J Sagar Associates (JSA) tax chair Ashok Dhingra, partner Smita Singh, and partner-equivalent chartered accountant (CA) Sonia Gupta, have set up boutique tax advisory firm Ashok Dhingra Associates (ADA).
The firm would focus on two primary areas - indirect taxes and regulatory, and anti-corruption laws, explained Dhingra.
“We are not doing transactional work,” he said, adding that the firm would only act for multi-national companies and foreign law firms.
Dhingra said that 70 per cent of his former JSA clients had already agreed to move to his new firm, after JSA had offered to waive the non-compete clause on his retirement with respect to clients and hiring colleagues.
The firm (including Dhingra, partner Singh and principal consultant Gupta), would consist of six fee-earners operating from an office in Gurgaon.
Dhingra added that he had also already moved his personal law library that he’d been building since 1976 to the office, consisting of 7,000 to 8,000 books.
The former bureaucrat had left Khaitan & Co as a partner in 2009 to join JSA in Gurgaon, where he became a partner and chair of the tax customs & trade team, and co-chair of the corporate compliance, anti-corruption & investigations team. From 1998 to 2005, he had worked at Arthur Andersen, Ernst & Young and KPMG, after 22 years at various government departments, including customs, central excise and service tax.
Smita Singh is a 2006-Delhi University law graduate, who had joined JSA from Khaitan with Dhingra in 2009, getting elevated to the salaried partnership earlier this year.
Gupta is a 2002-batch chartered accountant with a focus on customs trade, foreign trade policy, regulatory, money laundering and anti-corruption laws. She had joined JSA in 2009 from ING Vysya Bank where she was manager-credit.
“We wish him well - he’s always personally been a dear friend,” commented JSA Bangalore partner Sajai Singh. He also confirmed that JSA operated a retirement policy where partners can voluntarily opt to retire at age 60, rather than 65, which Dhingra took advantage of, and that, as far as he was aware, the firm did not generally impose non-compete clauses on early retirees.
The only remaining partner in the tax practice at JSA was currently Sunil Jain in Gurgaon, alongside several other fee-earners. Sajai Singh said that the firm hoped to make an announcement before the end of the year about a replacement for Dhingra at the indirect tax and senior level of the practice.
Comments
Why would any sensible firm's management waive non-compete with respect to clients?
It may also have something to do with the the type of practice - indirect tax, I understand, probably did not generate as much revenue as some of the other transactional groups, so maybe it's not perceived as too painful to lose a few clients in the niche area.
Another question which follows: are non-compete clauses imposed on other retirees, but not on early retirees? It makes no logical sense!
As a matter of Indian law, non-compete clauses have very limited legal validity, which makes me wonder what is imposed on partners who exit at retirement age.
Anyway, my question was "why" would a firm waive non-compete. Some people may have the answer.
I mean, let's face it, non-competes are ridiculous. I know some Indian lawyers choose to not poach clients where they used to work out of some sense of honour, but ultimately it's just a massive charade of "it's ok if the client calls me directly and I don't actively solicit ex-clients".
Everyone does it, and postponing it by 6 months might give the old firm a bit of time to get ducks in a row and arrange a replacement for the client relationship, but it's also likely to piss off departing and existing lawyers some, as well as make clients who want to move feel weird that the firm won't let the client decide freely who they want to work with by locking in its lawyers.
However, from a business perspective i.e. leaving pretences of honour and nobility of the profession aside, the people at the top have to manage a partner exit for the sake of the firm. A client who wishes to move today, as a knee-jerk reaction to the exit of his preferred partner, may lose the inertia after a couple of months. To that extent, “restrictive” clauses work well and they are illegal [i]per se[/i] [u]only[/u] when imposed for a long duration. Add to this your valid point about buying time to get ducks in a row. Thus, IMHO, non-competes are not-so-ridiculous. A real professional is unlikely to be pissed about a valid contractual arrangement, which is not the same as Amarchand’s unprofessional attitude or Luthra’s ill-famous 3-year lock-in.
So, the question really is "why" JSA does business differently. Just niceness? Not interested in getting into controversies for a few dollars more? Too big to fail on account of some defecting clients? Daft management?
I wouldn’t link it to the practice area in view of Mr. Singh’s statement that the firm does not "generally impose non-compete" clauses, although I am still confused as to why he felt the need to add "early retirees". I guess just a loose choice of words.
Thanks for your comments.
So he didn't literally say early retirees, nor "does not generally impose", but that was what a longer conversation was boiled down to, so there's not too much value into reading into wording above that is not in quotes.
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Wonder what is going to do with books bought in 1976.
In response to your question, I would assume that he replaced some of the volumes that have gone out of date or been superseded by new editions though?
Do you have any more info on that? Which other firms are on that panel?
If there is a conflict, maybe TRAI has waived the conflict? Many PSUs, government and quasi-government agencies waive/restrict various sorts of conflict at the engagement stage to get the bigger firms to bid at lower rates.