People management, the mantra of succes

PEOPLE MANAGEMENT, THE MANTRA FOR
SUCCESS: THE CASE OF SINGHANIA AND
PARTNERS
It was 9:15am on 25 April 2006. An article published in that day’s Economic Times, a leading Indian financial daily, had attracted the attention of both Mr Ravi Singhania and Ms Manju Mohotra. Singhania was the founder and managing partner of Singhania and Partners,1 one of the largest full-service national law firmsin India; Mohotra was its chief executive. The Indian legal services industry had been booming since the country’s economic liberalisation, which had started in the 1990s. The exponential growth of this industry was accompanied by an acute talent crunch. The ability to hire and retain talent was becoming a source of competitive advantage, a mantra for success. The news article Singhania andMohotra read was about the movement of partners between legal services firms. It was yet another testimony to the high attrition rate in the Indian legal services industry. Sitting in Mohotra’s office, the article provoked both Singhania and Mohotra to reflect on the adequacy of their firm’s people practices.

Indian Legal Services Industry
The legal services market covered law practitionersoperating in every sector of the legal
sphere such as commercial, criminal, legal aid, insolvency, labour/industrial, family and
taxation law. Before 1992, a vast majority of Indian lawyers worked in small practices as
Indian law mandated that law firms could neither have more than 20 partners nor could they
advertise their services. Additionally, Indian corporations preferred in-house legal advisorsas
they were more economical compared to external counsels, further rendering the creation of
large legal firms less likely. The legal services industry had competitive pricing and legal
firms were mostly fragmented and competed in niche domains.
With the liberalisation of the Indian economy, beginning in the early 1990s, came the foreign
investors and multinational corporations. Indian lawfirms soon realised the importance of
providing legal services to these new arrivals. But, only a few Indian legal firms had the
expertise to handle commercial work for multinational corporations. Combined with this
paucity of expertise was the high demand for it, created by the fact that the legal system in
India was very slow and companies preferred arbitration over going to court insettling
disputes. These two factors combined to create an explosive demand for legal services in
India.
In spite of the country’s accession to the World Trade Organization in 1995, the Indian legal
services market remained closed to foreign players. Various political parties were opposed to
the idea of opening up this sector to outsiders. Hence the Indian legal services industry was
protected—thepractice of law was restricted to Indian nationals only. Under the Indian
Advocates Act of 1961, foreign law firms were not allowed to open offices in India and were
prohibited from giving any legal advice that could constitute practising Indian law. This
prevented foreign lawyers and law firms from establishing offices in India. International law
firms were allowed to function only as liaisonoffices, or foreign legal consultants.
Law firms were people-intensive organisations and their key capability was the skill,
knowledge and capacity of their employees. The high demand for lawyers that came with the
liberalisation of the Indian economy, together with the continued shortage of good quality
lawyers in many areas of law, meant that the industry faced an acute shortage of legalprofessionals. With ample employment opportunities in the industry, attrition became a real
concern. Effective human resource management became essential for law firms. The
increasingly competitive labour market required firms to develop creative approaches to the
recruitment and reward of employees. It also brought significant retention challenges. Firms
had to find ways of holding on to...