Corporate law firms and their clientle

When Atul Dayal quit Kanga & Company to set up a new firm dedicated to Reliance Industries, there was a chorus of dissaproval from the law fraternity . Kanga & Company had served as legal counsel to Reliance since the Dhirubhai Ambani days and Dayal was a senior partner, second only to the legedary ML Bhakta.

In a profession where there is a very clear-cut distinction between a law firm and an in-house law department, Dayal had suddenly blurred the lines. His “captive law firm” is now seen as an aberration and other senior lawyers pray it will remain so.

Why the fuss? In a field where “independence” is important , corporate law firms usually take great care not be linked to a single client. Large corporates, for their part, prefer to distribute their work among several law firms, rather than be dependent on one, however good it may be. ”We don’t want all the work of a client and we certainly don’t want to be associated with a single company,” says Cyril Shroff, managing partner at Amarchand Mangaldas , one of the country’s largest firms.

Still, every lawyer has a favourite client, and it’s usually the one he’s handled the most challenging cases for and grown with. Amarchand has been linked to the Anil Ambani group, but Shroff says that’s not his favourite client. If he has a soft spot in his heart, it’s for two companies in the financial sector . “My favourite clients are ICICI and Kotak Mahindra,” he says. “Our firm has worked with them right since their inception and we’ve grown with them. For Kotak, we handled the migration from NBFC to bank. It’s the only such case in India so far and it took a year for us to navigate the whole regulatory process.”

Entering the office of Eruch Desai at Mulla & Mulla & Craigie Blunt & Caroe, it’s hard to miss who his favourite client is. Occupying pride of place on the shelf facing his desk are two faded pictures of the lawyer with GD Birla and with Aditya Birla. Over time, the Birla group has come to distribute it’s legal work among many law firms, but still, in the minds of the old timers, the association is still very clear - when you think of the 115 year old firm of Mulla & Mulla, you think of the Birlas.

Desai recalls his first personal contact with GD Birla on stage, at an annual general body meeting (AGM) of Hindalco in 1966. Mulla & Mulla’s senior partner NK Petigara passed way that year, and the firm sent Desai, then a junior partner, to attend the AGM in his place. “I had done the rights issue prospectus of Hindalco the same year, so I knew everything about the company,” says Desai. “When shareholders asked Mr Birla questions, I whispered the answers , which he appreciated.”
Through the 60s and 70s, most of the legal battles fought by the Birla group were against the government and Desai played a major role in all of them. For example, when Kiser Aluminium wanted to sell its 26% shareholding in Hindalco , the government insisted that the shares should go to the state-owned financial institutions .
“GD was totally opposed to this and we fought the case in the Kolkata high court and won. The shares went to the public,” recalls Desai.
A short distance down the road, in the offices of the equally old firm of Crawford Bayley & Co, veteran lawyer RA Shah has an office bereft of client portraits . That’s probably because his oldest client is Nusli Wadia, who somehow doesn’t make for a cosy portrait. Rather than business houses, Shah’s clients are best classified by industry. All the major FMCG companies — Hindustan Unilver, Proctor & Gamble, Colgate, Nestle, Britannia — are his clients. So are the pharma majors, from Pfizer, Abott and Roche to Nicholas Piramal and Wockhardt.

Before the new regulations restricting the number of directorships an individual could hold came into being, Shah held the record for the maximum Board memberships (over 50). “I am a strategic lawyer,” he says. “Clients come to me for advice when they have big issues. For routine problems, they go to others.”

Today, new law firms are working hard to build the kind of relationships that firms like Crawford Bayley and Mulla & Mulla have. It’s not easy, but one young firm that has managed a breakthrough is AZB Partners — and its big ticket client is no less than the House of Tatas. Some lawyers credit AZB’s success with the Tata group to the personal friendship the firm’s senior partners have with the directors of Tata Sons, but AZB senior partner Bahram Vakil says that’s not the way it works: “It’s not because of the friendships that the work has come our way. It’s the other way round. We’ve become close to the Tatas because of the work we’ve done for them.”

A friend of Tata Sons director Arun Gandhi, Vakil’s first contact with the group was through Tata Power. The company then wanted to investigate the possibility of acquiring the Enron power plant and Vakil was brought in becuse he was involved with the Dabhol project since its inception. That acquisition never happened, but AZB did go on to bag the brief for other major deals like the Tata Motors acquisition of Daewoo, Tata Steel’s acquisition of Corus and Tata Chemicals’ take-over of General Chemical. “The Tata Chemicals acquisition was particularly exciting ,” says partner Abhijit Joshi. “The seller was a hedge fund and the target company had footprints in Germany, Canada. We were negotiating a leveraged buyout with the lenders, with the assets of the target as collateral.”

With corporates distributing different types of work among law firms, the highest firm in the pecking order is the one that gets the M&A deals. Khaitan & Co, with its main offices in Kolkata, has always been particularly close to the RPG group but Mumbai based managing partner Haigreve Khaitan presents Anil Agarwal’s acquisition of Sesa Goa as an example of the interesting work the firm is doing. “Vedanta beat LM Mittal and the AV Birla Group on this acquisition because we were able to negotiate terms that went beyond the price per share. The transaction terms were very innovative and our expertise in tax laws helped,” he says.

Some firms like Majmudar & Co — whose logo is accompanied by a prominent band saying ‘international lawyers’ — are now targeting the new MNCs. When Microsoft set up operations in the country eight years ago, Majmudar handled the land acquisition deal in Hyderabad , followed by a series of intellectual property (IP) contracts with vendors and employees . “These type of contracts were new to India when we created them,” says partner Anoop Narayanan. “We had to negotiate with the lawyers at Infosys, Wipro, TCS, Satyam to ensure that Microsoft owned the rights to everything they developed for it. We even had to review the contract they had with their own employees.”
For new firms, IP has been often served as an entry point to large corporates. The seven year old ALMT Legal, for example , does IP work for engineering giant Larsen & Toubro and ALMT’s Mumbai based managing partner Sameer Tapia and Bangalore based partner SR Arun say: “We’ve got a team of engineers who work with L&T’s engineers to evaluate what is patentable. L&T has filed for 100 patents in the last two years, up from just 20 patents in the previous 15 year.”
And finally, at Kanga & Co, the new star client is Vijay Mallya’s United Breweries.

UB was earlier with Crawford Bayley and legend has it that Mallya switched to Kanga & Co when he saw ML Bhakta, Kanga’s senior-most lawyer, in action in a case where he was the opposing counsel. Since then, the firm has handled UB’s joint venture with Scottish & Newcastle , its GDR, convertible bonds and rights issue. The firm also played an interesting role in UB’s acquisition of Shaw Wallace.

“There was actually a conflict of interest, since both companies were our clients,” says partner Preeti Mehta, who has risen to take Atul Dayal’s place in the firm. “But that ultimately worked to everyone’s advantage because Mr Bhakta stepped in as the mediator.”