legal services sector in India 2012


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Post the initiation of the Indian Government’s efforts towards globalization of industries, the Indian economic landscape has been weathered with phenomenal changes. As the country opens its gates to foreign investments, domestic concerns also tread the lines of expansion. Majority of the demand for legal services stems from corporate sector as increasing number of organizations look at expanding or new entrepreneurs look at setting its foothold in the market. Beginning with setting up an establishment to manufacturing goods and selling them, the entire schema of a business is conditioned with legal procedures. And in order to cater to every legal procedure and regulation, legal services derive its demand. Though the sector is plagued by a gamut of regulations and restrictions in the professional domain, yet legal service sector in India is still marked with sanguine optimism and growth as reflected in its performance even during sub-prime crisis.

The report begins with an introduction to the hierarchical structure of the legal system followed in the country. The introduction section begins with a briefing on the concept of legal services and the types of legal services prevalent in the country. This is followed by a market overview section that provides a description of the Indian legal services market along with its market size and growth. It then narrows down to describe the types of legal services prevalent in the sector. A deliberation on the type of business model adopted in this sector constitutes the following topic of discussion. While the traditional partnership and limited liability partnership model continue to loom large in the sector, it is the innovative lockstep model that has been able to create ripples of legitimate compensation in the sector. The section gets concluded with a Porter’s Five Forces analysis of the sector.

Brief descriptions of the drivers that help the sector to prosper include demand from corporate entities, legal services related to products, legal services for accidents and lifestyle influences. Setting up an establishment in the Indian market makes it necessary for the companies to abide by all the legal regulations, not following of which makes the company accountable to the court of law. Starting with incorporation laws to that of franchising contracts to commercial trading services, a legal service provider gets sufficient fodder from this corner. Manufacturing activities resulting in the production of goods and services is another potential stimulant for this sector. As a product passes through the life-cycle of innovation to delivery, it gets encapsulated with a set of legal procedures. Packaging innovations to patents to the penultimate stage of pricing and distribution, a product is beset with paraphernalia of legal services, thus boosting its growth as manufacturing activity shoots up.

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legal services sector in India 2012

