Top law firms, consultancies take contrarian corona bets

MUMBAI: The country’s top law and professional services firms have taken a contrarian stance by rolling out annual bonuses, promotions and pay hikes. These come as companies and some state governments have made or are considering salary cuts to mitigate the impact of the Covid-19 outbreak.

In past few days, Deloitte, Grant Thornton, Shardul Amarchand Mangaldas, Cyril Amarchand Mangaldas, AZB & Partners, J Sagar Associates, Khaitan & Co and Trilegal have announced promotions to partners, hefty bonuses and increments, reflecting a belief that the economy will make a quick recovery once the pandemic blows over. While the coronavirus outbreak has impacted cash flows , the firms are betting on the long-term growth prospects of India Inc, insiders said. Once the economy recovers, businesses will gravitate toward those that are well prepared to deliver. Hence the move to invest in talent, they said.

“We were clear that all those people who deserved to be elevated, needed to be rewarded without delay,” said Vivek Chandy, joint managing partner at J Sagar Associates, which has made 43 promotions this year and increased its partner count by 10. In all, the top seven law firms and top five professional services firms in the country have added about 60 partners in the past few weeks, paid out crores in bonuses and promised hikes on par with last year.

Deloitte, one of the Big Four firms, elevated more than 30 directors into partnership roles. Grant Thornton added 15 new partners and even gave them leeway on capital requirements for such roles.

“We have taken a cautiously optimistic stance on partner additions and promotions,” said Vishesh C Chandiok, CEO of Grant Thornton India LLP. “We are mindful of the fact that they may not be able to bring capital and so we would give them a longer runway to be able to fulfil the conditions.”

Partners in consultancies and law firms bring in capital and then share in the firm’s annual profits. In top firms, a partner earns a minimum Rs 1 crore annually. In the last week of March, Shardul Amarchand Mangaldas announced annual bonuses, with most lawyers getting 100% of their variable pay. In some cases, the bonuses were 200% of variable pay, insiders said.

AZB & Partners has promoted about a dozen lawyers, including seven to partner, in the past few days. Cyril Amarchand Mangaldas has also announced generous annual bonuses.

All this while working capital has been impacted because many clients are unable to make payments.

“The business is affected for sure, but we have to think of the long term with a pragmatic view,” said Mohit Saraf, senior partner at law firm L&L Partners (formerly Luthra & Luthra Law Offices). The firm hired 45 lawyers recently and is all set to announce promotions.

Besides their bullishness on the economy, another reason why these firms are handing out big bonuses is the fear that, if not treated well, top performers may jump ship once a recovery is under way.

Some of these firms are making operational changes with a sharp focus on cost.

“We are already learning and will adapt ourselves to the extensive use of new technology and thus shave off non-essential operating costs substantially,” said Amar Sinhji, executive director, human resources, at Khaitan & Co.