This article on how Indian government can help your startup has been contributed by Himanshu Jain CEO at LegalRaasta, an online portal for GST Registration in India.

In this article, Anubhav Kumar Pandey talks about the legal fee one can expect to pay for divorce cases in India and factors on which a lawyer’s fee will depend.

There are more than 2.18 crore cases pending in district courts across the country. 12 states have more than 5 lakh cases to decide while a little more than one case, on an average, is awaiting conclusion for at least 10 years. Cases for divorce is not an exception. In India, divorce cases take years before they are finally settled. The court process is tedious and requires money at every step. For every draft of application, appearance in court your lawyer will charge with some or the other amount. Therefore, it becomes important for us to know what exactly can be the lawyer’s fee one can expect to pay for divorce cases in India. Here is a detailed report on factors on which a lawyer’s fee depends when it comes to cases relating to divorce in India. What are the different procedure or a layman may say checkpoints at which money has to be paid?

Factors on which a lawyer’s fee depends in India

#1 A Lawyer’s fee depends upon his experience 

It is understood and expected of a good lawyer to charge more fee compared to any other decent lawyer. When I say a good lawyer and a decent lawyer, one can assume the difference between the two. A well-established lawyer might even take fees per hearing which he will make in the court. For every draft, every application, he might charge a hefty amount. And there is a reason too for this.

A well-established lawyer knows how to turn your case and lift it from barren land to a fertile plain. Letting the secret out, even a judge respects and listen more closely to the points made by experienced lawyers.

One might even find lawyers wandering around the premises of any family court in any city who guarantees you a win-win situation that too in a lump-sum amount of INR 10,000 to 15,000. Beware of such lawyers. Such advocates often play with the clients. They initially say the case will get settled within lump-sum amount but later ask for money to facilitate court proceedings and other miscellaneous charges. They intentionally delay the procedure and there have been situations in the past where the couple seeking divorce left the very idea of it due to the heavy amount of money flowing through their pocket. Thanks to these lawyers! They saved a marriage but looted the party.

#2 A lawyer’s fee depend on the financial status of the party fighting the case  

It will not be incorrect to say that, one of the factors which a lawyer considers while deciding his fees is the financial status of the party who wants a divorce. In the practical arena, it is often found that the same lawyer might charge a poor farmer less when compared to big businessmen. There are veteran lawyers, like Sri Ramjethmalani who makes all his asset through 10% of his cases only, rest 90 % of the cases he does for free! Therefore, a lawyer’s fee also depends upon the financial status of the party fighting the case.

#3 Personal law to be applied in your case

In India, there are different and separate enactments for every personal law. For Hindus, the matter relating to marriage and divorce are dealt with the Hindu Marriage Act. In the same way, Indian Muslim are governed by their personal Shariah law and Quran. In Hindu-dominated cities, it is often difficult to find good lawyers who can fight Muslim divorce cases and ultimately they charge a good amount for their consultation.

#4 A lawyer’s fee depends upon the nature of the divorce: contested or mutual

This is the point which plays a decisive factor in deciding the lawyer’s fee. A divorce case through a contest, that means when either of the parties is not willing to give the divorce, takes long years to get finally settled. One party to a marriage wants a divorce and other wants to remain in the bond of marriage. Therefore, lawyers charge more in cases where the divorce is through a contest. In cases of mutual divorce, the lawyer charges fewer fees compared to what he charges for divorce through a contest.

Reason behind divorce cases being so expensive

The reason lies in the procedure. Therefore, to understand the reason as to why a divorce case requires a hefty amount of investment in terms of money, it is important for us to understand the procedure involving divorce cases.

Procedure for divorce through mutual consent

• Both the parties need to file together with a petition seeking a divorce before the District court.
• Before the filing of the petition, married couple should make sure that they are living separately for a period of one year or more. After the petition is allowed, parties are required for filing of the statement.

If any party is not available, any such family member of such party may file the statement on his behalf. Once this is done, ‘First motion’ is established.

• Couple seeking divorce by mutual consent will have to give the reason why they are not able to live together and mention in the petition that they have not been able to live together and that they have mutually agreed that the marriage should be dissolved.
• Court after a period of 6 months and not more than 18 months (cooling-off period) will give a date for listening to the parties.

