Want to succeed as a lawyer? You better be careful about the area of law you choose to practice in. It is probably one of the most important factors that will determine your growth as a lawyer.
It is almost certain now that Indian economy is going through a bad patch. Growth is lowest in decades as demonstrated by key metrics, and some indicators are even in negative. The SENSEX and other indexes are falling day after day. BSE small cap index is trading at a 2 year low. Global economic environment is not particularly encouraging either. There is a net capital outflow from the country as far as foreign institutional investors are concerned. Rural demand has tanked, and joblessness is also high. Top companies in India are reporting poor earnings. Bellwether sectors like Automobile and FMCG seems to have been hit.
While a recession has not been declared, it is now impossible to ignore the economic malaise that is prevailing around us. We really do not know when we will come out of this slowdown cycle, it could be a year or two easily.
Of course, some areas of law practice are going to be hit more, while some will boom. And there are others that will stay neutral.
Many litigators have been talking about how fee recovery has drastically fallen in the last few months, and therefore litigation and disputes practice is not totally immune to an economic slow down either.
If you are a young lawyer, or a law student about to graduate in the next couple of years, how will this affect you? How should you plan things?
Remember that a slow down is cyclic, and not permanent
India’s long term growth prospect is really good. An economic slowdown is a cyclic change, and not permanent. This happened in 2008-9 as well, and its normal for a slowdown to come back once in a decade. A lot depends, however, on how severe it will be, and what will be the global situation.
You should not probably decide your entire future based on such a cyclic and impermanent change.
However, if you are just about to join the profession, or have big loans to pay off, you need to be careful. 2-3 years of slow career growth or difficulty in bagging or retaining jobs can be very demotivating, especially right at the beginning of your career.
The Indian government is responding with big systemic reforms, likely to do more
Since I was a teenager, I have been hearing about labour law reforms to make India a more capital friendly country. It never really happened. Well, it is underway now. Major changes in labour law is going to hit the market in the next few months.
Such massive changes also often result in a lot of new legal work, like we saw with the introduction of GST.
We are also likely to see more legal reforms in the next few years, probably around energy sector, banking sector, infrastructure and land acquisition.
Farmers are one of the core targets of government activity, and already we have a law for increasing crop productivity – the Model Agricultural Land Leasing Act of 2016. Developments around agricultural reforms will be worth watching closely as new opportunities for independent lawyers may arise here.
Land acquisition is also a problematic area, and reforms can be expected in order to promote industry and government projects. Every project leads to many legal disputes and challenges, which increases work for lawyers. So far, lawyers have failed to capitalise on work around this, but things are likely to change in the next 5 years.
Disinvestment and infrastructure will be a major area of work
Government is going gung ho with disinvestment to generate more revenues, and that means a lot of work for big law firms in coming years. Even if there are fewer M&A or investment deals, massive disinvestment activity can offset some of that and keep corporate transaction teams afloat.
Government backed infrastructure projects are likely to get a new push in an economy that is seeing a slow down, because that is the only thing the government can do while private investment takes its time to recuperate. While Indian government is also trying to cut deficit, it has no choice but to increase public spending if the economy starts tanking. Lawyers working on such matters (Projects practice, Project Finance) have reasons to be very happy in coming months if they can land the government as a client, by getting empanelled.
Supply chains moving out of China
As a result of a trade war with the USA, a lot of global supply chain companies are looking for alternative locations, if not for relocating then at least for further expansion. Since India and US relationship is relatively on a better footing these days, it is not unlikely that we would see some of that supply chain relocating to India, especially given the huge difference in average per capita salaries between China and India.
Only problems here are red tapes, higher tax, and difficult labour laws. Given the impending labour law reforms, we can expect slightly better prospects, and we can expect more SEZs to come up in order to avoid customary red tape and taxes.
That would be a major boom for transactional lawyers in India if it actually happens.
As government is getting aggressive about collecting taxes, we can expect a lot of litigation and work for tax lawyers. We now routinely see that tax officers are given revenue targets and quotas like sales people in a private company! As a result, some officers at times indiscriminately fire off thousands of notices to assessees. This is only likely to grow from here as companies begin to report losses or fail to pay taxes on time.
