Foreign law firms are finding India to be an unattractive destination, as the gap continues to widen between the hourly rates of Indian legal practitioners and their international counterparts.
This concerning finding from a soon-to-be published study carried out by RSG Consulting, comes even as the government looks to open up the Indian market for foreign law firms in order to give economic activity a boost.
Pricing Pressure Limiting Industry Valuation
Intense competition has caused downward pressures on pricing, resulting in the Indian legal market to be limited to a potential size of $1.3 billion (Rs. 8,400 crore) for the year till March 2018. This is despite the roll out of goods and services tax increasing available work.
Further worrisome is the fact that Indian law firms are managing to net only just about half of this legal market, with the remaining going to foreign law firms that cannot yet open local offices.
Reena Sengupta, chief executive of RSG highlighted that a majority of the foreign firms (75%) considered India as “less attractive” as a destination for setting up operations even if the market opens up due to the existing pressure on fees.
RSG Consulting releases a report every other year ranking Indian law firms based on trust levels amongst lawyers.
Sengupta noted that just two firms did not offer discounting in fees namely AZB and Trilegal.
Hourly Billings Declining For Indian Firms
Hourly billings are down by 8 percent to $992 on an average for senior partners at top law firms while for junior parts it has dropped by 39 percent to $615, according to the report.
In comparison, UK lawyers earn an average fee of $1,200 and discounting is limited to 15 percent on major transactions when the firms may agree on a fixed fee, Sengupta said.
