Sometime in early 1991, Jyoti Sagar, chairman, Jyoti Sagar Associates (JSA) sat his uncle down for a talk. Sagar had worked at his uncle’s law firm for nearly 19 years now, three-and-a-half years as an apprentice and 16 as a lawyer. Over the two decades, he had added to the goodwill of the firm and helped the firm grow. What about the future, Sagar wondered. Would his uncle consider making him partner, or share profits?
“He was actually blunt with me,” Sagar recalls. “He expected people to remain as paid employees. Then he said, I can give you a 10 per cent partnership, but you have to pay for that share and that goodwill amount was around 60x my annual professional income. I was stunned.”
Sagar left the firm about six months after that conversation. On 1 November 1991, he set up his solo practice from a single hotel room in Qutub Hotel, Delhi. “There was a waiting list of 8-10 years for a telephone line in those days. So, I started in a hotel room. It was just me and an office boy,” says Sagar.
Now, 24 years later, JSA is one of
the top law firms in India, with over 270 lawyers, including 70 partners and offices in New Delhi, Gurgaon, Mumbai, Bangalore, Hyderabad and most recently, Chennai. “We started with a capital of ?50,000,” recalls Sagar, “which was actually advance fees given by my first client.” Despite a humble start, JSA actually had a good run from the beginning and even Sagar admits that he was ‘uniquely blessed’. He informed about 20 clients of his departure, along with his new address and contact information. Soon after, clients began sending cables to his uncle’s firm, requesting a transfer of files to Sagar’s new practice. “After the first week, it felt like my table had just moved from one location to the other.” Sagar’s founding clients were the same he’d been working on earlier – the likes of Oracle, Pepsi and the Digital Equipment Corporation.
Sagar’s timing was fortuitous. The opening of JSA coincided with the opening of the Indian economy and a flurry of legal work. “Prior to 1994-95, lawyers didn’t work in telecom or power or mining, because there was no private investment in these areas,”
explains Sagar. But it wasn’t just luck. After a successful start, Sagar quickly realised that the firm’s future lay in providing domain expertise. At a firm retreat, he spoke to his small team of lawyers about the need to specialise in important sectors such as municipal, infrastructure, etc. Amit Kapur, partner, JSA, remembers Sagar’s speech well. “He spoke about how the world is changing and the need to be a broad based firm that looks beyond FDI. I was told to look at municipal and infrastructure. I was quite enthused; I got Amar Gupta to take over litigation and I started looking at projects,” he explains.
Kapur has, since that speech, made quite a mark. He is regarded as one of the top lawyers in the power sector, and regularly consults with the government on the topic. Sagar’s vision paid off. The firm, with the help of old hands like Kapur, evolved into structured practice areas.
While the firm grew in practice and revenue, it was still a small player; from 1991 to around 2000, JSA had about 34 lawyers, and two offices, Delhi and Bangalore.
Bangalore too was actually the initiative of JSA partner Sajai Singh, who was interested in tech law and volunteered to set up the office. ‘‘Sajai had many contacts in Bangalore. We said, well, that’s one space where we don’t see any specialised areas. Bangalore was low-risk compared to Bombay,” says Sagar, on why his firm chose to expand down south instead of Mumbai. The expansion to Bangalore also raised the question – could JSA become a national firm?
A JSA commissioned client satisfaction survey in 2000 was an eye opener. While the clients lauded the firm for its ethical and management practices, they complained that JSA lacked a presence in Mumbai and the financial markets. Sagar and his team quickly realised that if they had national dreams, they needed a stronger presence in Mumbai. At the time, they only had a small three-person office in the city. “That’s what led to our search for a like minded person and that is how we found Berjis (Desai) and his team,” describes Sagar.
Sagar and Berjis Desai, managing partner, JSA, had been on opposite sides of a matter before and knew of each other. Through a mutual friend, an introduction was made and Sagar inquired if Desai was interested in JSA Mumbai. Desai, who happened to be in talks with another firm at the time, found that he and Sagar instantly connected on what they wanted to do. The finalised on the commercials of the new firm (Desai would become partner and bring
about 16 people with him, including current partners, such as Somasekhar Sundaresan and Gayatri Bhandari) within minutes.
“Bombay was a small office when we joined. It has grown organically. In the first few years we joined, the growth was quite rapid. Then it just happened without effort,” explains Desai. His strategy was to consciously attract people with sector expertise, such as Dina Wadia and Sandeep Mehta from Little & Co, Nitin Potdar from Amarchand, Akshay Chudasama from AZB, and Farhad Sorabjee from the chambers of Atul Setalvad. “They became equity partners, brought their own practice areas and in some cases, we started developing new practice areas like media or competition law, as we went along.”
But how did he lure such
Upendra Sharma & Sandeep Mehta Vivek Chandy
Sumanto Basu & Venkatesh Prasad Dina Wadia
Somasekhar Sundaresan Amit Kapur Dhirendra Nagi Currently vacant
prominent personalities to a barely known firm in Mumbai? Was it the lure of more money perhaps? “Not at all,” claims Desai. “The whole idea of a firm that didn’t belong to anybody was the primary attraction. JSA also offered considerable freedom and flexibility to do what each one pleased, within their sector.” And, as one partner remarked bluntly, “people were so unhappy in their existing set ups, that it didn’t require much effort to bring them in.”
“I didn’t want to be in a family kind of structure or where you were always subservient to a family or where the equity structure was skewed,” adds Dina Wadia, partner.
The JSA story is more than just a fairy tale for legal dorks. It is also the story of how Sagar chose to try and build something bigger than an average family controlled law firm; an institution in perpetuity, that would have no place for nepotism and old codgers that refuse to retire. Sagar led by example. After starting in November 1991, in April 1998, he took the baby steps of ceding equity in favour of jSA’s two senior-most colleagues. They were inducted as partners without paying anything to the firm or Sagar. After the expansion in 2000, the firm once again brainstormed ways to institutionalise this practice. “We said, how do we create something that will outlive us? How do we focus on the people?” says Sagar. The merger with Desai also gave all the partners an opportunity to structure the institution, with a set retirement age for partners, creating a trust that owned the firm, voting rights, etc.
The result is that JSA partners do not own the firm. Instead, the firm is owned by a trust and all equity partners are trustees, upholding the institution. The partners also decided that there would be no pay-in at the time of induction and no pay-out at the time of retirement. Incoming partners would not be charged for capital investment or goodwill. Importantly, Sagar also left no space for nepotism. JSA strictly prohibits any sort of familial ties within the firm. No child, sibling, nephew, or any relation whatsoever of an existing employee is allowed to work in the firm. (Sadly, love affairs between office colleagues- turned-spouses have resulted in one of the two leaving JSA.)
Kapur describes Sagar’s attitude and the firm’s structure well. “He said if I have to retain talent and grow this as an institution that is larger than me, then I have to accept that different people will come together and they will not be related. They’ll be people of excellence and we will develop something that is larger than anyone. That’s where his Openness and his willingness to not control everything has played a big role.” Kapur also credits Desai with being the yin to Sagar’s yang. “They were such a solid fit in providing for each other’s strength and weake- nesses. Neither of them were pursuing that this (JSA) should go to my son or daughter as a legacy.”