  1. 1. Legal Services Market ‐ IndiaJune 2012
  2. 2. Executive Summary  Legal services market is slated to grow at a rate of x1% per annum Market  The sector can be segregated into x2, x3 and x4 services  Legal services can be before court or any other tribunal system of law Drivers – Demand from corporate entities Challenges Drivers &  – Legal services related to products – Shortage of lawyers Challenges E  – Legal services for accidents – Slow judicial system PL – Lifestyle influences create legal services  opportunities  Trends   Legal service goes online AM  Entry of foreign law firms in India S  Law graduates opting for corporate career  Consistent rise in salaries of lawyers  Legal process outsourcing emerging as a viable opportunity Major PlayersCompetition Amarchand & Mangaldas  AZB & Partners Fox Mandal Luthra & Luthra CPA Global Ashurst  LEGAL SERVICES MARKET IN INDIA 2012.PPT 2
  3. 3. •Introduction•Market Overview•Business Model•Drivers & Challenges•Government Participation •Trends•Competition•Strategic Recommendations•Appendix LEGAL SERVICES MARKET IN INDIA 2012.PPT 3
  4. 4. Even during sub‐prime crisis, Indian legal services sector remain sanguine about growth reflecting its potential  SAMPLE Legal Services Market – Overview   • The Indian legal services sector has weathered changes and emerged as a highly competitive sector • To practice a law in India an advocate needs an LLB from an Indian university, followed by one year practical  training and enrolment with a State Bar Council • While the sector has spelled enough opportunities for the domestic law firms, interest of foreign firms in the  Indian market implies the latent growth potential within the sector • While globalization of legal services is a latest term linked with this sector, several foreign firms have already  treaded the lines of forming associations with Indian firms Legal Services Market – Growth INR bn T b1% S R Q P 0 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ LEGAL SERVICES MARKET IN INDIA 2012.PPT 4
  5. 5. Legal advisory services capitalizes on the requirement to adhere to laws in the country X5 Services SAMPLE  X6 services pertain to legal services in different fields of law • X7  A • X8 • X9 • X10 B • X11 • X12  • X13 C  • X14 • X15 LEGAL SERVICES MARKET IN INDIA 2012.PPT 5
  6. 6. Drivers & Challenges – Summary   Drivers Challenges Demand from corporate entities Shortage of lawyers Legal services related to products Slow judicial system Legal services for accidents Lifestyle influences create legal  services opportunities LEGAL SERVICES MARKET IN INDIA 2012.PPT 6
  7. 7. … road and rail accidents Road Accidents SAMPLE  Railway Accidents • The  Act, 1885 entitle legal heirs of a  • The passengers who meet with an  deceased accident victim to claim  accident as defined under Section 124  compensation from the person who  of The railways Act 1989 or even  committed negligence become victim of untoward incidents  as defined under Section 123 (C) of The  • The Motor Vehicle Act entails a  Railways Act 1989 are entitled to  compulsory third party insurance and  receive compensation for loss of life or  procedure of adjudication to ensure  injuries incurred due to their  relief to victims of accident cases involvement in a railway accident   Registered Deaths Injured Unit No C% S8 Unit No S4 S2 S6 N O S7 M S5 S1 S3 0 0 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ Road Accidents – Growth  Rail Accidents – Growth  LEGAL SERVICES MARKET IN INDIA 2012.PPT 7
  8. 8. As people look at registering marriages and separation legally, services in the said field gets a fillipLifestyle influences create legal services opportunities Impact• Present day social customs have also been characterized by legal rules and regulations• While earlier, m1 were considered to be more a product of social rituals wherein court of law  did not come into play PLE • Today, m2 are legitimized at the court of law that registers the m3 as a legal sanctity SAM• Lifestyle influences have shaped people’s thought process wherein people part ways through  m4 either as a result of mutual consent or bitter alimony claims• In both the matters, legal services are of prime importance as it is through court of law that  these issues can be resolved, thus providing a fillip to the legal services sector • Even m5 and m6 require authorization of responsibilities that is rendered by court seeking  legal services’ help Divorce – Rate in India Wedding Industry – Growth in India Unit No INR bn h% Y g% X F W E V U 0 0 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ LEGAL SERVICES MARKET IN INDIA 2012.PPT 8
  9. 9. … regulates the sectorBar Council of India (2/2) SAMPLE  Protest by BCI About o1 mn  • The Bar Council of India (BCI) and all other state bar councils have decided to protest against the  lawyers across  proposed Higher Education & Research Bill, 2011 the country are  • The new bill intends to put an end to the prerogative of the BCI to inspect educational institutions  slated to boycott  imparting law education across the country courts on Jul ‐‐ • BCI and other representatives have termed it as an infringement of Sections 6 & 7 of Advocates Act  and ‐‐ to protest  • In addition to the Higher Education & Research Bill, the BCI and state bars have also been opposing  against the  Higher Education  the Foreign Educational Institutions (Regulation of Entry and Operations) Bill 2010, the Educational  & Research Bill  Tribunals Bill 2012 and the National Law Schools Bill 2012     2011 Unique Identification Number • The BCI is planning to introduce Unique Identification Number (UIN) system and UIN is slated to be awarded to the  lawyers • The UIN system would be serving as an useful framework for implementing and tracking continuing legal education  across the profession • It also mentioned that practicing lawyers would be given access to hardware and software resources and would  also be trained to use technology in related matters • Further, a proposal of stipend for the advocates with less than 3 years’ practice along  with an insurance scheme for  lawyers will also be introduced  LEGAL SERVICES MARKET IN INDIA 2012.PPT 9