If the case is withdrawn or the parties do not move to court at the given date(s), the petition stands cancelled. After hearing to the parties and on being satisfied, the court may pass a decree of divorce declaring the marriage to be dissolved.

Paper Requirement

1. Income Tax returns (3 years)
2. Details of present income
3. Birth and family details
4. The details of the assets

Procedure for contested divorce

• Lawyer files for a divorce petition on behalf of the petitioner in family court or civil court after which court issues notice to the other party.
• The opposite party has to appear either himself or along with an advocate. Later is preferred.
• Court might send the matter to mediation with the district legal services authority. If not sent for mediation, the procedure goes as follows.
• Pleading begins. Allegation and counter-allegations are made by the parties contesting the divorce. It is this step which takes the time and increases the cost of litigation.
• Respondent leading evidence and cross-examination by the petitioner lawyer.
• The conclusion of the evidence and finally closing with final arguments.

A thumb rule, the cost of litigation is directly proportional to the time duration of the litigation.

City wise report on fees one can expect to pay for a divorce in India

Delhi

• By the virtue of the place being the capital of the country, one find multiple options available when it comes to choosing of lawyers. Divorces cases are fought by various lawyers. Along with the options available for individual lawyer consultation, one can even go to law firms based in Delhi.

• Therefore, if you are opting for any decent lawyer the minimum fees will be starting from INR 2000 and the higher limit might even go to lakhs.
• This is mere the consultation fees. Rest if you hire any lawyer, either independent or through a law firm, there will be charges at every step. Per appearance fee, drafting fee, court fee (one time), photocopy charges, and it all can cost you around lakhs!
• Though the figure is ambiguous but it has its reasons for being so. No one knows, how many years your case will be heard in the court. You might give 10 Lakhs to a veteran and get it done within few hearings or you may even pay an average charging lawyer, say INR 10,000 per hearing and get it done within 3-4 years!

Here is a link providing a good legal solution for cases relating to divorce in NCR.  http://cliklawyer.com/index.php/service/avail_service

Mumbai

Being the financial capital of India, Mumbai is litigation expensive city.

For mutual consent divorce → INR 15,000 – 30,000 (for complete process) Lawyers with experience of 1-3 years.

Divorce through contest → This is the real deal. Lawyer charges in Mumbai from a minimum of INR 3000-7000 per hearing (Experience of 3-5 years). Going for a veteran lawyer can eves cost you around INR 35,000 per hearing.

Bengaluru

In Bengaluru, litigation expenses are less when compared to other metros like Delhi or Mumbai. The consultation fee of lawyers with experience of 1-3 years can start from INR 1000.

Again the upper cap cannot be stated by anyone as there is no law which limits the fee charged by lawyers in India.

Apart from consultation fees, the charges per appearance may vary. There might even be decent lawyers who can relieve you from all the daily payments and fix a lump-sum amount.

Here is a link where you can find lawyers in Bengaluru https://www.urbanclap.com/bangalore-divorcelawyers?p=1

Hyderabad

In Hyderabad, the litigation expenses are again high and similar to Delhi, Mumbai. An average consultation fee can be around INR 2000 and per appearance fee even be higher. Here is a link which might help you http://lawrato.com/divorce-lawyers/hyderabad

Chennai

When it comes to Chennai, the litigation expenses is not as exorbitant as it is in Delhi, Mumbai or Hyderabad. Owing to the history of legal practice the old and shining Madras High Court, the price of a consultation is minimal as the profession of lawyer is quite common in Madras.

