The world has come to a halt during these tough times due to the COVID-19 pandemic. Except for essential services, all kinds of activities either stand suspended or operate partially. Following these facts, various services are scaling down or shutting down.
The pandemic has also left its impact on the corporate litigation business. Not a single corporate law firm in India is bringing in big bucks or hiring new associates. Corporate law in India is synonymous with exuberance and unduly large sums of money. Hefty legal fees and other hidden charges pave the way for huge earnings for the firm and heavy paychecks for senior counsels on the case.
Over the years, the noble profession of advocacy that serves as a servant of the judiciary has been made into a cash cow. However, with the COVID-19 pandemic leaving long-lasting impressions on the world’s social and economic order, a lot of practices would need replacement.
Here are some factors that would give us an idea about the future of the legal industry in India:
Junior counsels & associates
]These trainee lawyers are the backbone of any corporate law firm. In India and most of the world, trainee lawyers look after the drafting of cases and other formalities, seldom going to trial, or getting to learn directly from an experienced senior counsel. This leaves little room for learning the tricks of the legal trade.
The pandemic has allowed law firms to expand the role of junior lawyers beyond paperwork, and establish them as efficient trial lawyers. The reason being new clients will be reluctant to pay hefty fees for senior counsel, citing poor economic growth in the past quarter.
An untimely prolonged closure of businesses due to COVID-19 has made everyone rethink the kinds of contingencies a business could face. The same goes for law firms. The management, i.e. the partners and senior partners will now have to find ways of keeping their litigation shops up and running even in times of great economic stress.
Prolonged business closure translates to hefty losses in revenue. The current scenario has made it clear that such closures will not be surprising in the future. As a result, effective contingency plans for client management and revenue management will be needed.
Working with a good corporate law firm in India means spending money. Huge sums of it. Millions of rupees are spent by an organization on hiring the best legal advisors and lawyers in case of a lawsuit. It so happens that companies spend a significant fraction of their wealth to prevent and tackle all kinds of legal issues, and the fee of a senior counsel is what inflates the expense account the most.
But, this is not just it. An array of expenses comes along with the legal fee. Expenses like court fees, accommodating senior counsel, hundreds of meetings concerning ongoing litigations – all of this wastes precious business hours which could be spent generating revenue.
In light of recent events, all such practices like Michelin-Star lunches, exorbitant meeting venues, and a fee per hearing would need to be done away with. New fee structures need to be put in place so that the firm benefits and not just the senior counsel alone.
Impact on Revenue
Assumptions and hypotheses are being made on the number of clients and income that business law firms will generate post-lockdown. Naturally, prolonged closure of the courts will bring in a high volume of work for the firms. However, it may not correspond to the revenue the firms are assuming to make out of it.
Law firms must account for the fact that cases at the lower courts are inevitable. Also, much of the litigation of lower courts are looked after by independently practicing lawyers and small law firms. In summary, it would not be an overstatement to say that lawyers practicing at lower courts may not take that bad of a hit. However, mid and large-sized firms will surely struggle to match their revenues with the mounting expenses, citing the current state of the economy.
The management must, therefore, be prepared. Such policies must be formulated to curb the growing expenses, along with utilizing the available and future funds for the welfare of all stakeholders of the firm. This will also provide increased efficiency and morale among the employees.
Just like other sectors, the future of law firms especially in terms of revenue does not seem to be very bright. However, in these trying times, firms need to adopt different business practices. A holistic approach needs to be taken towards managing the inflow of funds. At the same time, laying off associates would only add to a tarnished social image, considering the rising unemployment in the country.
Suitable restructuring of work and hiring junior lawyers may prove stressful in the beginning, but these factors will enable the firms to ride the wave of the next economic boom.