The retirement age of 60 was a true test for Sagar. In 2013, Sagar surrendered the last bit of equity he owned (7 per cent odd) and left the firm. And, while he continues in the role of chairman and mentor, he takes no share of profits from the firm and claims to have no active participation in the firm. “Sagar is the perfect example of doing what everyone preaches. He could have stuck around, but he didn’t. That is truly building an institution,” says Hai- greve Khaitan, managing partner,
Chudasama: honest about recession
Khaitan & Co. “He is forward thinking and one of the finest people in the community. I really admire him, not just for his work, but also his vision.”
The trust is not the only thing that sets JSA apart. It also has a unique compensation structure that is determined by its compensation committee. “We have a certain methodology, which includes not only experi- ence/position, but also interesting performance criterion,” says Sagar. “There are 6-7 slabs,” elaborates Desai. Seniority is only 5 per cent of the weightage. Other criteria include performance, practice area performance and brand building for the firm among others. The lowest slab is at 1.75 per cent, while the highest slab is at 6.25 per cent, adds Desai. Sagar is particularly proud of the fact that the equity slabs or bands as he calls them, are flexible. Partners can move easily within bands, and “to be specific, when I retired, the difference between me and the next set of partners was less than 1 percentage point. We are that flat an organisation.”
Desai, the Mumbai office, the expansion, the time – the combination was a turning point in jSA’s growth chart; from 34 lawyers before Desai, to
50 with Desai in 2003, and his team, to 350 lawyers in 2015. Admittedly, such growth has been the norm for most of the leading law firms.
The peak years saw JSA grow at 40 per cent per year. “We always had some kind of plan – that we would like to be x number of partners, x number of associates in y years. We did that organically and by joining up and taking up other practices. That also brought in heft into geographies where we had a decent presence but made us bigger. We knew that places where you can grow on merit, the sky was the limit,” says Wadia.
The recession and subsequent global slow down impacted India’s legal industry as well and last year, growth slowed to 17-18 per cent. Partner Akshay Chudasama is honest about the recession and its impact. “A lot of our competitors are completely undercutting us. It’s a big problem. I’ve gone into matters where we’ve given quotes of x lakh, and our peers from good quality Tier II firms have given quotes for half that amount. You can’t compete with that,” he says.
But Desai was optimistic about the figures for this year, with a new government in place and reforms on the agenda. “Stalled infrastructure projects should boost the industry,” he added. Business from foreign law firms also makes up 20-25 per cent of JSA’s revenues, and the uptick in the global financial markets should help.
The partners also pride themselves on being a transparent organisation. The firm’s accounts, for example, are web-enabled and each partner has access to it at any time from any given place. “It is different from other firms. Unless you’re able to accept that money is not everything, that you will be part of an institution as a trustee and the key is people – it is difficult,” says Chudasama.
Perhaps, it is the transparency or the unique compensation method. But JSA continually boasts of having the lowest attrition rate in the legal industry. “The firm is built around openness to evolve as per your passion and talent,” says Sagar.
Today, the firm is divided into nine practice areas and a practice head (who is also an equity partner) chairs each area. The firm’s business strategy is carefully crafted around each of these areas. There is a macro plan for every three to five years. And there is an annual budget and business plan for each practice area every year. “For example, in regulatory and policy practice, there are three equity partners and four to five younger partners. All of us think through questions such as how did we do last year, how do we expect to do this year, do we need more people, etc. It’s about time, economic reality of that industry and how to allocate effectively,” explains Kapur.
Once each practice area has created a plan, it is shared with a peer-sharing counsel, which is made up of all the practice chairs and Desai. All plans are combined to make a firm wide plan, with components such as people, training, clients and potential revenue, explains Chudasama. He also stresses on the importance of having yearly and long-term plans, citing the downturn in the capital markets over the last few years. These are short terms issues, the plan must be driven by a long-term view, he says.
JSA also regularly engages with its clients to improve on their work, as well as get an objective, outside review. “We try to marry our resources with opportunities,” says Chudasama. Most clients have glowing reviews for their JSA teams. “They
have scale and a large number of professionals covering different areas to take up complex assignments. At the same time, they are approachable and nimble enough to respond promptly,” says Atul Nishar, chairman, Hexaware Technologies Limited. “There is a fine combination of sound legal knowledge and strong business understanding.”
The firm’s executive committee, on the other hand, looks at the administrative side of things, with each member taking on one responsibility such as finance,, human resources, technology, etc. Kapur stresses on evolving the firm’s practice, whether by experience, looking at peer firms, other service sector or consulting firms, and finding the best solutions.
For now, the focus is on growing the firm. Desai hopes to expand to Ahmedabad next. While he’s happy about the firm’s number one status, when it comes to power or securities practice, he honestly admits that jSA’s M&A practice is not as large as it should be. He also enthused about the dispute resolution team in Mumbai that JSA has been developing in a big way over the last year.
JSA’s strategy of evolving and cultivating nine practice areas has been successful so far. Some, however, see it as too segregated. It is almost as if different teams are merely sharing an umbrella called JSA, comments an industry expert. “There is too much
decentralisation,” admits one of the partners. “And that comes with its fair share of issues.” From the outside, it is easy to imagine a few practice heads walking out with their teams. But the insiders, the equity partners themselves, are committed to the firm and insist that there are no such issues.
The departure of Sagar had raised similar concerns two years ago. “Everyone obviously respects Sagar, but we are operating pretty much as it is. In fact, we are growing and we’ve made progress. A lot of the questions on the ability of the institution to carry on once Jyoti (Sagar) retires have been resolved,” insists Chudasama.
Some outsiders claim that Sagar’s retirement is not as clean as it seems and he remains involved, if not invested, in many of the firms matters. JSA though, absolutely denies such claims. The other issue is that Desai is up for retirement in one year and once again, JSA will have a new person at its helm. Will the firm be able to carry on without its founding partners? And will it survive a succession contest every few years? “The real challenge will be the kind of structure people want to see. Do they want to see a managing partner as it is now? Somebody will have to emerge as a leader. The younger lot is seeped into the culture, so to speak. But the new lot – how true they stay to the philosophy is a major weakness,” says Desai, bluntly and to the point.
Even then, the younger lot seems prepared for it. “It is not something that is coming up out of the blue,” explains Chudasama. “People have discussed it, deliberated it and prepared for it. Our structure is quite benign; so, it is unlikely that we will have problems.”
Desai claims that young legal professionals are increasingly wary of the family law firm set up. “They would love a model like this. Oil & gas, competition, media and entertainment, shipping – a highly specialised firm dealing in specialised vertical practice areas. That will be the strength and USP of the firm, so long as they can stick together.”
♦ SONEERA SANGHVI [email protected]