Here is a link which might help you if you are looking for divorce lawyer in Chennai https://www.urbanclap.com/chennai-divorcelawyers?p=1

http://lawrato.com/divorce-lawyers/chennai

Kolkata

Like any usual metro city, seeking divorce in Kolkata is expensive. Here is a link which might help you finding a good divorce lawyer in Kolkata http://lawrato.com/divorce-lawyers/kolkata

http://www.pathlegal.in/DivorceConsulting/Kolkata/

Jaipur

http://lawrato.com/divorce-lawyers/jaipur,

Agra

http://lawrato.com/divorce-lawyers/agra

Pune

https://www.urbanclap.com/pune-divorcelawyers

Ranchi

http://lawrato.com/divorce-lawyers/ranchi

Patna

https://www.hg.org/law-firms/divorce/india/patna.html

Patiala

http://lawrato.com/divorce-lawyers/patiala

Itanagar

http://lawrato.com/family-lawyers/itanagar

Dispur

http://lawrato.com/divorce-lawyers/Dispur

Raipur

https://www.justdial.com/Raipur-Chhattisgarh/Lawyers-For-Divorce-Case/nct-10296165

Panjim

https://www.justdial.com/Goa/Lawyers-For-Divorce-Case-%3Cnear%3E-Panjim/nct-10296165

Gandhinagar

https://www.justdial.com/Gandhinagar-Gujarat/Lawyers-For-Divorce-Case/nct-10296165

Chandigarh

http://lawrato.com/divorce-lawyers/chandigarh

Shimla

http://lawrato.com/divorce-lawyers/shimla

Trivandrum

http://lawrato.com/divorce-lawyers/trivandrum

Bhopal

http://lawrato.com/divorce-lawyers/bhopal

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

In this article, Anubhav Kumar Pandey explains the common problem in hiring an advisor in exchange for equity or money. 

Understanding equity

Let us understand equity by reviewing our environmental classes lessons which we all learnt at school. Steps required to grow a plant!

• First, you sow the seed.
• Second, you keep watering it on a daily basis.
• Third, you wait for some time with patience.
• Fourth, with due respect to time, you will get the fruits of the efforts you made.

The same concept applies to equity too. It is an ownership in the business. If you own 200 shares of company X which has a total of 1000 share in public domain. You are 20% owner of company X.

Equity advisory

To an alternative to borrowing money, a company can raise capital by selling equity. As an equity advisory, a person or a firm gives independent financial advice to companies issuing equity via the market. Advisors, who are mostly veterans in their field advise start-up companies and in return takes a certain share of the equity of the company. The work of an advisor involves, advising, bringing funds, providing solutions to the problems the company is facing. This is equity advisory.

What does equity advisor do

Good equity advisors have great network, reputation, and skills required to boost the growth of any company. Having an advisor in exchange for equity or money has its own pros and cons. Bringing funds, hiring a person, solving issues are few of the jobs which an advisor does.

How much equity to give and what kind of equity is it

Incentives are a crucial part of doing any business. It is a tricky part when it comes to dividing the equity between the founders, team members, directors, investors and advisors. Diving equity poses a challenge to the founder. Typically a start-up allocates 1/10%  – ½% of equity for the advisors vested (explained below) for 3 or 4 years. Keeping the grant small is the key. 

Pic courtesy https://www.linkedin.com/pulse/how-divide-equity-among-startup-founders-investors-advisors-kazanas

There are various models too which are helpful in dividing the equity in a company. One such model is Slicing pie model.

Different kinds of equity available are as follows.

Sweat equity

These equities are issued to exceptional employees or directors or officers for performing considerably well and adding to the Intellectual Property Rights of the company in any form. Sweat equity is governed by section 54 of the Companies Act 2013. Sweat Equity is a grant of shares at discount or without monetary considerations. A company can only issue sweat equity if it fulfils the following conditions.

• The issue is authorised by a special resolution passed by the company.
• The resolution specifies the number of shares, the current market price, consideration if any, and the class or classes of directors or employees to whom such equity shares are to be issued;
• Not less than one year has, at the date of such issue, elapsed since the date on which the company had commenced business; and
• Where the equity shares of the company are listed on a recognised stock exchange, the sweat equity shares are issued in accordance with the regulations made by the Securities and Exchange Board in this behalf and if they are not so listed, the sweat equity shares are issued in accordance with such rules as may be prescribed.

Employee stock ownership plan (ESOP)

ESOP is a grant of an option to purchase shares at a predetermined price given to employees. It is in the form of incentive and can be issued only to employees and officers. It is a form of remuneration given to employees. ESOPs can be in the form of Stock Option Plans, Phantom Equity Plans and Stock Purchase. Different companies have their different eligibility criteria for ESOP schemes but there is statutory condition which needs to be followed.