Tax lawyers, both direct and indirect, are going to have a great time in coming years.
Policy lawyers are in demand
Until sometime back, policy practitioners were not even considered to be lawyers. They were thought of as lobbyists. But this has changed rapidly. New companies entering India, from Uber, Amazon, Walmart to Juul, all are aggressively hiring policy lawyers. Economic slowdown has always led to reduction of resistance towards policy changes and weakening of old guard and dominant business lobbies.
The slowdown will see more clout in favour of policy lawyers because this would be an important front for battle. New industries will aggressively spend on policy lawyers to push back traditional industries, and the slowdown is a great window of opportunity to make policy upheavals take place because government is more open to radical policy making in favour of economic growth.
So e-vehicles over old automobiles. Juul over big tobacco. Expect such changes.
Along with global slow down, another important trend that we cannot ignore any more is environmental awareness. Europe has burned this summer from unprecedented global warming, and that has already led to trigger election of environmentalists in the last few European elections. It is hard to ignore the impending global environmental catastrophe anymore. Closer to home, cities are reeling under water crisis, and environmental awareness is at unprecedented levels. There is little doubt that the environment is about to become a major political issue going forward, because the majority of Indians are already bearing the brunt of it.
We are likely to see a lot of action on this front in the next 3 years. This may be a nascent area even now, but nobody can deny its importance, and there is a dire need for a lot of lawyers to take up the cudgel on this front going forward. Environment will be a highly litigated issue and a priority for courts going forward.
Businesses and government will naturally be forced to spend a lot more on this area of law in times to come.
In the next few years, we are likely to see class action suits emerge as a viable option in India, thanks to internet based platforms and crowdfunding. There are a plethora of issues in India which are not litigated because the victims or plaintiffs are from the bottom of the pyramid or because they cannot prosecute big companies and organizations. These cases are likely to be now taken up, especially in the light of third party funding becoming legal. Crowdfunding will also be critical here, especially in light of major successes in other countries – such as Brexit litigation being funded through crowdfunding.
Third party funding also may become a reality as financing models emerge. India has a lot of civil matters which does not move forward due to lack of funding and slow court process.
Two crucial legal reforms have changed the situation. One of the introduction of fast tracked commercial courts for large commercial disputes that are suitable for third party funding. The other is the amendments to Specific Relief Act. Earlier damages used to be default, but after the amendments, enforcement of contract has become the norm over damages.
These systemic changes would make it easier to develop viable models for third party funding. Third party funding of class actions against large corporations, especially on the back of a new political and social will to protect the environment, privacy, air and water would also gain a lot of traction, although perhaps at a later stage, only after the lower hanging fruits have been picked.
Export growth is likely to be an area of priority for government policy if the dream of creating a 5 Trillion USD economy has to become real. Even government chasing it will mean a sharp focus on export growth, where India must claim a bigger share in world exports.
This will require stronger enforcement of environmental, labour and safety norms, increasing work for lawyers working in this very nascent area.
This would also require more investments in manufacturing, organized agriculture and agro processing, agritech companies, technology products and services. This may see growth of work for investment and transactional lawyers.
Export-import, customs, international tax, transfer pricing and international trade law will also be a major areas requiring fresh infusion of legal talent if anything like this actually picks up.
Insolvency and bankruptcy
This is the classic area that is supposed to jump up when recession hits. In India, this is already a booming area of work with insatiable hunger for trained lawyers at present. This is only likely to go up even further as economic crisis deepens. It’s indeed a great time to learn IBC and start practicing at the NCLT.
Loan recovery and cheque bounce cases
Money recovery work will go up manifold for lawyers as an economic crisis will result in defaults across sectors. There are two kinds of clients here, one would be banks, NBFCs and new age fintech companies. Recognised financial institutions are protected by certain favourable laws as financial creditors. There are special proceedings for them which makes recovery a bit easier. However, the sheer volume of these cases would mean a lot of lawyers, especially junior lawyers, finding gainful employment.
On the other hand, there would be vendors and service providers with a lot of unpaid debts, who will pursue the same through various types of cases – ranging from criminal complaints, insolvency petitions to cheque bounce cases and summary suits.
Lawyers who have made some name in this work have very exciting times ahead.
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