“He would have found it challenging,” says Pallavi Shroff, Delhi managing partner at Shardul Amarchand Mangaldas (SAM), about how Mumbai managing partner Akshay Chudasama, hired from the very different J Sagar Associates (JSA), would have fit into the legacy Amarchand Mangaldas firm, had he joined before the break-up.

Indeed, it’s fair to say that SAM’s predecessor, Amarchand & Mangaldas & Suresh A. Shroff & Co., was a management morass.

Due to the long-lingering, usually latent, but sometimes overt, animosity between the brothers, the two regions—Delhi under Shardul Shroff and Mumbai under his brother Cyril—were semi-autonomous in their day-to-day affairs, while the larger firm decisions and strategy had to be filtered through various national and management committees that were often less than efficient.

SAM’s Pallavi Shroff and Akshay Chudasama, co-managing partners, talk candidly to Legally India’s Kian Ganz about the last year and what will happen (if anything) come 1 April, when the informal no-poach agreement between CAM and SAM comes to an end.

Read full interview in the Mint newspaper or on its website today.

Highlights:

• Firm chairman Shardul Shroff has taken a bit of a backseat in day-to-day (micro)management, which is divided fairly equally between Pallavi Shroff and Chudasama.
• The Mumbai office is cash profitable on a month-to-month basis, when excluding the initial investments relating to office lease, fit-out, etc. People are at 80+ per cent utilisation in Mumbai, says Chudasama.
• The two most senior Shroffs, Shardul and Pallavi, remain biggest equity holders but management increasingly handled by non-Shroffs.
• 47 non-equity partners; 22 non-family equity partners who are on an approximately seven-level modified and gated lockstep (moving up a level – or through a ‘gate’ - depends on performance, and typically takes around three years). Chudasama joined at the top of the lockstep.

Choice quotes

• “I think what we’re trying to achieve here (at SAM) is quite unique.” Chudasama.
• “What’s important is that we have a clean slate.” Pallavi Shroff.
• Chudasama: “My comfort has been with Shardul and Pallavi. The reason I’m here today is that I have a lot of comfort with them.”
• Chudasama: “The big challenge is: how you deal with people, lawyers, their egos, making sure that they communicate with each other, that there’s collegiality amongst them.”
• “Khaitan (and Co.) is a competitor, Zia (Mody of AZB & Partners) is a competitor, CAM is a competitor, so is Luthra (& Luthra).” Pallavi Shroff

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Full article below

“He would have found it challenging,” says Shardul Amarchand Mangaldas (SAM) Delhi managing partner Pallavi Shroff about how Mumbai managing partner Akshay Chudasama, hired from the very different J Sagar Associates (JSA), would have fit into the legacy firm, if he had joined before the break-up.

Indeed, it’s fair to say that the SAM predecessor, Amarchand Mangaldas Suresh A Shroff & Co, was a management morass.

Due to the long-lingering, usually latent, but sometimes overt, animosity between the brothers, the two regions – Delhi under Shardul Shroff and Mumbai under his brother Cyril – were semi-autonomous in their day-to-day affairs, while the larger firm decisions and strategy had to be filtered through various national and management committees that were often less than efficient.

From that perspective, the split between them appears to have done SAM good.

But it could have really gone either way when SAM officially launched on 11 May 2015, after a six-month mediation over a family inheritance between brothers Shardul Shroff in Delhi and Cyril Shroff in Mumbai.

The subsequent pace of expansion of both brothers’ operations were unprecedented in the Indian corporate legal market.

Shardul’s new Mumbai office alone had hired six partners before even opening its gates (though a Bangalore office was still and continues to remain missing, also for the immediate future, say Pallavi Shroff and Chudasama).

Two weeks later, the firm formally confirmed that its Mumbai office would be headed up by Akshay Chudasama, the former J Sagar Associates (JSA) partner, who would be Mumbai regional managing partner alongside Pallavi Shroff, who would be Delhi regional managing partner.

Pallavi’s husband and Shardul Amarchand Mangaldas namesake, Shardul Shroff, would be executive chairman of the firm. Several more high-profile lateral partners followed Chudasama from JSA and AZB & Partners.