• An employee who is a promoter or belongs to the promoter group shall not be eligible to participate in the ESOP.
• A director who either himself or through his relative or through anybody corporate, directly or indirectly, holds more than 10% of the outstanding equity shares of the company shall not be eligible for ESOP.

Should equity be vested or should it be given on a DRIP basis

There are two things.

• First, vesting the equity which means, at the very beginning each founder gets his or her full package of stocks at once but, the company has the right to purchase a percentage of the founder’s equity in case he or she walks away. It is an observed practice for companies in India to vest equity for a time period of 3 years (36 months). The longer you stay, the larger percentage of your equity will be vested until you become fully vested in the 36th month.
• Second, DRIP or dividend reinvestment plan. This is a long term prospect. A dividend reinvestment plan (DRIP) is a method through which existing shareholders can reinvest their dividends to purchase additional shares of the company.
• Out of these two, vesting is considered as your best friend. Let us understand this by narrating a simple story. A and B start a company and divide equity among them on a 50-50 basis. After working for a complete year, B decides to walk out and do work on his own. Now, in this situation A will be obliged to give 50% of the company’s stake to B. But if the equity would have been vested, the situation would have been completely different.

How to structure the performance standard of an advisor

In the practical arena, it is very hard to find advisors who can continue to maintain their performance same for the whole time span of 3 or 4 years, whichever is in the advisory agreement. Therefore, it is advised by most veterans that, the advisory agreement should have the following structure, One year of NSO shares, monthly vesting, no cliff. (Cliffs basically allow you to “trial” a hire or partnership without an immediate equity commitment.)

Hiring an advisor in exchange of money

The technicalities are the same just in place of equity, the advisor will be facilitated with money either on a monthly term or in whichever manner their agreement facilitates it. Most advisors do not look for money as equity is what makes them rich. Equity gives you the power to own a part of the company. All the big billionaires in the world derive their wealth from the equities which they have in big companies.

Cash flow Vs equity. Cash might help you to receive a permanent flow for a short duration of the agreement, but equity helps to own partnership stake in a particular company.

Let us now move to common problems in hiring an advisor in exchange for equity or money

#1 What if advisor starts a competing company or advises competitors

• When founders and co-founders of a company look for an advisor, trust is an important factor which they look for. The company bestow trust upon the advisor and at the same time expects the same in return. But there are situations where your advisor might start a competing company or starts advising competitors. What to do in such situations?
• Solution to this problem is an advisor’s agreement. Time is one of the most important things which your advisor is giving to you and it is indeed valuable to your advisor too. Having a legal backup ready is valuable for both the advisors and the company founder too. It assures the advisor of the equity or whatever incentive is to be given to him. A proper legal framework must contain clauses which specifically mention that your advisor will not be involved with the same kind of business and they will not advise your competitors or share your business ideas with them.

#2 What if the advisor starts to leak your confidential papers and ideas

The solution to this problem is related to the first problem. There can be situations where your advisor might break some confidential obligations imposed upon him. The solution to this is to have a strong Confidentiality clause in your advisor’s agreement.

These are the following ways to have a strong confidential information clause in your advisor’s agreement.

Having a strong No conflicting obligations

It is recommended to have a strong ‘No conflicting obligations’ in the advisor’s agreement.

Having a strong proprietary information clause.

The clause may read as follows.

• During the term of this Agreement, Advisor may receive and otherwise be exposed to information regarding the patents, trade secrets, technology and business of the Company.  Advisor therefore agrees that all Proprietary Information, whether presently existing or developed in the future, whether or not patentable or registrable under copyright law, shall be the sole property of the Company and its assigns, and that the Company and its assigns shall be the sole owner of intellectual property and other rights in connection with such Proprietary Information.
• “Proprietary Information” includes, without limitation, any information created, discovered, developed, or otherwise known to the Company, all inventions, works of authorship, trade secrets, business plans, confidential knowledge, data or any other proprietary information of the Company and any information assigned or otherwise conveyed to the Company by another entity.
• To have a look at sample advisor’s agreement, click the following link.
• Further, having strong non-disclosure clause, no improper use clause is recommended.

