#Interviews: We don’t want the ‘eat what you kill’ culture, HSA’s Amitabh Sharma (Part -II)

In the second part of the interview with Pallavi Saluja, Hemant Sahai and Amitabh Sharma speak about the firm’s equity structure, liberalisation and the legal profession in India.

(You can read Part I of the interview here)

Pallavi Saluja: Having worked at JSA and Khaitan, what are some of the cultural differences you see within these firms?

Amitabh Sharma: Let me respond to this question by highlighting the positive cultural aspects that I see here – HSA’s greatest strength is its openness, transparency and systems driven culture. Mutual trust, faith and comfort is the bedrock of the firm’s leadership’s philosophy.

We are modeling ourselves on the underlying philosophy of the question “What can I do for my firm?” Our people are to leave their egos behind and focus on benefiting themselves by benefiting the Firm.

Because we are still a mid-sized Firm, it is easy for us to adapt to these new policies and organizational culture. Tomorrow, when new people join the firm, they will know that this is the culture that they are walking into and this is what is expected of them. At the end of the day, we do not want people who only work to eat what they kill.

Pallavi Saluja: With bigger law firms making more Partners to retain them, do you think the value of the partner” tag goes down?

Hemant Sahai: That is an insightful observation. In India, most firms are making partners for strategic reasons, for example to make sure he/she doesn’t leave, or almost for reasons linked to PQE rather than because that person adds to the stature or value of the firm.

They do so without necessarily evaluating that person against objective standards of performance or behaviour. When you meet partners across international firms, they have very similar attributes, there is a certain standard of performance and behavior to be expected and they truly act as ambassadors of their firms. In India, without being derogatory or sounding disparaging or even questioning lawyering skills, one comes across partners who would perhaps not have the requisite skills or stature to even be a senior associate in another firm.

In India, without being derogatory or sounding disparaging or even questioning lawyering skills, one comes across partners who would perhaps not have the requisite skills or stature to even be a senior associate in another firm.

Part of the problem lies in the fact that the law firm sector in India is still unregulated and is yet to mature. Also, the pressure to present mature partners to clients comes from mature clients themselves.

Finally, there is very little formal training for partners. The Bar Council of India plays a marginal role in regulating the profession and appears to be more involved in disciplinary issues rather than regulating standards of the profession. In England, on the other hand, the Law Society plays a very important regulatory role, including in professional standards and CLE. The clients too are more discerning in these jurisdictions, and they would want to work with a Partner only if they see real value.

This is one of the reasons that I am supportive of the entry of foreign law firms. They carry experience and international best practices with them and are generally not susceptible to taking ad-hoc decisions. Whichever way you look at it, entry of foreign firms is going to benefit the Indian sector and individual Indian lawyers.

For us, it is not just about lawyering skills, which for a sharp lawyer will have to be taken for granted. More important than that is the ability to manage a team, manage clients and be an ambassador for the firm. Sometimes you have partners who are so individualistic that they don’t talk to other partners. This is something we completely discourage. Some of these attributes are difficult to evaluate in a person, but with experience, one can assess the characteristics and personalities, with reasonable accuracy.

Amitabh Sharma: I have seen a lot of partners even though being great lawyers, they are not very good at the business of law. We have a very detailed procedure for inviting people to the collegium; we assess where the areas of strength are and the areas of improvement. A firm and the incoming partner needs a development plan, which is not what most firms are doing.

Pallavi Saluja: What are the negatives of liberalisation?

Hemant Sahai: The size of the foreign firms is so large that Indian firms can’t compete with them unless there is a structural change allowed to be made by the Indian firms. Simple things like how we advertise, detailed information permitted to be displayed on websites, cap on number of partners, effective tools for limiting professional liability and similar structural changes that people have been talking about for a long time.

There is merit in that; to simply unleash these firms in a market where the existing firms do not have the financial muscle would mean that we will be forced to combine or end up being small, niche practices.

To simply unleash these firms in a market where the existing firms do not have the financial muscle would mean that we will be forced to combine or end up being small, niche practices.

Foreign firms generally criticize the joint venture model, but it worked very well for the Singaporean lawyers, while it may not have worked for the international firms. The domestic firms grew because the international firms were forced to partner with the domestic Singaporean firms, giving them and the domestic markets time to mature and be able to sustain larger sized firms.

Pallavi Saluja: How are you preparing for it as a firm?

Hemant Sahai: At this point of time, we just need to make sure that we create a firm with a robust structure, a decent size, and be recognized as leaders with specialization in areas where we cannot be ignored. They are not necessarily looking at acquiring client bases in India, they are primarily looking to set up efficient and good quality execution capabilities in India, with minimal historical and family baggage.

It has to be recognized that their financial muscle will allow them to pick and choose quality lawyers in the market. However, there is merit in the assumption that a team with demonstrated execution strengths and strong leadership will be a better platform for foreign firms to partner with.

So we need to be able to offer a value proposition, where they see us as a firm, and not as individual lawyers and recognize strength in our team in its entirety, rather than a motley collection of good lawyers.

