Indian cos’ annual legal costs hit ₹40K cr on rising M&A, IP cases

livemint.com:

MUMBAI : Indian companies’ aggregate legal expenses hit ₹40,000 crore in each of the last two fiscal years, two industry executives said, a figure that is expected to rise further driven by white-collar crimes, insolvency cases, mergers and acquisitions (M&As), intellectual property (IP) matters, and regulatory filings. Law firms have bulked up to meet rising demand, recruiting hundreds of law grads from campuses as well as from rival firms.

Additionally, partners at law firms have moved to corporate roles as their expertise becomes critical. “Our estimate is that legal spending rose by more than 30%, with large law firms benefiting the most in revenue growth.

The increased legal spending is in the areas of litigation, white-collar, investigations and regulatory matters," said Ritvik Lukose, the co-founder and chief executive of search and advisory firm Vahura, which specializes in legal and governance functions. Lukose estimated that in the last two fiscals, Indian firms would have spent around ₹40,000 crore on legal costs, each year.

Rising forensic cases, corporate disputes and changing startup regulations have also swelled demand for lawyers. Leading law firms said companies are working with them to determine the way forward on the new data privacy regime, which represents an additional investment for Indian companies.

“Indian companies’ legal spending over the last year is estimated to be north of ₹40,000 crore. This could go up significantly in the next two years due to the complexities of legal scenarios, especially with commercial activities including arbitration, disputes, transactions, capital markets and fundraising witnessing an increase after covid," Tina Gosar, chief financial officer, Khaitan & Co, said.