How exactly that was going to work out, and whether the family-run leopard would ever change its spots, was anyone’s guess at that point.

A new beast?

“I don’t know the old firm in that sense,” says Chudasama over a video conference call from Mumbai. “My comfort has been with Shardul and Pallavi. The reason I’m here today is that I have a lot of comfort with them.”

“I can tell you one thing,” adds Shroff. “If you want a senior person with you, you need to have space and need to have them run with things. You can not have a managing partner [micromanaging].”

“Has there been interference on a day-to-day?” asks Chudasama. “Absolutely none. But do we talk about things? Do we [disagree on] policy decisions?” Yes but there is no micromanagement, he insists.

However much you probe, Chudasama is unequivocal in his praise and enthusiasm for his new role and these come across as honestly held.

“There are challenges, there are roadblocks that keep coming up but nothing one didn’t expect [or] can’t surmount. It’s been phenomenal, really: we’re ahead of where we thought we’d be,” he claims.

However, while Mumbai is making cash profit on a monthly basis, it is not yet overall profitable when considering the heavy initial investments, as well as three floors of office space in the iconic Nariman Point Express Towers building costing nearly Rs 70 lakh per month in rent and having required more than Rs 2 crore of deposits.

“Yes, we have fancy offices”, quips Shroff, but depending on how you calculate it, in terms of day-to-day operating costs, Mumbai was “paying for itself” and was “way ahead” of the “original budget”. “The firm will make profit in the very first year,” she adds.

“The true test is how busy people are. I wouldn’t say we’re at a 100 percent capacity. but we’re definitely at 80-plus,” notes Chudasama. “That for me is the true test: in less than (10) months since I’ve been around, we’ve managed to keep 80 people pretty much fully occupied.”

“It’s not mean achievement I think,” adds Shroff.

Two partners have left SAM (they “have joined in-house and we share a very good relationship with them” says Shroff) but overall attrition has been minimal, say Shroff and Chudasama. The firm as a whole is now around 400 lawyers strong, with Chudasama predicting that by 2017 the headcount may reach 500, with growth of around 20 per cent year-on-year.

National cohesion

Becoming a single national firm remains a work in progress though.

“One of the things we’ve really been pushing a lot over past few months is to build this concept of national practice groups, and really a lot [of effort] has gone in that,” says Chudasama.

All partners in larger practice areas now report to national practice heads. The competition practice for instance, reports to Irish-qualified John Handoll, who had joined in 2012; Pallavi Shroff is the national disputes and litigation head; Shuva Mandal, who was poached from AZB & Partners by Chudasama only four months after he had joined SAM, heads up the national corporate practice.

While the extended Shroff family still retains the largest control over the firm’s equity and profits, they are also power-sharing more than they had been before. “Yes, they’re the largest stakeholders, [but] they’re also the senior-most and most capable partners,” comments Chudasama.

“The way we’re structured, we got his management committee, of two Shroffs, [partner] Jatin [Aneja], [partner] Gunjan [Shah], myself, [former SEBI chairman] M Damodaran [who sits on the board as an external advisor], [competition head] John Handoll, so we’ve got five non-Shroffs,” he explains.

In two years, adds Pallavi Shroff, she, Shardul Shroff and Chudasama would remain on the committee while the other four positions would probably be opened to other partners on rotation. “And we may bring in one more (really senior) person down the line.”

Meanwhile, the role of Shardul Shroff has transitioned from less of the hands-on managing partner that he used to be at Amarchand Mangaldas to what is traditionally more of a senior partner role in a law firm. “Shardul is our mentor in many ways,” says Pallavi. “He oversees whether in right direction and focus, he’s also doing a lot of work, and he’s also the ambassador.”

Its competition practice is arguably SAM’s single biggest practice area advantage vis-a-vis CAM, and easily the largest such practice amongst Indian law firms, according to Pallavi Shroff, and it also attracts a considerable number of non-SAM-clients, purely on its own merits. That department continues to have a strong family presence: daughter Shweta Shroff and son-in-law Naval Chopra play key roles in the competition department, alongside Pallavi.

Despite the Shroffs’ continuing influence in the firm, Chudasama says it has not been overbearing. “The truth is that every single management board meeting, every decision has ended up being consensual so far. It’s been a very open healthy debate on various points and nobody [none of the partners] has tried to push agenda points across.”

