How You Can Benefit From Understanding Leverage

October 9, 2019

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This article is written by Komal Shah, Content Head, LawSikho.

In financial terms, leverage would mean borrowing funds and investing them in such an optimal manner so that you could get higher returns from the investment than you would have to pay to the lender, thus earning a decent profit, without having to put your funds at risk.

Somehow, kids get the concept of leverage thoroughly. My 9-year-old daughter ensures that for every additional effort that she puts in i.e. doing household chores or getting something from the shop downstairs, she gets the maximum benefits i.e. if she were to get spaghetti for her work, she will also bargain for chocolate doughnuts, for the same effort (she is allowed junk food only to a certain extent).

How does leverage work in the life of a lawyer?

You don’t acquire skills very easily, do you? You have to go through a lot of reading before you can be clear with interpretations, you have to sweat it out during your internship, or even if you are a LawSikho student, you still have to research and work on your weekly assignments. If then, you can invest the same skills (remember, acquiring these had a cost for you) for multiple purposes, why would you not do this and leverage your skills?

Leveraging Research

When I was studying law, we were told that the criteria to be a successful lawyer is that on any given topic pulled out of a hat, you must be able to speak to an audience something relevant for a full 90 seconds. 90 seconds looks like a very short time, but trust me, when you have to frame something to speak to an audience, this can become a test. The idea here was that you must have engaged in extensive research to know about the topic and you must be able to arrange your thoughts very quickly in a manner which seems relevant to an audience.

The kind of tools you have in today’s world for research are unmatched and far superior to the time when I studied law. Where you are trained in research which is sharp, and which is aimed at problem-solving rather than just an information-gathering exercise, this is a skill you can leverage on multiple counts. How to do a Google search is an art in itself. Once you get it, you can find answers without getting lost in the vastness of the internet and make optimum use of the time and the information which you have found out.

This is what we train you to do in the simulatory exercises you get in LawSikho courses. The focus is completely on applying what you have found out, rather than just reading the bare sections of the law. When you apply, you register and retain and therefore, you are able to recall where required, for many purposes.

A simple example is the Ministry of Company Affairs website, which is used to extract information for a specific company. But did you think that you can also download specific contracts filed by that company (for example, contracts relating to charges, such as deeds of hypothecation, mortgage deeds etc.), review them and develop a good template for yourself with that same research? This is how you leverage research.

Leveraging Writing Skills

I had this discussion once, with a colleague about what it means to write. The most important thing about writing is that it has to be reader-centric and not writer centric. If your readers can’t get you, that means you’re not a good writer.

At LawSikho, you will be asked to deal with writing assignments on various topics. And you will be trained on how to write in a reader-centric manner.

How can you leverage reader-centric article writing skills for your work? With all the world of case laws and arguments that you may put into a legal opinion, if the client doesn’t get you or appreciate your finer points, it’s of no use, right? Clients (or your management, where you are an in-house counsel) want a specific answer, and they want to know that you have based your answer on some clear legal provisions and interpretation and that the conclusion is not arrived at out of mere assumptions. Where you are trained to write in a structured manner with the reader in mind, all documents that you draft – whether it is a legal opinion or a petition or a contract will then begin to be structured in a manner so that the users can understand and get the logic of these. That’s how you leverage writing skills.

Leveraging Litigation Skills

If you were able to use the same litigation skills with a little bit more effort, for multiple types of cases, would you do that? Let’s see which forum provides you this opportunity.

The National Company Law Tribunal (NCLT) is a uniquely placed forum as compared to other tribunals because the NCLT is not only an adjudicating authority for the Insolvency and Bankruptcy Code, 2016 (IBC), but is also the replacement of the erstwhile Company Law Board for adjudicating company law matters. In fact, it was initially handling only matters under the Companies Act, 2013 and allied rules, before the IBC came into being.

But given the surge in the IBC matters, there are many lawyers who took efforts to research and learn the IBC and started working on IBC matters. You can see them at the NCLT practically every other day, running from one court to another, appearing on behalf of either financial or operational creditors or the company itself.

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For filing IBC cases, an advocate is required to get into details of the facts and circumstances of the matter and check for quite a few prerequisites before actually proceeding to file section 7 / section 9 applications. Unless there is a clear existence of the financial debt or an operational debt where a demand notice has been raised by the operational creditor and these are evidenced appropriately, it’s a question whether the application itself will be admitted by the NCLT to continue further with the case. It is also likely that IBC matters will go for more number of hearings. If the fees in such cases have been fixed on a lumpsum basis rather than per hearing, these matters can leave a low return on the time and effort invested.

On the other hand, you can use your same drafting, advocacy and litigation skills profitably to matters under the Companies Act, 2013. If you have been appearing before the NCLT for IBC cases, you are already familiar with the courtroom environment and you are also familiar with who the judges are and how they deal with cases. What you need to do is simply to get the fundamentals of company law clear, by a systematic study. Something like this can help. Once you get the hang of the Companies Act, 2013, there are certain matters which wouldn’t require you to devote days and nights on interpretation and understanding the facts and circumstances of the case. For example, take section 252 cases – appeal for revival or restoration of a company which has been struck off. Most cases in this category are similar – companies have been struck off since they did not file their annual financial statements for a certain period, the Registrar of Companies issued a notice to strike off and there was no response to that notice. Once you are able to frame arguments for one case, you will be able to leverage these for many cases as against IBC, where each case can be different.

Same is the case for matters related to approval of the scheme of arrangements under Section 230. Unless these also involve a reduction of capital, the procedure is as laid down in Chapter XV of the Companies Act, 2013 and The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The only real ground where the NCLT would reject a scheme of arrangement is if it is against the public interest. Most schemes of arrangement are for the benefit of the shareholders and do not adversely impact the public interest. Thus, once you are clear with the procedure, that same knowledge of procedure can be applied to many cases.

This is how your existing litigation skills can be profitably leveraged for company law matters if you take a little more effort to understand the basics.

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