Conversation with Pradip Kumar Khaitan and Haigreve Khaitan

Khaitan & Co, set up in 1911 by Debi Prasad Khaitan turned 100 years in November 2011. Debi Prasad Khaitan, who was a member of the Constituent Assembly was the pillar of the firm while Lakshmi Prasad Khaitan, the eldest brother who was not an attorney, handled the firm’s finances and administration. Later on, Debi Prasad’s youngest brother Bhagwati Prasad Khaitan who was a barrister also joined the firm..Khaitan & Co recently celebrated its centenary in Delhi where Bar & Bench Editor, Pallavi Saluja caught up with Pradip Kumar Khaitan (Bhagwati Prasad’s Son), who joined the firm in the 1960s and Haigreve Khaitan (Bhagwati Prasad’s grandson), who joined the firm in 1990s to talk about the early years of the firm, the work culture, client – lawyer relationship, the setting up of the Mumbai office and the management of the firm..Bar & Bench: Congratulations! The firm has completed 100 years. How does it feel?.Pradip Kumar Khaitan (Pinto): I feel very happy and satisfied. If your efforts are successful that in turn gives you satisfaction. And this is particularly so because we have been able to attract a lot of talent from across the globe apart from other law firms; having seen them work together gives a great satisfaction. I think Khaitan & Co had the advantage of having galloped unnoticed. If we were noticed 5 years earlier, we would have faced a stiff competition in our upward growth..Bar & Bench: Khaitan & Co represented only Indian businesses during early the 1900’s. What was the thought process then?. Pinto: The firm was started in 1911 at the time when the British were in India in full force. In Calcutta there were hardly. any Indian lawyers and whatever lawyers were there, they were mostly advising Zamindars, landowners and moneylenders. There was hardly any industry or businesses in Indian hands. So my uncle, Debi Prasad Khaitan, who started the firm, was advising Mr. G.D Birla who was in the Independence movement and Dr. Rajendar Prasad who was the first President of India later on. So all this led to the firm working for the Indian community. I mean for example the Birlas never bought anything from the British. They set up jute mills, textile mills in parallel to the British businesses. They set up Indian chambers in parallel to the Bengal Chamber; they set up FICCI in parallel to ASSOCHAM..So, we were really representing the Indian businesses and in those days you still had British solicitor firms. For example, in Calcutta you had Fowler & Co, Sandersons & Morgans etc. All the British firms used to go to British lawyers, so we ended up working for the Indian community..So it was not a thought process but a logical consequence. It was much later, probably in the 60’s that, because of the independence, new British lawyers never came to India, and the ones who were in India retired and moved back to England..When I joined in 1961 there were only 2 or 3 English solicitors practicing; the others had already left. So obviously the tradition of having English firms started breaking from the middle of 60’s..In our case, we were one of the large firms representing Indian businesses and even if a foreign client came to us to deal with our client, we were conflicted..Bar & Bench: Had you always wanted to be a lawyer and join the family firm or did you have plans to join some business house? .Pinto: As far as I am concerned, I always wanted to be a lawyer. I was very enamored of my father and what he was doing. My other relatives had lot of problems in deciding what they would do, they didn’t want to be lawyers, but they didn’t know what else to do. In my case, since the law college was in the morning, during the day I started going to the office. I had no doubts in my mind. Later on I did receive lot of lucrative offers to give up the legal profession and join some business..As I told you Debi Prasad Khaitan joined the Birla Brothers, Durga Prasad Khaitan joined R. Dalmiya, Moti Khaitan joined the Bata shoe company and later became the chairman of Bata India. So there were many instances where members of the family and partners were attracted to other businesses and I was also attracted, but I said I would rather be in the practice..Bar & Bench: Any specific advice you got from your father when you were entering the profession? .Pinto: My father’s famous saying used to be, “Work begets work”. If you do the work properly, and keep the client happy, more work will come to you. He said “Never chase money, money will come to you on your own”. His statements were very true. On many occasions, I had clients who told me that they had not received our bill and handed over money. There were instances where I raised a bill the company employee would have paid, but when the owner came to know he said the bill was too low and asked us to send a supplementary bill..Of course, there were a few who didn’t pay, but my father’s advice to whoever came was work begets work. In those days mostly things used to happen by word of mouth and so your progress was by word of mouth..Bar & Bench: Can you tell us more about the work culture, when you joined the firm in ’61? .Pinto: In 60’s and 70’s, we were a family firm. Most of us were related to each other so the environment was very family like. I remember, one of my family members never came to office until 12 o’clock, so as a young man I asked him, how come you don’t come to office on time? He said, “I can’t come without having my lunch and my wife can’t make lunch until 12”. So I said you better retire and have lunch every day at home comfortably..If somebody did less work or more work, it didn’t matter because it was all a family but as and when we became more professionalized, there was more discipline. So today, for example, if a family member wants to join the law profession he will have to go through the same rigorous process of evaluation otherwise he will