Cyril Amarchand Mangaldas (CAM) has significantly underbid competitors Shardul Amarchand Mangaldas (SAM) and Luthra & Luthra to win the final rounds of blind bidding for the mammoth strategic Air India disinvestment, quoting Rs 29.9 lakh ($46,100) in fees for what is expected to be a complex series of corporate M&A deals, said sources with knowledge of the bid.

It is understood that the next highest bids in the final round were in the crores - around Rs 3.5 crores ($539,400) in Luthra’s case, and around Rs 1.5 crores ($231,000) in Shardul Amarchand’s case, according to authoritative sources.

That would mean Cyril Amarchand had bid fees that were respectively 12 and 5 times lower than Luthra and SAM to win the mandate.

One lawyer we spoke to privately doubted that CAM’s quoted fees would even cover lawyers’ salaries on what is expected to be a complex deal, probably requiring partner resources and several fee-earners working full-time for up to 10 months.

We have reached out to Cyril Amarchand for comment earlier today.

The three law firms had qualified for the final round of the disinvestment of the debt-ridden national carrier after the first stage of tenders that assesses on technical skills, which had also seen Crawford Bayley, ALMT Legal, Trilegal and Hammurabi & Solomon throw their hat in the ring, as we had re-reported from a PTI report yesterday.

Air India has debts of over Rs 50,000 crores, with the government looking to sell off the flag carrier and five or more subsidiaries, such as ground luggage handling and others, to private companies.

Consultancy firm EY and investment bank Rothschild also won the bidding process, quoting 0.2 per cent of the total transaction fees, according to the Business Standard.

In 2010 we had reported in Bloomberg on the new tendering process for disinvestments, which introduced the initial technical tendering stage (assessing firms pitches on technical skill, experience and capacity to deliver the work), followed by a stage where shortlisted firms were selected on the basis of the lowest fees (the so-called L1 principle).

In 2010, Luthra & Luthra and DLA Piper had jointly won the bids to handle the capital markets disinvestments of Engineers India for Rs 136 lakh and in Coal India for even less than that - both far below what law firms would charge most private companies.

The reason the government has been able to get such heavy discounts on legal services is manyfold: some may feel that the prestige and experience of these marquee mandates could offset the money lost (or not earned), or that the client and government relationships that can be groomed in such mandates will be worth it in the longer run.

The government’s job in managing such low-paid legal work will be to ensure that the law firms continue fielding sufficient resources and partner time in the mandates, even if it may not be financially lucrative for them.

Update 1 November 2017, 15:23: Bar & Bench has reported the technical scores given by the government for a number of law firms in the bid, out of 100 (the cut-off to proceed to the final bidding round being 80):

Crawford Bayley & Co 78

Cyril Amarchand Mangaldas 89

Hammurabi & Solomon Partners 63

Luthra & Luthra 94

Shardul Amarchand Mangaldas 91

Trilegal 79

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Photo by lasta29