  10. 10. Trends – Summary  Entry of foreign law firms in India Legal service goes online ` Key Trends Law graduates opting for corporate career Consistent rise in salaries of lawyers Legal process outsourcing emerging as a viable opportunity LEGAL SERVICES MARKET IN INDIA 2012.PPT 10
  11. 11. Cost efficiency and capacity utilization drive the legal processing sector… SAMPLE Legal process outsourcing emerging as a viable opportunity (1/2) • Legal process outsourcing refers to the practice of a  law firm or corporation that look at obtaining legal  support services from a third party law firm or legal  support services company • When the outsourced entity is based in some other  Services included  country, it is also called Offshoring in LPO • In‐house law verticals of MNCs outsource a  • T1 considerable part of work in order to restrict their  costs • T2 • LPO has gained in momentum after the recent sub‐ • T3 prime crisis around the world • T4 • India has been touted as one of the chief centers of  • T5 outsourcing businesses with a considerable number  of lawyers being educated in the UK and US law  colleges and universities Legal Process Outsourcing Employee Strength – Market Size and Growth  Unit No n% M L K J I 0 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ LEGAL SERVICES MARKET IN INDIA 2012.PPT 11
  12. 12. Private: Domestic Company – Company 1 (1/3)Company Information Offices and Centres – India Registered AddressTel No.Fax No. Place    WebsiteYear of Incorporation Registered  AddressProducts and Services Category Products/Services Key People MPL E  Name Designation SA LEGAL SERVICES MARKET IN INDIA 2012.PPT 12
  13. 13. Private: Domestic Company – Company 1 (2/3) Financial Snapshot SAMPLE  Key Ratios y‐o‐y change  Particulars  2011 2010 2009 2008Total Income Total Income Profit (2011‐10) INR mn INR mn  Profitability Ratios Profit / Loss S Operating Margin 7.49 ‐6.73% ‐14.22% ‐20.71% ‐20.53% Net Margin 6.31 63.20% 56.89% 46.89% 43.61% Profit Before Tax Margin 9.60 92.51% 82.91% 75.64% 73.96% Q R Return on Equity 6.66 38.16% 31.50% 35.04% 47.43% P Return on Capital Employed 5.93 ‐5.15% ‐11.08% ‐22.90% 122.33% Return on Working Capital 1.58 38.49% 36.90% 45.99% 89.99% Return on Assets 3.65 33.46% 29.81% 30.22% 32.71% Return on Fixed Assets 105.01 266.85% 161.84% 89.44% 73.59% 0 0 Cost Ratios 20‐‐ 20‐‐ 20‐‐ 20‐‐ Operating costs (% of Sales) N.A. N.A. N.A. N.A. N.A. Administration costs (% of  N.A. N.A. N.A. N.A. N.A. Financial Summary  Sales) Interest costs (% of Sales) N.A. N.A. N.A. N.A. N.A. • Company incurred a net profit of INR ‐ mn in FY 2011, as  Liquidity Ratios compared to net profit of INR ‐ mn in FY 2010 Current Ratio 10.16% 3.82 3.47 2.57 1.32 Cash Ratio 114.42% 0.09 0.04 0.13 0.20 • It reported total Income of  INR ‐ mn in FY 2011,  Leverage Ratios registering a decrease of a1% over FY 2010 Debt to Equity Ratio 148.82% 0.14 0.06 0.16 0.45 Debt to Capital Ratio 130.49% 0.12 0.05 0.14 0.31 • Earned an operating margin of a2% in FY 2011, an  Interest Coverage Ratio ‐78.66% ‐8.85 ‐4.95 ‐5.68 ‐3.73 increase of a3 percentage points over FY 2010 Efficiency Ratios • The company reported a debt to equity ratio of ‐ in FY  Fixed Asset Turnover N.A. N.A. N.A. N.A. N.A. 2011, a increase of a4% over FY 2010 Asset Turnover N.A. N.A. N.A. N.A. N.A. Current Asset Turnover N.A. N.A. N.A. N.A. N.A. Working Capital Turnover N.A. N.A. N.A. N.A. N.A. Capital Employed Turnover N.A. N.A. N.A. N.A. N.A. LEGAL SERVICES MARKET IN INDIA 2012.PPT 13
  14. 14. Private: Domestic Company – Company 1 (3/3)Key Recent Developments SAMPLE  Description  News • Is Indias oldest law firm with offices both in the country as well as overseas • Besides having foreign presence in l1, l2, l3, l4Overview • Additionally, it also has representative offices in places including n1, n2, n3, n4 • Boasts of a team of a total of ‐ lawyers with ‐ partners and ‐ para‐legal staffServices  • Provides expertise on fields such as o1, o2, o3, o4, o5 • o6 have separated with o7  repaying o8 the original stake purchased in the Bombay Miscellaneous solicitors firm when they merged in 20‐‐ LEGAL SERVICES MARKET IN INDIA 2012.PPT 14
  15. 15. Thank you for the attentionThe Legal Services Market – India 2012 report is a part of Netscribes’ Business Services’Industry Series.For more detailed information or customized research requirements please contact:Phone: +91 33 4064 6214E‐Mail: sales@netscribes.comFollow us on:About NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used in the preparation of this report,Netscribes is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes. and prior permission is required for guidelines on reproduction. LEGAL SERVICES MARKET IN INDIA 2012.PPT 15