Information Technology Law Conference Report

The conference in Bangalore attracted about 300 people, of which nearly 60 were speakers from law firms, technology companies and legal outsourcing companies. It opened with a call by Dr. F.C. Kohli (referred to as the father of the Indian software industry) for technologists to create software in India’s 22 non-English languages so that the 600 million uneducated Indians in rural areas can access information to improve their livelihoods and their lives.

I thought the best presentation in the two days was the session on private equity investing in India, with detailed and substantive coverage of the tax implications and effects of various investment structures by attorney Bijal Ajinkya of Nishith Desai Associates (Mumbai, Bangalore and other cities), and guidance on the legal complexities associated with private investment in India by Stephen Mathias of the Bangalore office of the Kocchar & Co. law firm. (Rohit Kochhar, founder of the firm, is the author of “Doing Business in India,” published by Thomson/West.) Ms. Ajinkya described the tax advantages of utilizing India’s tax treaties with Mauritius, Cyprus and Singapore to structure capital investments, with special recommendations for structures applicable to Sharia investors (governed by Islamic law) and Japanese investors. Mr. Mathias outlined the specific limits on investments in listed and unlisted equities applicable to foreign direct investment (FDI) vehicles and foreign venture capital investment vehicles (FDVI). This session demonstrated a high level of technical knowledge by the law firms involved and made it clear that investing in India should not be considered by the uninitiated or the unrepresented.

Yesterday’s session on legal process outsourcing (LPO) sounded a warning to law firm lawyers everywhere: the LPO industry in India is booming. The panel featured two US-based private practitioners and executives of three India-based LPOs. The US lawyers recited a laundry list of potential obstacles to LPO (e.g., waiver of attorney-client privilege or work product privilege, quality of the Indian attorneys engaged, unauthorized practice of law concerns, ethical concerns about disclosure of the LPO relationship), but these arguments were dismissed by the LPO vendors who insist that their attorneys are not practicing law, either in India or in the US, when they undertake research assignments, litigation support tasks and patent searching for foreign law firms and corporations. (The Indian LPO vendors do not provide services to Indian corporations or firms.) Moreover, the lawyers employed by the LPO firms have US and UK legal training and are supervised by lawyers with experience in some of the best-known law firms in the world. Apparently, working for the LPO firms is quite desirable for Indian lawyers, and the LPOs claim they have no trouble recruiting from the best law schools in India and abroad.

Quislex, a 100-lawyer based LPO headquartered in Hyderabad and New York, is run by two Columbia Law School (NY) graduates, Sundari Pisupati and Ram Vasudevan. Both worked in major law firms before starting Quislex. Ms. Pisupati was valedictorian of her law class at The National Law School of India University, the country’s top law school, with five gold medals for outstanding achievement and medals from the President of India and Chief Justice of the Supreme Court of India. In India, they would call her a “topper.” Other emerging LPOs include Bodhi Global and New Galexy; the latter’s chief executive graduated from Cornell and his colleagues all trained in law firms in the US or the UK. In addition, “captive LPOs” are cropping up in India, as US companies set up India-based groups of in-house lawyers to supplement their in-house law departments. Dell has 7 lawyers in Bangalore, who act as “virtual contract managers” and “virtual legal counsel” for Dell’s sales team. The Dell LPO is only 18 months old, but will grow to assume additional responsibilities and perhaps even reduce Dell’s reliance on outside law firms, according to Sudha Munireddy, one of the lawyers in the Dell LPO group.

One factor driving the Indian LPO industry (besides comparative low rates of Indian lawyers vis-à-vis their American and European counterparts) is the prohibition on foreign law firms practicing here. (An obstacle to identifying qualified Indian firms is the prohibition on their having web pages.) Without this bar to foreign firms, which some Indian lawyers say will eventually be eased, major US and European law firms might simply acquire LPO offices and operate them as their India branches. (Might this be part of the strategic/growth/exit strategy for Indian LPO vendors….?) Uncertainty about the future of permitted legal structures for Indian and foreign lawyers may make it wise for a law firm or company doing significant business in India to get to know LPO companies while they are emerging, as the best of them might eventually be snapped up by competitors, either as branches of firms or captive corporate legal departments.

Post conference, I hosted a drinks party with Columbia University and Columbia Law School graduates attending the conference (there were 7 of us), ranging from a 2003 MBA to two 1982 law graduates. Columbia Law graduates in India have their LLMs, for the most part, and all are multilingual. In their company, I could not help feeling a little provincial. We found each other by word of mouth and review of the speaker biographies, and as a group, we’re working for India-based LPOs, law firms, major multinational corporations, and the Seoul National University. Our impromptu gathering was my introduction to Grover’s Reserve 2004, a good Indian red wine. It is a Cabernet Shiraz blend, made from French vines imported to India, and the grapes are grown in the Nambi hills outside Bangalore. As I’m so fond of saying, “who knew?”

Regrettably, the conference hotel, the Le Meridien, is inconvenient to the city center, so I could not get to the women’s professional tennis tournament that is happening this week, and missed the Valentine’s Day celebrations which filled the restaurants and nightclubs. Walking is challenging (some might say suicidal) but I navigated the streets for an hour yesterday until I would have had to cross a busy street, where I lost my nerve. Today’s papers reported 4 traffic fatalities in Bangalore yesterday, including two pedestrians mowed down by vehicles and two motorcyclists killed by a truck, so caution seems smart in retrospect. Bangalore lawyers travel by taxi or private car – chauffeured cars charge them 800 rupees (less than $20) for an 8-hour day (including waiting time), but the hotel’s travel desk charges more than 3,100 rupees for the 8-hour day, which is leaving quite a few conventioneers feeling ripped off. Consequently, I haven’t seen much of the so-called “garden city,” which was cited as the second-best city in India to do business according to a World Bank study released this week. (Hyderabad is in first place.)