Over two years ago, when the COVID-19 pandemic hit, judicial services came to a complete halt and people in the legal profession, just like those in other professions, were hit hard.
Even corporate and full-service law firms, which draw most of their business providing dispute resolution services and legal services beyond litigation, struggled as business and economic activity came to a grinding halt.
But, for the most part, these firms sailed through with minimal damage and are on their way to reaching pre-pandemic levels of business. Unlike private practitioners, who rely solely on litigation and court work for their earnings, law firms ventured into different practice areas and tapped on novel sectors that came up due to the coronavirus.
We take a look at how law firms kept going over the preceding two years as the world reset in the wake of the COVID-19 pandemic to enter a new normal.
Immediate aftermath
The pandemic brought with it many uncertainties and changed the way business was conducted. With corporates and businesses looking to minimise losses, the corporate advisory practice of law firms saw an uptick.
“People wanted to renegotiate leases, terminate employees, change employment terms,” says Shoubhik Dasgupta, Partner, Pioneer Legal who attributes this change to the increase in corporate advisory work.
Dasgupta also points out that not only litigation but “a lot of corporate transactions, including mergers and acquisitions, equity investments etc were (also) put on hold.” This meant reduced legal and regulatory work on big-ticket transactions.
Akil Hirani, Managing Partner at Majmudar & Partners, adds that in the wake of the first nationwide lockdown, law practices relating to real-estate and infrastructure also slowed down severely.
Essentially, during the first lockdown, new business and briefs stopped coming in at law firms and most busied themselves clearing existing pending work. While this work was sufficient for some firms, many faced hardships.
“We, like every other firm, were unsure about the impact this (pandemic-induced lockdown) would have on billings and receipts. While there was some impact, fortunately for full-service firms like ours, the Corporate and Projects practice continued to witness a good deal of growth despite the slowdown,” said Atul Sharma, Managing Partner at Link Legal.
Majmudar & Partners saw demand for advisory work in areas such as technology, pharmaceuticals, life sciences, employment law, financial restructuring, to name a few, after the first lockdown.
However, at litigation-heavy firm MV Kini, business shrank 60%-70%, says Managing Partner MV Kini.
Nevertheless, despite the second wave being more severe, 2021 saw many law firms bouncing back.
Insolvency, M&A business
After the second wave of the pandemic waned, litigation slowly started picking up, and some corporate practice areas took off.
There was an increase in cases involving arbitration as an alternate dispute resolution mechanism, as many contracts fell through or parties chose to renegotiate terms in a bid to secure their interests amid the uncertainty. “Arbitration took off because a lot of contracts were being renegotiated or being called off,” says Sameer Jain of PSL Advocates and Solicitors.
For Jain’s firm though, the litigation and arbitration practices have always seen a balance. Through the pandemic, the insolvency practice proved to be a driving force for revenue inflows at many corporate firms. After the initial moratorium on initiation of insolvency proceedings against corporate debtors ended, many firms saw revenue from their insolvency practice surge.
“Firms got their share of work because a lot of business consolidation and resolution took place through the pandemic,” said Anand Desai, Managing Partner at DSK Legal. “These moves required a fair amount of legal work, where larger law firms were involved.”
“The pandemic saw a rise in the number of insolvency resolutions, real estate financing and mergers and acquisitions, which essentially drove the business at law firms,” Desai adds.
Rajiv Luthra, Managing Partner at L&L Partners, said the M&A practice was one of the most important areas for his firm and accounted for a large chunk of the revenue it earned during this period.
“Our firm did not see the number of clients go down but not much work was coming in from existing clients because businesses were not doing too well during the pandemic,” says Luthra. He adds that while the firm worked to deepen relations with existing clients and seek new ones, three practice areas boomed during this period namely: (1) insolvency, (2) advisory on renewable energy and (3) private equity funding and investment. These were in addition to the large-scale mergers and acquisitions.
Hirani of Majmudar & Partners also credits a number of Initial Public Offerings as well as work involving securities law and restructuring exercises for keeping his firm busy during the second year of the pandemic. “Like many other firms, I imagine we have ended the year pretty well and have had a pretty good financial year in the second year of Covid,” says the Managing Partner.
‘Nothing to complain about’
Unlike many other industries, which saw huge job losses, or even the other arm of the legal industry — litigation — which saw many distraught practitioners struggle to make ends meet, law firms got by comparatively unharmed with their corporate practices keeping them afloat.
While some firms have not done that well after the pandemic began, most are in a comfortable position. For instance, Desai of DSK Legal says that while his firm may not have reached pre-pandemic levels in terms of revenue, “there is nothing to complain about”. Despite its large reduction in revenues, MV Kini & Co, too, did not see a reduction in team size.
Most firms got by without resorting to any layoffs. Indeed, some firms, including PSL Advocates and Solicitors and L&L Partners, added resources during this period. Luthra says that his firm has also opened newer practice areas such as blockchain, estate planning, and Internet of Things to name a few.
Where salary cuts had to be introduced, firms purportedly adopted a staggered formula to ensure that senior management took the maximum cuts while employees in the lowest pay grades were affected the least.
For instance, Ravi Kini, Managing Partner at MV Kini, said that while the firm did not have to close any branches or lay any employees off, the compensation structure had to be altered. “The compensation structure had to undergo changes and pay cuts were introduced. Our management team was generous in agreeing to take a higher cut to reduce the burden on junior staff.”
Link Legal’s Sharma says that “the partners showed collective ownership and supported the firm by forgoing a part of their remuneration for the first few months (of the lockdown).”
At Pioneer Legal, “as a partnership, we decided that we would not reduce salaries of anyone below the counsel level,” says Dasgupta
Going the extra mile
Extraordinary times call for extraordinary measures and the pandemic saw law firms across the country take steps to make their employees feel secure during the economic meltdown.
At L&L Partners, the firm set up a ‘Covid survival fund’ for the benefit of employees. And while no salaries were cut, the equity partners voluntarily chose to not draw any money from profits, says Managing Partner Luthra.
Many firms held vaccination camps for their employees and arranged seminars or mentorship programmes to ensure the mental health and well-being of their employees. With the work setup going completely remote, interactive activities, games and informal virtual meetings were given space in the work culture to keep employees motivated.
Limited work from home and a hybrid system are likely to become permanent features for employees at many law firms.