The alternative too is always available to us, i.e. focus on our key strengths in our market leading practices and continue as an independent, albeit smaller firm. As the size of the market grows, there will be adequate space for law firms of different sizes and each firm will find its niche or level, provided they offer tangible value to clients.

As the size of the market grows, there will be adequate space for law firms of different sizes and each firm will find its niche or level, provided they offer tangible value to clients.

Amitabh Sharma: The markets in India are still not as deep and sophisticated as in foreign countries (particularly the US and UK), so clients are not ready to pay top dollar to firms, which makes it difficult to maintain a large stock of lawyers.

We aren’t aiming to be more than 250 lawyers large (even in year 2021) because this will allow us to concentrate efforts on creating a niche – something that will prove advantageous in the midst of foreign law firms seeping into the Indian market.

The pecking order of law firms in India is going to change soon; in 3-5 years we will see a very different pecking order. The breakout outlier firm would be one of the firms from the mid-tier, as long as they keep their flock together and break away from outdated practices and restrictive cultures.

Pallavi Saluja: How is the equity structured?

Amitabh Sharma: We have just concluded revamping our entire HR systems and processes and have introduced Balance Scorecard across all levels of attorneys, including our equity partners. We are now in midst of our institutional designing and equity restructuring.

Once the restructuring is done, you will see that it will have broadly three components. One is a fixed compensation which will be based on the number of years (i) in the firm; (ii) in the profession: your market standing/reputation, leadership attributes; your execution/rain-making skills etc. Second, a performance linked bonus which will be determined by way of your evaluation in the balance score card based on certain defined and agreed KPIs (Key Performance Indicators), and third an equity linked share in profits.

Neither do we want to create and promote a structure which can get us either complacent nor do we want to promote the culture of ‘eat what you kill’ – it has to be performance benchmarked.

Pallavi Saluja: Any specific strategies for talent retention?

Hemant Sahai: The key is transparency in our dealings with partners. Talent retention is not always about money, which one can legitimately take for granted after certain number of years and value of his individual practice and stature.

A talented person is more often looking for opportunity to grow as an individual and a lawyer, playing a meaningful leadership role and taking on other kinds of different roles in the firm and recognition. The money just follows. As long as your systems for reward are linked to performance, talented people will be ready to forego a potentially higher pay package from another firm.

Ironically, the biggest push factor in some of the larger firms is the ‘golden handcuff’. I have found on several occasions that many are unable to leave even though they dislike their environment.

Ironically, the biggest push factor in some of the larger firms is the ‘golden handcuff’. I have found on several occasions that many are unable to leave even though they dislike their environment. However, the moment they get an opportunity, and an assurance of certain minimum income, they are ready to unshackle themselves from the golden handcuffs. That is what we aspire to do – create an alternative that offers a more rewarding experience.

Amitabh Sharma: Before I joined HSA, Abeezar Faizullabhoy mentioned to me that in law firm management, there are two very critical elements that I need to pay attention to – lawyers’ egos and compensation. If we manage to strike a balance between both, there will be no stopping us.

Some people say it is easier to herd a group of cats than a group of lawyers! Though I believe otherwise.

Some people say, it is easier to herd a group of cats than a group of lawyers! Though I believe otherwise.

To have partners work as a team, all you need to have is shared values and common vision. To achieve it, I believe there are four basic promises we need to elicit from the partnership collegium – one, complete faith, trust and mutual respect; two, Honesty; three, one hundred percent transparency; and four, ethics.

Pallavi Saluja: Now that it has been half a year since you took over as Managing Partner, how much closer are you to achieving HSA 2.0?

Amitabh Sharma: The six-month mark is a great time to reflect on progress and assess whether or not we are on the right track. Hemant Sahai handed me a clean canvas with a simple mandate to work tirelessly, diligently and honestly towards catapulting the Firm to the next level.

I do not look at the words “Managing Partner” as a designation or yet another feather in my cap. It is an enormous act of trust on Hemant Sahai’s part – something I wish to make the most of, do my best with, and leave something for the future generation of Partners and lawyers.

I think of my role and responsibilities to be divided primarily into two compartments – first being internal systems and process management, and the second being external client facing/outreach initiatives.

To keep the firm running, we need a steady yet rising inflow of work, and a workforce that is able to keep pace with the same. For this, I strongly believe we need to create a robust platform within the firm, to ease the pressure that comes in with increasing work. We are ramping up our practice areas across offices in terms of quantity and quality. We are tapping the market pan India, getting more and more brilliant legal minds on board with us. Of course, when you have a great asset, maintenance and advancement is the only way to justifiably make the most of it.

HSA 2.0 is a vision for 2021. I don’t wish to jinx it, but I can’t help but feel excited at how wonderfully its progressing already. I am eager to see this through and every step towards that goal is proving to be very thrilling.

(Views expressed in this interview are of HSA Managing Partners Hemant Sahai and Amitabh Sharma. Bar & Bench neither endorses nor is responsible for the same)