A few days back, The Economic Times had as a lead story on how law firms are trying to tap the startup space in India. Aarthi, the blog’s co-author, also gave her opinion:
The spat between Housing.com founder Rahul Yadav and its investors probably could not have been settled anywhere but in the air-conditioned boardrooms of AZB & Partners, one of the country’s top corporate law firms. Allwin Agnel, founder of PaGaLGuY, an online education network, needed the acumen of Impact Law Venture, a boutique law firm specialising in startups, to structure stock options for his employees.
Boutique Legal FirmsCompeting with the market leaders are several nimbler boutique legal firms that have become specialists in the field. Six-year-old TMT Law Practice is now harvesting the benefits of its early faith in the Internet eco-system and today its billings have doubled as clients such as Zomato, Mydala and Roposo keep coming back or send referrals. In some cases, TMT has offered fee discounts of as much as 60%. To keep its clients comfortable, TMT has even designed its offices with a “grungy garage look” with exposed floors, large windows and an open space with conference tables and small, private rooms. “It gives an interesting vibe as opposed to large white shoe law firm with suits,” says Kaushik Moitra, partner and head of technology at TMT. “Lawyers, like their clients, also opt to wear smart casuals over formals and pinstripes.
The space is getting crowded as niche, startup focussed peers such as IndusLaw, Samvad Partners and Impact Law Ventures jostle for market share. In much the same way as their startup client set, consolidation among law firms may soon be a reality as a dearth of talent and economies of scale come to the forefront. “We are expecting some boutique advisory law firms to be acquired by larger ones in the next couple of quarters,” said Ritvik Lukose, cofounder of legal recruitment firm Vahura.
The fresh-faced founders of startups are also waking up to the necessity of roping in sound legal advice early on. “As an entrepreneur we have so many things to do and we can’t learn law now,” said Sumit Jain, cofounder & CEO of CommonFloor.com, an online property listing site. “We involved Khaitan & Co and Amarchand to help us structure customer agreements and protect our brand, among other things. It’s been incredibly useful when we negotiated with our investors.”
he venture has attracted investors including Google Capital, Tiger Global and Accel Partners. Some law firms, however, are wary about the speed at which deals are closing and the casual approach – often, people only glance through the potential pitfalls.
“The process of thinking through the investment cycle and shareholder rights for the next round, in my opinion, may have been compromised,” cautions Aarthi Sivanandh, a partner at J Sagar Associates “The frenzy in India is the same as in the Valley. Without writing a line of code, if a $5-million series (A) round can take place in the Valley, then an appmaker selling handme-down clothes or a food-ordering system can raise $3 million here.”
Credit: The Economic Times