In effect, day-to-day management is now split between Chudasama and Pallavi Shroff, respectively the co-managing partners of the Mumbai region (including the smaller Ahmedabad outpost) and the Delhi region (including Gurgaon and Kolkata). They say they talk two or three times a day, whether by phone or WhatsApp message.

“Akshay can do what he wants,” notes Pallavi Shroff, “but the reality is that we talk every day together, we’re targeting clients every day together, we go to clients jointly - either I go, or if Shuva is going, either one from Delhi will go. We approach clients jointly and show them that we are one firm.”

Equity

That vision of a national practice has to be more than just managerial; encouraging partners to freely share mandates across offices is something that’s been notoriously hard to do in professional services partnerships, particularly in many Indian law firms where fiefdoms are quick to develop when bonuses and take-home-pay depend on the work you or your team or office do.

“If you are all sharing from he same profit pool, in a modified lockstep manner, in the way we’re currently structured, we are one partnership, one profit centre, as far as I’m concerned it doesn’t matter if handled out of Mumbai or Delhi,” says Shroff.

SAM is “one partnership, one balance sheet, one profit centre”, agrees Chudasama.

Of course, that’s not the entire story.

The equity model of the firm is still similar to what it was before the split: one majority equity pot that only the Shroff family is eligible for, with a separate equity pot that non-family members can be a part of, with the 47 non-equity partners effectively getting paid salaries.

The 22 partners who are part of the non-family equity pool, can climb a modified lockstep of seven levels, with each level taking approximately three years to climb and being subject to performance and appraisals, explain Shroff and Chudasama.

Chudasama, as a lateral, came in at the top of that lockstep ladder.

“There are two sides: ownership and management. The tendency is to mix the two,” says Shroff about how she envisages the new structure, with ownership and management increasingly separating as time goes by – i.e., the family may always hold a large chunk of the equity, but the management may be handled by other partners. “That’s a change from the legacy that we had.”

That said, all this is easier said than done and the devil remains in details.

From a management perspective, the biggest challenge that we have are all people and practice issues of how to service particular deals, says Chudasama. “The big challenge is, how you deal with people, lawyers, with their egos, with making sure that they communicate with each other, that there’s collegiality amongst them.”

The past

As for history and Amarchand Mangaldas Suresh A Shroff & Co, Pallavi Shroff reflects that it “was a good period when it was good”.

“The last one year (of the break-up) was very difficult, but the rest of the time we’ve grown beautifully in the new firm. This is a new beginning, I have so much to look forward to in the new firm,” she says.

Cyril Amarchand Mangaldas (CAM), the other half of the legacy firm that has expanded aggressively into Delhi, is treated “as any other competitor in the market - there’s no emotion here”, according to Shroff. “Khaitan is a competitor, Zia is a competitor, CAM is a competitor, so is Luthra.”

That said, both Shroff firms have poached from all those firms except directly from each other so far, running for the first year after their separation under an informal non-poach agreement between each other, which will expire on 1 April 2016.

Will the gloves come off soon? “There’s nothing targeted in that sense,” Shroff responds, and adds, more cryptically: “We’re not definitely going and targeting people here or there, we need to keep our own flock together.”

For Chudasama it is quite a new start too, moving from one-partner-one-vote firm J Sagar Associates (JSA), whose founder Jyoti Sagar retired in 2013, surrendering his equity completely. “JSA is a much more flat partnership across the board,” says Chudasama. “JSA was a far more democratic model and there are obviously strengths in both models. I think what we’re trying to achieve here [at SAM] is quite unique.”

It’s a balance between tradition and moving towards an international model, he says.

“What’s important is that we have a clean slate,” chimes in Pallavi Shroff. “We can make the approach very different the way we want it, it can be inclusive, or [not but] I personally don’t believe in that and Akshay doesn’t believe in that either. This is a much more inclusive culture than we’ve ever had in the past.

“People are given responsibility of leadership, and if they don’t perform and don’t prove themselves, somebody else will step in.”

When or if such leadership transition will extend to the Shroff family, is a question that’s at least several years away, though some of the right building blocks are certainly being stacked right now.