultancy work).
Even young litigators have started taking up corporate retainerships, which bring with them a heavy component of transactional and advisory work to have a useful source of supplementary income. Sometimes, the retainer amount under these arrangements may even exceed top corporate law firm job salaries!
#2 Representing clients in arbitration proceedings
Arbitration is becoming very popular and ubiquitous with time – not just high-value contracts but even most domestic contracts have arbitration clauses these days. Developing expertise in the subject requires some specific skills that you were not taught in college and may not learn unless you work with a lawyer with a major practice in this area.
For a lawyer representing his client at an arbitration proceeding, mere knowledge of cases pertaining to the Arbitration and Conciliation Act or the theories of international commercial arbitration is not good enough to successfully represent a client in arbitration proceedings- it is important to have a strong grasp of how commercial contracts work across different industries.
#3 Regulatory litigation
Regulatory litigation at tribunals and administrative authorities such as income tax appellate tribunal (ITAT), SEBI, TDSAT presents a great opportunity for young litigators – those who are interested in building a practice in regulatory litigation must understand the entire sectoral framework pertaining to the relevant tribunal and keep abreast with how updates affect the interests of their clients. Tax, securities or telecom sector laws can be quite technical and require sustained effort to build expertise.
Notice how each new opportunity requires you to develop expertise in an area pertaining to business laws – whether it is tax, securities, investment law, company law or telecom laws.
What is the size of this opportunity?
After an opportunity has materialized, you can’t capitalize on it any more – you’ll only be a late entrant. Lawyers who have emerged as successful litigators and managing partners at law firms have been known to spot opportunities early – from PravinAnand who was amongst the first Indians to be present in international conferences on intellectual property to Zia Mody, Cyril Shroff or Rajiv Luthra, who have actively pursued corporate clients as early as the 1980s and 1990s, having foreseen the possibility of foreigners investing billions in India in the coming years.
Let’s look at some trends to evaluate the size of the ‘commercial litigation pie’ for present and future lawyers.
#1 Companies are footing larger litigation bills and have expanding legal teams
Did you know that the top 500 companies spent Rs. 9500 crores on legal bills in 2013? Did you know that the Tata group has around 400 lawyers – which competes with the number of lawyers working at India’s largest law firm Amarchand Mangaldas!
Not everyone avoids litigation – you’ll recall how Google had an aggressive stance with respect to email as well as Google Books, it rolled out ads (on Gmail) or Google Books service without unduly worrying about litigation pertaining to the privacy issue or copyright licenses – those took their own time to resolve (in courts and outside). Of course, Google was aware that no matter what it did, litigation was inevitable.
In India too, large players recognize litigation as a necessity – Adani’s legal expenses have doubled from Rs. 78 to 157 crores! DLF has been consistently spending around Rs. 150 crores over the past two years. Imagine being their lawyer.
#2 Amounts in dispute can be significantly high
As you saw in the introductory paragraph, the value of disputes has significantly increased – the Sahara case involved money worth Rs. 24,000 crores! In fact, it is increasingly common to have a dispute running in at least a few hundred crores.
#3 Volume of litigation for the largest companies is increasing, increasing the chances for young lawyers seize such opportunities and build their ‘profile’
You may work on relatively small matter or earn a small fee, but due to the increased volume of litigation faced by large companies, the likelihood that you will have a big-ticket name as your client has increased drastically. Globally, the biggest companies have been involved in a huge volume of litigation – whether it is Apple, Microsoft, Samsung, Vodafone, Nokia, Jet, Novartis or DLF.
These companies approach a variety of lawyers for different purposes and do not exclusively restrict themselves to the most famous legal names for all their work – for example, young litigators may have opportunities to defend (or argue against) such a company in cheque dishonour cases, real estate disputes, employment disputes or consumer cases.
Representing such clients will give a tremendous boost to a person’s credibility as a lawyer. It results in a network effect – he is able to inspire more trust from clients, his practice improves (he may start getting more conventional matters such as property law disputes, matrimonial cases or criminal law matters too!) and he may be able to charge a higher fee.
#4 Certain commercial sectors are more litigation prone than others
The general counsel for the Essar group has himself stated that litigation costs for companies in the steel, telecommunications and infrastructure sector have increased 3-4 times over the last five years!
Imagine where a litigator or a law firm which recognized this opportunity 5-8 years back would be placed now.
Future of litigation and how business law skills will help litigators
How can someone considering litigation as a career option capitalize on these opportunities?
Litigators like Harsh Salve or Rohinton Nariman are known to argue cases on the most important issues, from tax cases like Vodafone to constitutional law matters.
However, due to the increasing complexity of work and emergence of dedicated tribunals for regulated sectors, India may well see a breed of specialized commercial litigators in the future, which is similar to the UK or US. For example, Philip Wood, Queen’s Counsel in England (this is similar to the Senior Advocate designation in India), is internationally renowned to be an expert in international financial laws.
Even Nani Palkhivala is specifically remembered for his expertise in constitutional law and direct tax, apart from his remarkable advocacy skills.
To be in a position to capitalize on such emerging opportunities, developing business law skills in the early stages of your career can be helpful.
How can business law skills help litigators? Well, it’s simple – you can’t be arguing before the Securities Appellate Tribunal without being an expert on securities law, or at the Company Law Tribunal without knowing how the Companies Act applies at the ground level.
Most importantly, the importance of persuasiveness has been hugely undermined by young lawyers in court. While we know that a successful litigator must understand the relevance of ‘courtcraft’, or he must be ‘convincing’ and ‘persuasive’ to the bench – how this ability can be developed is a mystery to most people. How can one develop this ability?
‘Persuasive’ abilities are not inherent by birth or developed overnight – when you are arguing on a commercial issue, a nuanced understanding of commercial interests of the parties involved can significantly alter the course of the hearing.A court does not merely look at the provisions of the statute – they place significant weightage on the intentions of parties and ‘practices’ of the concerned sector.
Learning about business law systematically, understanding commercial intent and knowing how business law or commercial agreements can be strategically used to further commercial interests is extremely important for developing persuasive arguments to articulate a client’s interest.
For those who are not you may not want to miss out on this – unlike practise areas like private equity or capital markets, litigation presents a growing opportunity for the country’s best corporate law firms. India’s best corporate firms have realized that capital markets and private equity practise is dwindling and have consequently slowed down hiring, but litigation has followed a different journey – Khaitan’s litigation practise has grown 25 percent annually in the last 2-3 years!
Abhyudaya Agarwal is a co-founder of iPleaders, which focuses on bridging the gap between industry and academia. iPleaders conducts a one-year business law course with NUJS which helps law students develop practical skillsets to improve their employability. The course has been taken by law students from the best national law schools and even litigators and law firm associates. Information published in this article from Business World has been used for substantiating certain facts.