#3 Deciding expenses and compensation

• It is for the company’s administrator to decide how to compensate the advisor. Should they be compensated with equity or money? In general advisor’s agreement contract contains a compensation clause which goes as follows.
• In consideration of the foregoing Services, the Company will grant Advisor, subject to approval of the Company’s Board of Directors (the “Board”), an option to purchase XXXX shares of the Company’s Common Stock at the fair market value of such stock as determined by the Board on the date of the grant.  The foregoing stock option shall provide that the shares subject to such options vest in equal monthly instalments over a period of four (4) years, provided that Advisor is still performing Services for the Company.

#4 What representations to take from the advisor

Fundraising – Capital is the biggest requirement for any business to grow. The founder and members of any company depend on their advisor when it comes to fundraising. One of the most important duties of any advisor advising a company is to advise them on places from where funds can be raised. Every company have different expectations from their advisors depending on the field of work of the company.

Here are few general representations to take from the advisor.

• Advising- As the name suggests, it is the responsibility of the advisor to advise the company on all matters. Even at times, advisors are expected to sort the matters relating to equity between the founder and co-founder.
• Product development– An advisor is expected to give ideas regarding the development of products, how to improve the quality of existing products or services.
• Recruiting– Advisors are involved in hiring members for company too.

#5 After taking equity advisors do not add much to value

Not all advisors are created equally. All those who are looking for an advisor need them as they add value to their business. Advisor tends to lose interest when the company’s performance is not on par with the expectations. When availability, desire and priorities of an advisor change, it is an indication that your advisor won’t add much to value to the company.

How to tackle such situations? What to do when, after taking equity advisors do not add much to value to the company?

First, try to talk it out. Try to resolve the difference between a company and the advisor as the relation between an entrepreneur and his advisor depends upon trust. If things do not work out, the only solution left is, terminating the advisor’s agreement.

Under what circumstances can the advisor’s agreement be terminated and what are its consequences

An advisor’s agreement may get terminated on the account of any reasonable reason such as,

• When the advisor starts a competing company or give advice to a competitor
• When the advisor breaks the confidentiality clause.
• When the advisor is not adding much to value to the company.

A time limit to terminate the agreement between company and advisor exists, which generally is of 3 years. This time period is subject to certain conditions such as,

• With the mutual consent of both advisor and company, the agreement can be extended for a period of 1 year (preferably).
• Both, the advisor as well as the company is free to terminate the agreement at will subject to a notice of 30 days prior to termination.

Consequences of termination of an advisor’s agreement

• Each party shall be released from all obligations and liabilities to the other.
• But such relief shall not release the advisor from the duty of keeping the intellectual properties of the company a secret.
• The advisor shall promptly deliver to the company all documents and other materials of any nature in advisor’s possession pertaining to the services, together with all documents and other items containing or pertaining to any Proprietary Information.
• Share in equity will depend upon the nature of the contract between company and advisor. If the nature of equity is vested consequences will be as explained above in the section of vested equity.

When and how the advisor will leave the company

The advisor will take an exit when the advisor’s agreement will come to a conclusion. As specified in the agreement, the advisor will take an exit with his allotted equity or money at the fulfilment of the time period mentioned in the agreement. If there is a mutual consensus between the advisor and the company, the agreement might get extended for a further duration of time. The advisor may also take an exit when he does not conform to the agreement clauses of the agreement.

This was all about the common problems in hiring an advisor in exchange for equity or money. Do comment and share with your friends and family.

In this blog post, Shantanu Pandey, from Rajiv Gandhi National University of Law Punjab, discusses various aspects concerning visa bulletins. 

In this blog post, Shantanu Pandey, from Rajiv Gandhi National University of Law Punjab, describes the different types of US Visa and the procedure which is needed to be followed in order to apply for them.

In this blog post, Shantanu Pandey, from Rajiv Gandhi National University of Law Punjab, describes the procedure for applying for a Green Card in the USA. 

In this blog post, Shantanu Pandey, from Rajiv Gandhi National University of Law Punjab, describes and details the laws prevalent in India that help to prevent and control water pollution.