not be accepted. That time if he was the family, he just joined..Bar & Bench: It was only a Calcutta based firm and I think you were the one who traveled abroad and saw the law firm culture abroad and decided to set up office in Delhi. How did it all happen?.Pinto: I got this opportunity in 1968. I had gone to New York, Washington and Chicago with K.K Birla and there I met these American lawyers. During conversations with them I realized that we must have a presence in Delhi. In fact we used to do a lot of work in Delhi in the Supreme Court and the Finance Ministry..In the mid 60’s we had labour problems in West Bengal when the Communist government came to power. So a lot of.businesses were moving out of Calcutta to Delhi, Bombay or Bangalore and that was the time we also thought we should start something. So Delhi became the first logical choice and that’s how we started in Delhi in 1970..Bar & Bench: The law firm culture – is it more relationship bound or process bound? .Pinto: It’s a mixture of both. Process is very important to hold the client, to serve him well so that he keeps coming back. At the same time your competition can also provide the same process and same quality, you are not the only one who has the best quality. To meet the competition you have to have a strong relationship with the client. So if you have a good relationship he does not yield to competition and if your process and quality of work is good, he doesn’t find any reason to look for an alternative..In the olden days it was pure relationship, even if you took too much time to do a job, even if you did a poor job they wouldn’t leave you. Today no matter how good your relationship is, if your job is not good they will leave you..Bar & Bench: I read that the firm has advised the Gandhi family. How did that happen and do you still advise them?.Pinto: The first time we advised Indira Gandhi was when she lost the elections. Indira Gandhi had been asked to appear before the Special Court at Patiala House to be tried for offences on account of ‘Emergency Excesses’ under the Special Courts Act, 1979. It was amongst the most sensitive cases ever..Businessmen like K.K Birla, R.P.Goenka had arrest warrants issued against them for contributing to the Congress party souvenir in which they gave advertisements. In those days political contribution was not allowed, so it was said that this is a political contribution in the guise of advertisement. That was also the time when Indira Gandhi was under threat. So we got the court orders for bail and therefore, were able to avoid arrest..I remember K.K.Birla was abroad, so we got an order from the court permitting him to get bail if he is arrested and we had somebody fly out and deliver him a copy so when he lands at the airport he has it. Of course, they didn’t arrest him. The next time we had an occasion to advise Sonia Gandhi as she was also having some problems regarding elections. So we represented her. That timeHR Bhardwaj was the main man who used to look after her affairs..Bar & Bench: So, do you still advise the Gandhi family?.Pinto: At the moment we are not advising them. We are not into politics. They must be having their lawyers who are in the Congress; they have a battery of lawyers in their party..Bar & Bench: Talk us through the decision of setting up office in Mumbai..Haigreve: There were two things. One, some of us were working on several transactions, which allowed us to see the Mumbai market. Second, our Calcutta clients were engaging Mumbai banks who didn’t know anything about Calcutta firms. The banks used to advise the Calcutta clients to go to a more experienced Mumbai or Delhi firm as they had worked with them in the past..So we realized that if we really want to be a national level firm, we have to be in Mumbai and Delhi to begin with. It was really a decision of one of my colleagues who is no longer a part of the firm. He said that we must open an office in Mumbai because there is a great future. So, three of us moved. Honestly, we never thought it would be a permanent one!.Bar & Bench: And the decision to set up an independent office versus merging with a Mumbai firm? Why did you decide on building it solo?.Haigreve: During a World Bank transaction we travelled with this Mumbai based firm a couple of times and during one such trip they said, “Look you guys want to open up, why don’t we merge.”.That’s how the discussion started. But they had a different model in mind; they wanted to remain a family controlled firm. Since we were not a family controlled firm and we didn’t want to be that way, the discussions were called off..Bar & Bench: Which firm were you negotiating with?.Haigreve: It’s a long time back. It’s not of importance now..Bar & Bench: How has the firm reinvented itself over the last ten years?.Haigreve: It’s really the people who have changed this firm. So if you see the sort of people who joined the firm, who believed in the vision, it is really that which has changed the firm. So these people then got clients, the clients’ profile changed, our capabilities changed… every practice area is really a top tier practice today..We have leading individuals whether from other domestic firms or internationally. Out of 300 people, only 6 are Khaitans. So that’s what has really changed the firm..Bar & Bench: Can you tell us about the management and decision-making process at the firm and how is the firm structured?.Haigreve: We have converted one of our offices to an LLP. We have a management committee elected by the partners, which manages the firm. So we have a lawyer who is a COO but not a practicing lawyer, we have a chartered accountant who is the CFO; we have a knowledge management head, IT head, HR head etc. We have a very capable management team who support all of the functions at a national level..Bar & Bench: How is this management committee elected?.Haigreve: The management committee is elected through