We want to do loads of workshops in Goa. Republished from A First Taste of Law archives.
So as you probably know – I and Abhyudaya (my co-founder at iPleaders) have quit our law firm jobs and have been developing a business law course instead. Why? Why now? The answers to these questions we have no choice but to share.
Is it necessary to know the business law at all?
Everyone knows some law. In fact, knowing the law is a prerequisite to living in society.
You need to know some law if you want to do business. You know the standard practices – you have to learn them right at the beginning. Talk to older people, who are into a particular trade or sophisticated profession for many years, and you’ll see they know the laws, rules and government policies that apply in their domain better than any lawyer.
When a business is small, knowing the law and running the business according to law is often optional, especially in India where law enforcement is not very stringent. Very small businesses remain out of the radar of law enforcement agencies – and implications of the violation of law are small and manageable.
However, as the business scales up, violations can be expensive for everyone – there can be huge fines, the risk of imprisonment for promoters and investors not to speak of negative publicity. All these can result in huge losses for the business, and for society – in the loss of a useful product or service.
You do not want your startup to face this eventuality– especially when it is so easy for you to learn the practical aspects of the law.
Navigating the great Indian Legal Jungle
It is not an easy task to unravel the mysteries of Indian law – there are thousands of statutes, tens of thousands of rules, regulations and government policies. The majority of these laws are made for businesses – different sectors, businesses of different sizes, different businesses based on activities, investments, manpower, resource consumption or geographic location are treated differently. The body of Indian laws is humongous and very complex.
Apart from complexity, lack of access is a big issue with legal resources. Laws are almost invariably written in complex language, and difficult to find. Despite internet growing at an exponential speed, organized legal knowledge available on the internet that is aimed at non-lawyers is negligible. There are hardly any legal books published for non-lawyers. There is pretty much only one way to learn the relevant laws in an industry – through years of experience of being in that industry and seeing the law in action.
As a result of this, legal knowledge and good legal service is valued extremely highly in India – which means a good corporate lawyer can command very high fees. It is extremely difficult for startups in the early phase to hire a good lawyer due to high costs and relatively low numbers of corporate lawyers.
If, as an entrepreneur, you think about the law only when you are in trouble, you are not adopting an optimal strategy for your business.
Even when an entrepreneur approaches a lawyer, he does so either because he is already in trouble with legal authorities or a counterparty in a contract, or because he wants a contract drafted. That means he loses out on legal insights in taking a day to day business decisions and fails to identify or address a preventable legal risk.
On the other hand, in a startup, day-to-day application of the law, or legal compliance requirements can be quite simple, and can be picked up by pretty much anyone who has a willingness to learn. If given access to good learning resources, he can learn the basic concepts of law and practical application skills, which makes the involvement of a lawyer mostly redundant. This applies equally to managers who take decisions – and knowing the practical law is a great way to distinguish one’s profile from that of other managers.
Why should educational institutions/ students be interested in a diploma course at this point of time?
1. Startups create new products and services, employment opportunities for the larger population and can thus fuel economic growth. Indian entrepreneurs are making waves globally. Today, startup and angel networks have matured, and early stage entrepreneurs/ student entrepreneurs are willing to mentor, guide and support them. This creates a conducive ecosystem for startups today.
“India’s high rate of economic growth can only be sustained if approximately 1 million jobs are created per month. If India can, in the next decade, provide its next generation with the education and training for entrepreneurial ventures, it will not only create the jobs necessary to stay on a growth trajectory, it will foster more start-ups, accelerate growth, and spawn creative industries for the benefit of millions, including many residing outside India.
There is now an established pipeline of student entrepreneurs, with a community ready to create and support them—something that has never before existed in India.”
See Centre for Strategic and International Studies article on Entrepreneurship in India: The Next Wave, Vol 1, Issue 9, 14 December 2011
2. Venture capital investments are on the rise, and venture capital has been the preferred route for investing for risk capital, as early-stage entrepreneurs come up with more path-breaking ideas, compared to private equity. It is much easier to obtain funding for ideas now than before.
“Investment in start-ups and early-stage companies totalled just $300 million in 2010. But last year, it expanded more than four-fold, making up $1.2 billion of the $9.3 billion in total risk capital.” See Economic Times story: “Venture capital beats private equity as Indian start-ups attract millions of dollars in funding”, 8 February 2012
Experimental workshop in Goa
As an experiment, we conducted a workshop on the “Startup Founder’s Guide to Business Law and not paying Lawyers” (which was a crash course version of the diploma) for students of BITS, Goa. Here’s what they said:
“Damn good! Very informative” – Anirudh, student, BITS Pilani (Goa campus)
“Course was extremely useful, but time was a constraint.” – Rathin Shah, student, BITS Pilani (Goa campus)
“This workshop is definitely enlightening. I don’t claim I understand everything, but surely it increased my interest in business.” – Mihir Kakrambe, student, BITS Pilani (Goa campus)
“OMG! You finally got good lectures who did a decent job. This workshop was better than others at BITS Pilani Goa Campus.” – Abhinav Motheram student, BITS Pilani (Goa campus)