Ques: With international financing severely crimpled and billions dollars worth of deals on hold, the international legal industry is facing a crisis. How do you see yourself in the market currently in terms of work being undertaken by the firm?
Ans: I would say it is not that bad a crisis. I have seen times when Europe was in a crisis and the property market in UK dived. People in my firm had nothing to do. When I sit in 2012, I remember the depression in 1991 and the dotcom bubble in 2000-2001. These things go up and down and it’s not facing a crisis. It is true that when you have uncertainty, uncertain state of euro, sovereign debt crisis, people are not secure. However, over my life nations have defaulted in debts. Russia defaulted in 1997. It took Russia 5 years to recover. And now we see a similar situation with Greece, Portugal, Italy and Spain. I think Greece will go bust but Euro would not collapse. Clients often say that they are not entering into deals because of uncertainty and they do not know what’s around the corner, but deals are still happening because they cannot wait forever.
USA’s economy is now reviving. India is still growing at 7% p.a, which is phenomenal. If GDP is actually declining at the moment, it is of UK (0.1%). UK has proved to be fifth biggest economy and going down by 0.1% is truly speaking nothing. After all, life goes on. Banks are lending to each other. In 2008, banks were suspicious but inter-bank lending freezed. So, if banks could not borrow from each-other, it could not lend. Now, that is sorted. The growth is now in India and China in terms of finance, trade, infrastructure, etc. Infact, if we see the rise of an emerging middle class of 250 million reasonably well-off people, it is growth. So, we’re not really talking about crisis!
Ques: India is perceived to have a different legal system. What do you think is the greatest challenge that an overseas corporation which is doing business in India faces?
Ans: I think it is the justice system that is unbelievably slow. The businesses hope and risk that they don’t go to dispute resolution. As lawyers, you draft contracts and tell clients that if it is breached, you will get your rights. In India, that never happens and one does not get his rights and remedies. Hence, one goes for arbitration. Arbitration results in a quick award but is not enforced because some fine lawyers find a point and get it overturned, which only results in further delay.
Businessmen want to sign contracts and hope to never look at it again. Alternatively, they want to sign contracts which they can get enforced. In India, lawyers tell you that they could approach the Courts and get them damages. But, the cases last 20 years!
The Indian system is highly sophisticated in comparison to China and Russia. India has long traditions w.r.t Legality and Independence. Take the case of the Chief of Army Staff who goes to Court for resolving his dispute. This could also be resolved outside Court. I think this could also be an over-hang of the license raj.
Ques: Can you tell us more about Herbert Smith’s India and China practice?
Ans: I was designated as the senior partner in 1992. I led the way in 1990’s and have had a long connection with India. Herbert Smith did its first deal for TATA. Last year, ET celebrated their 50 years and one of their supplements mentioned acquisitions by Indian companies. Out of the 4 biggest acquisitions, Herbert Smith did 3. Herbert Smith has represented TATA, Wipro, Essar, HDFC, ICICI, etc.
Herbert Smith has a fantastic practice in China. Herbert Smith had the first western Chinese lawyers set-up their practice who knew all the people who had to come to power. Mao had closed all law faculties in China. In 1979, all law faculties were re-opened. Herbert Smith’s head of China practice was of the first 20 people to re-study law. He topped and knew everybody. Herbert Smith hired him to lead the Chinese practice. Soon, Herbert Smith aspires to be the no.1 Asian practice.
Ques: What is your opinion on the entry of foreign law firms into India?
Ans: I think you want to keep them out as long as possible. Firms like Ashrust, White & Case were practicing in India till someone approached the Courts in Bombay. In 2010, the judgment came out upholding the ban. India has a huge reservoir for legal capability and can do it on its own. Indian firms need not to be patronized by the UK and US firms and do not require learning it from them. These firms should only tell you what to do outside. Indian firms are as good as their foreign counterparts. I addressed the IBA before the Mumbai case and said that they should be kept out. Indian law firms should learn from complicated things that international firms are good at. It is only a question of jargon. If Indian firms can pick that, they will be the best in the world and sub-standard to none. The foreign investment from India is growing and soon Indian law firms by advising them will become global law firms.
I don’t think the market is opening for foreign firms for a few decades.
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