a secret ballot. The term of the management committee is 3 years. We must have representation from each office in that national committee so that all offices are represented..Lawyers who constitute this committee also address local management issues because we clearly want to be one firm. We don’t want to be like this is “Khaitan Delhi” and this is “Khaitan Bombay”. It has to be one firm..There would be some regional variation but we are one national firm..Bar & Bench: Is the management structured in a way that a non-family lawyer can reach to the top?.Haigreve: Absolutely. Hewitt, one of the consultants, did a full career planning for us in the firm. So right from when aperson joins from a college knows how he can reach the top and that’s very clear. So it is very objective and performance driven and everybody can reach the top. Rather we would like more people to reach the top and that’s how this firm will grow..Pinto: There should be lateral hires as well as promotions. You can’t miss that opportunity and luckily with an LLP model, you can go up to 100 partners though our request for clarity on LLPs is pending before the Bar Council of India for the last 2 years..Bar & Bench: I understand once you become a partner, you are an equity partner. How does the equity model in the firm works?.Haigreve: We have the compensation committee and the executive committee (which is same) and then we have a set of criteria and accordingly partnership compensation is revised every year. So even partners have to keep performing and its just not about revenue and money but its about over all contribution in the firm..Pinto: There is a salary component, which is fixed, and there is a profit sharing component depending on the firm’s performance and partner performance..Haigreve: Again we are going towards a national pool so if I am a partner at Bangalore, I earn out of the profits of the whole firm and not from the revenues of one city or transaction. We are improving every day to really get there..Pinto: We have also introduced a retirement age for lawyers so that it’s easier to get rid of the old wood..Haigreve: Right now the retirement age is 72. We are not a firm that believes in adopting the western practices just because the practices are so called good practices, but we have to really see what is good for our firm..Pinto: But I firmly believe that we should have a retirement age so there is no embarrassment in asking someone to go. Those who are good, you can request them to continue..Haigreve: True but if we set the age at 65 for example now as lawyers, at 62 or 65 you can be very active in the profession and if you set something like that you would be losing out on good talent. And we have to be flexible for the right talent. Lets even take an example from the West; Martin Lipton of Wachtell Lipton is 80 plus and is very active. It varies from person to person..Bar & Bench: You had set up an outsourcing company in 2005. So what happened with that?.Haigreve: We attempted to do it with a client who was in the technology sector and who felt that there was a great future. But then what we realized is that the low-end market and our high-end market just don’t match..Pinto: It was a feeble attempt at a wrong road..Bar & Bench: But the way LPO industry has grown. Do you still plan to set up a LPO?.Haigreve: There is very great future. I think it has to be run as a business. It can’t be run as a profession. If any of our partners wanted to run as a business we can do it..Lots of training is required and you don’t need lawyers for this. So you have good young graduate, you train them well and run it like a good outsourcing business. It has a future..Bar & Bench: I understand that you are planning to open more offices..Haigreve: That’s right. We are working very hard on the Chennai office because we are serving a lot of clients in that market. So if we are there I think it will help us..Pinto: We need some lawyers who are ambitious and willing to work as a group. There are a lot of lawyers who don’t want to work in a group and there are some lawyers who are not ambitious, they are good but not ambitious. So until and unless we get that we can’t start..Bar & Bench: So about the book, Amicus Curiae. How did this whole idea come up?.Haigreve: The idea really was that there is a long history behind the firm and we felt that it should not be forgotten. Today there are lot of people who can have anecdotes and stories to say all of this, but maybe in a few decades it will all be lost. So we always thought that we must have a collection of all of this and there was no better time. One of the lawyers took a lot of interest in doing this and all credit goes to her for all the hard work..Bar & Bench: You have been in the profession for more than 50 years, so what advice would you give to younger lawyers?.Pinto: Today I would give him the same advice which my father gave me which is “Work begets work” but I would also add that in modern culture you have to have good networking skills. Today you can’t do everything yourself and so networking is necessary, whether it is accountants, banks or valuers. You have to have good networking relationship to supplement your practice. So networking is very important and of course maintaining a good relationship with your client..Bar & Bench: How do you unwind?.Pinto: For me playing with my grand children is the best relief. I have four grand children. They all have different agendas, they have different questions, and they have their own ambitions. So they all keep me very busy. I also have some interest in charitable activities like hospitals and schools. I have some interest in a nature cure center, which keeps me fairly occupied..I am going to quit now. I have done enough. 50 years is a lot. So I will slowly fade away and let the youngsters’ carry on. I must relax and do some other things. Help other people and see my grandchildren grow.