In Short:
Senior lawyers in India are enjoying higher salaries and bonuses as law firms compete for talent. There’s a “talent war” with many lawyers migrating to boutique firms. To retain talent, firms offer faster paths to partnership and attractive bonus structures. Attrition rates are high, prompting firms like Shardul Amarchand Mangaldas to increase starting salaries significantly.
Mumbai – In a world where the legal field has become a battlefield for talent, senior lawyers are finding themselves in a golden age. Bursting with excitement, they’re being seduced by hefty retention bonuses, quicker paths to partnership, and salary hikes that can only be described as generous. In fact, the top law firms in India have enlisted the help of consultants to revamp their compensation strategies to keep their star players on board.
Talent on the Move
“It’s a talent war out there,” says Deepan Dasgupta, Partner in Human Capital at Deloitte. As numerous leaders in the field depart to establish boutique practices, the migration of top-tier legal talent is surging.
“Law firms are now incentivizing their professionals in two major ways – faster tracks to partnership and an alluring performance-linked bonus system,” he added.
The Landscape of Legal Competition
The intense competition is palpable among firms like Indus Law, Cyril Amarchand Mangaldas, JSA Advocates & Solicitors, Khaitan & Co, Trilegal, and Shardul Amarchand Mangaldas & Co, along with newer boutiques formed by former senior partners.
What Sparked This Frenzy?
The sudden surge in competition can be attributed to a variety of factors: an uptick in mergers and acquisitions, a wave of regulatory filings, and the emerging needs of smaller firms seeking legal expertise. As a result, seasoned partners are launching boutique firms and are enticing former colleagues with equity stakes to join their innovative new ventures.
The past couple of years, especially post-pandemic, have shown a rise in demand for lawyers focusing on taxation, risk, and crisis management, further fueling this talent hunt.
The Numbers Behind the Surge
Insights from Vahura Consulting indicate that the top 10 law firms boast between 6,500 and 7,000 lawyers, each hiring anywhere from 25 to 128 law graduates annually. Leading the charge in campus recruitment are firms like Trilegal and Cyril Amarchand Mangaldas.
However, attrition rates have seen a troubling spike in recent months.
Understanding Partnerships
Within law firms, there are two types of partners: equity partners, who contribute to business and share profits, and non-equity partners, who receive a fixed salary along with performance bonuses. The latter group is where law firms are focusing their attention.
The Duel for Talent Retention
“In today’s competitive legal market, retaining talent is more critical than ever,” stated Avimukt Dar, Founding Partner at IndusLaw.
Various strategies are being employed, from boosting base pay and performance bonuses to implementing transparent equity models in hopes of keeping their skilled professionals.
Bonuses at the partner level can be linked to individual and collective achievements, including clinching new clients and driving revenue growth. “We aim for a mix of flexible targets and performance bonuses to ensure that our best lawyers feel appreciated, even during challenging times,” Dar explained.
Competition Heats Up
Trilegal confirmed to Mint that it routinely seeks the counsel of top advisors regarding compensation strategies. Chief Human Resources Officer Parul Gupta remarked that competitors are adjusting their pay structures to align closer to Trilegal’s offerings.
In a bold move this July, JSA welcomed Nisha Kaur Uberoi, previously the head of competition practice at Trilegal, who arrived with two partners and a team of 25 attorneys. Additionally, JSA snatched up private equity and M&A partners Iqbal Khan and Ambarish, along with around 20 members from Shardul Amarchand Mangaldas.
Revising Offers for New Graduates
The increased competition has pushed firms to reconsider their offerings for fresh graduates. For example, Shardul Amarchand Mangaldas recently raised the salary for grads from ₹16 lakh to an impressive ₹20 lakh.
Shocking Attrition Rates
The legal sector has seen significant attrition, with reports indicating around 25% departures among associates and senior associates with 1-9 years of experience, as noted by Vahura in July.
Upping the Ante on Compensation
Law firms are now ramping up variable pay options, with some moving from 85-100% to as high as 200%. Dasgupta pointed out a newfound focus on rigorous performance differentiation through quantitative metrics, even enabling partners to customize their strategies based on their strengths.
Innovative Solutions at Work
Firms like Nishith Desai Associates are turning to artificial intelligence to ensure that their employees’ experiences remain within the firm. “If we lose some talent, the knowledge they have gathered stays with us, which allows us to avoid the rush to replace them while rewarding our top performers in the long run,” said founder Nishith Desai.
He elaborated that his boutique firm prefers to scale intelligently rather than simply grow in size. “We don’t view compensation merely as salaries; it’s an investment in talent,” he added. “Everyone, from team heads to support staff, is part of a revenue-sharing model that reflects our commitment to the firm’s success.”
