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Professional attrition, technology and foreign firms are the major puzzles facing Indian law firms, our annual state of the legal market survey reveals. Manokamana reports

The year 2024 is being marked with many changes: a new government, the upcoming US presidential election, increased use of artificial intelligence across industries, etc. Notable changes also include new criminal laws – Bharatiya Nyaya Sanhita, 2023 (repealing Indian Penal Code, 1860); Bharatiya Nagarik Suraksha Sanhita, 2023 (repealing Code of Criminal Procedure, 1973); and Bharatiya Sakshya Adhiniyam, 2023 (repealing Indian Evidence Act, 1872) – that came into effect on 1 July.

Lawyers, government professionals and even private individuals whose work involves careful navigation of these laws must retrain themselves to perform their duties efficiently.

Although new laws are not exactly a new challenge for those in the legal industry, changed criminal laws are a significant matter with which the industry will need time to familiarise itself. Newer challenges have emerged and remain, along with old ones, for lawyers and law firms to tackle. What are these challenges, and what do they mean for the Indian legal market and its future?

India Business Law Journal’s annual State of the Legal Market survey saw responses from legal personalities and law firms throughout India. Their answers provide an insightful read into navigating the current legal market for smooth and successful operations.

The survey report that follows is likely to be of interest not just to seasoned and senior law professionals, but also new professionals and even law students. What the market holds for them and what can be possible areas of focus to build the future are some of the questions answered by law professionals from across the country.

Looking back on 2023

Niche areas of practice such as IPR, cybersecurity, data protection, fintech, alternative dispute resolution (ADR), medico-legal and regulatory compliance – Indian and international – were observed by the lawyers with whom we spoke to be at the forefront of industry focus, and will most likely continue to be.

Lalit Bhasin, the president of the Society of Indian Law Firms, sees the possibility of more professional opportunities given an increase in inbound and outbound investment, joint ventures and M&A.

Bomi Daruwala, a Mumbai-based joint managing partner at Vaish Law, says: “Foreign strategic players are expected to continue M&A activity to increase their manufacturing footprint in India owing to the ‘China plus one’ strategy and favourable government policies such as the production-linked incentive scheme, which incentivises manufacturing in India.”

Ashish Ahuja, a joint managing partner of Wadia Ghandy & Co in Mumbai, also observes an increase in companies that need M&A to survive, believing it will bring in sufficient opportunities during this year.

Technology in law

The most remarkable growth in the past year was seen in the use of technology and artificial intelligence (AI) in the legal industry. Their rapid adoption for a variety of tasks such as legal research, document analysis, due diligence, contract management, case/litigation management or managing regulatory compliance demonstrates that legaltech and AI are revolutionising traditional practices, while enhancing efficiency.

Prachi Agarwal, partner, and Ashutosh Upadhyaya, managing associate, at the New Delhi office of Anand and Anand, note that the “domain of AI will see a lot of work in the coming year”, adding: “NITI Aayog’s report on AI, India and the EU’s joint call for developing trustworthy AI solutions in AI data and robotics and national communication policies all point to increase legal market in AI.”

Even though adoption of technology is now clearly a necessity, its widespread use “may act as both a boon and bane”, says Vikrant Rana, managing partner at SS Rana & Co in New Delhi, who adds that “technological advancements … pose challenges in the form of infringement of IP rights, AI bias, AI hallucination, issues of invasion of data privacy and protection”.

Rohan Janardhanan, the managing partner at Rex Legalis in Mumbai, says that “though use of AI … enhances efficiency, it also requires substantial investment and raises data security concerns”, while Gunita Pahwa, the joint managing partner at S&A Law Offices in Gurugram, along with Agarwal and Upadhyaya at Anand, feel that a robust and comprehensive framework is required to regulate AI.

Along with regulatory challenges, some practical challenges also emerge when trying to adopt technology into law practice. Malavika TV, litigation practice head of DePenning & DePenning in Chennai, observes the skill gap in new technologies for non-Gen Z lawyers is a major challenge that needs to be addressed. Avoiding technology in the industry is not an option. Justin Bharucha, the managing partner at Bharucha & Partners in Mumbai, says that “as the market evolves, firms must adapt to new technologies or risk falling behind”.

Finding and keeping talent

Another way of staying ahead in the industry is to recruit talented individuals. The competition for talent is as high as ever and has seen multiple professionals jump ship in several practice areas. “The large firms are not consistently able to hold on to talent, resulting in a constant migration or mushrooming of new firms,” says Sumeet Kachwaha, the managing partner at Kachwaha & Partners in New Delhi.

Another factor in this challenge is the “generational shift in terms of how work is fundamentally looked at, and aligning of inter-generational values,” says Vineetha MG, the senior partner at Samvad Partners in Mumbai.

There is also rapid development of niche areas of practice, but not enough experienced professionals are available to meet this demand. “There is a shortage of specialised legal skills in emerging areas,” says Daruwala, of Vaish Law. “Law firms often struggle to recruit and retain talent with expertise in niche fields, which are increasingly in demand.”

Anand Prasad, the senior partner at AP & Partners in New Delhi, agrees. “Law firms that develop specialised practices will fare better than others as clients look to approach domain experts. This is an ongoing trend and ties in closely with the increasing sophistication seen in the Indian market.”

It’s a significant challenge for firms, and they have their own ways and suggestions for dealing with it. CR Dua, the chairman of Dua Associates in New Delhi, says his organisation has invested in building robust practices in emerging niche areas, while also “adapting to the expectations of younger lawyers who are looking for more flexibility and work-life balance”. Samvad Partners also offers flexible work arrangements and a supportive work environment to foster a work-life balance and prioritise employee well-being and retention.

Anshul Saurastri, a partner at Krishna & Saurastri Associates in Mumbai, says his organisation has incorporated cultural changes driven by Gen Z, including flexible work arrangements incorporating remote, hybrid and ad-hoc working.

Law firms are not hesitant to change their mechanisms to ensure smooth sailing, whether it be compensation for their talent or introducing open dialogue. Vineetha MG elaborates: “To differentiate ourselves in the market, our firm offers competitive advantages such as market-matching salaries, performance-based bonuses …We also prioritise internal equity, ensuring that our compensation structures are fair.” Srishti Ojha, a partner at Verist Law in Mumbai, says her firm does not hesitate to have difficult conversations internally. Another way to attract and retain talent in the industry is with an encouraging environment.

“The best talent is retained when each person is professionally nurtured and blossoms in a friendly environment,” says Kachwaha, of Kachwaha & Partners. Vineetha MG, at Samvad Partners, says her firm offers “opportunities for professional growth and development, including training programmes and career advancement to help the lawyers build a fulfilling and rewarding career”.