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Analysis of the legal services market in India

Analysis of the legal services market in India Analysis of the legal services market in India
Release date 03.12.2020
Number of pages 53
Formats DOCX, PDF
Cost 250.000 ₹

The relevance of research

The legal services market is a market in which the realizable benefit is the provision of qualified legal assistance. The object of legal assistance can be both individuals and organizations.


Purpose of the study

Analysis of the state of the legal and attorney services market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the market of legal and attorney services


Content

Part 1. Overview of the Indian legal and advocacy market

1.1. Definition and Characteristics of the Indian Legal and Advocacy Market
1.2. Dynamics of the volume of the Indian market of legal and advocate services, 2015-2019
1.3. Market structure by type of service provided in India
1.4. The structure of the legal and advocate services market in the Union Territories
1.5. Assessment of current trends and development prospects of the studied market
1.6. Assessment of factors affecting the market
1.7. Analysis of sectoral indicators of financial and economic activity

Part 2. Competitive analysis in the market of legal and advocate services in India

2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players

Part 3. Analysis of the consumption of legal and lawyer services

3.1. Estimation of the volume of consumption of legal and lawyer services per capita
3.2. Market Saturation and Estimated Market Potential in India
3.3. Description of consumer preferences
3.4. Price analysis

Part 4. Assessment of factors of investment attractiveness of the market

Part 5. Forecast for the development of the market for legal and attorney services until 2024

Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators


Research excerpt

Part 1. Overview of the Indian legal and advocacy market

1.1. Definition and Characteristics of the Indian Legal and Advocacy Market

The legal services market is a market in which the realizable benefit is the provision of qualified legal assistance. The object of legal assistance can be both individuals and organizations. 
...

The Indian legal services market has always been traditionally open to foreign companies, while far from all countries of the world welcome such openness, and not everywhere are ready to put up with it. There are certain difficulties for international law firms, in particular, in India, China and South Korea. 
...

In the national market, firms, associations and associations organized by practitioners remain in the leading positions. This is 40-45% of the market. A clear growth trend is observed in the segment of individual entrepreneurs working on the maximum efficiency of available resources. The growth in the number of such enterprises is due to a personal approach to the billing of services. The third place belongs to lawyers who work within the framework of a single billing system. The presence of non-profit organizations is still indicated in the market, exercising supervision and protection of industry clients. 

The legal services sector in India is represented by two main groups of participants, divided by regulatory criteria: 
lawyers providing qualified legal assistance in the manner prescribed by the Law on the Bar; 
other market participants who do not have the status of a lawyer and provide legal services to an unlimited number of persons, in particular:  
- legal entities in the form of commercial organizations (as a rule, limited liability companies) and individual entrepreneurs without forming a legal entity, the main and additional activities of which are the provision of legal services;  
- branches and representative offices of international law firms;
- lawyers providing legal services as part of non-profit organizations and public associations;  
- other persons whose main or additional activity is the provision of legal services. 

Corporate lawyers should be singled out as a separate category, that is, persons engaged in professional legal activities under an employment contract as part of legal departments (or other structural divisions) of companies, as well as patent attorneys, notaries, auditors, civil servants.

1.2. Dynamics of the volume of the Indian market of legal and advocate services, 2015-2019

Diagram 2. Dynamics of the market volume of legal and advocate services in value terms in India, 2013 - 2019, billion Rs.

Despite the growth of the market in value terms, according to Rosstat data, the volume index of legal services in comparable prices in 2015-2017 decreased. 
...

Bankruptcy support and debt collection. In the last couple of years, the demand for such services has been steadily growing: both in terms of the number of requests and in terms of the revenue that such services bring. This is due to the complexity of bankruptcy legislation and judicial practice. There are more collection tools than there were five years ago. Now in this area, lawyers can offer their clients a wider range of services. In addition, the number of deliberate and fictitious bankruptcies is growing. 

Support for the creation of new businesses, registration of new rights, investment projects, etc. 

Protecting the interests of clients of banks and financial organizations. Arbitrary blocking of customer transactions, illegal refusals to open accounts, imposed services, frankly illegal commissions, ""black"" and ""grey"" lists. Void and voidable terms in financial service contracts. Disputes on OSAGO.

Services for real estate transactions - from support of transactions to litigation and challenging the cadastral value. Over the past couple of years, quite a lot of changes have accumulated in this area.

Growth in prices for legal and attorney services in 2013-2017 made it possible to avoid a significant drop in market turnover despite the decline in the number of services rendered. 

1.3. Market structure by type of service provided in India 
...

Diagram 4. Structure of paid services to the population, %

1.4. The structure of the legal and advocate services market in the Union Territories

After analyzing the retrospective of revenue from legal services rendered in the union territories and studying the distribution of existing legal organizations, we can conclude ...

1.5. Assessment of current trends and development prospects of the studied market

To the main trends and tendencies in the market of legal and lawyer services:
The need for multidisciplinarity. Businesses increasingly need advice not only of a legal nature, but advice at the intersection of law and business.

The most significant factor in the next five years will be the factor of changes in legislation.

Growing demand for high-quality resolution of corporate and commercial disputes for large businesses. Businesses are increasingly considering dispute resolution as a priority way of leveling market risks.

Intensive growth in the number of bankruptcy cases of companies and criminal cases related to the implementation of economic activities (which is associated with the situation in the economy). 

The general trend of recent years is associated with a constant increase in the number of tax disputes and related inspections by law enforcement agencies. 

The traditional growth of the practice of inheritance and divorce law.

Growth in cybercrime cases.

Use of technology. Market participants are looking for the most acceptable and least expensive technologies that can be used in the legal support of business. 

LegalTech is still an undoubted trend. Market participants consider digitalization and further partial automation as an inevitable, but evolutionary process in the development of the legal function. 

Thus, the penetration of new technologies can be singled out as key trends in the legal services market, both in terms of the objects of legal assistance, and in terms of the development of technologies for the provision of services. In addition, there is a steady trend towards the development of traditional practices: economic disputes, etc.

The market for legal and advocacy services faces the following challenges:
Most lawyers in India operate outside of any system of self-government (be it the bar or some other independent parallel structure), which means that the Indian legal system relies heavily on individuals who are not subject to the requirements of a code of ethics and disciplinary system. Consequently, many people who turn to them to gain access to justice, including to seek redress for human rights violations, will not be able to hold their legal representatives accountable if they are found to be incompetent, negligent or corrupt in the conduct of their case.

The lack of regulatory regulation of the provision of legal services and any standards for their provision put their consumers in a deliberately unprotected position in comparison with consumers of other types of services. 

The absence of special regulatory legal regulation of the activities of persons providing legal services outside the established requirements for the quality of such services and the rules for their provision, deprives the state of the opportunity to take any measures aimed at sanitizing the market by excluding unscrupulous participants from it in order to prevent violations of the constitutional rights of citizens to obtaining qualified legal assistance.

At the same time, there are widespread cases of lawyers providing legal assistance that does not meet the requirements of the law on advocacy and the Code. 

The lack of a unified legal regulation of the market leads to the fact that lawyers whose status has been terminated for violations of the Code or failure to perform (improper performance) of their professional duties to the principal may continue to provide low-quality legal services (including legal representation) in the unregulated market segment.

All of the above problems of the functioning of the national legal services market significantly complicate the realization of the rights of citizens and organizations to receive qualified legal assistance and negatively affect the protection of public interests. In addition, the spontaneity of the legal aid market disorientates citizens and the business community in choosing the right providers of such services.

1.6. Assessment of factors affecting the market

Let's consider the main factors influencing the market and, accordingly, demand.

Social (demographic)

During 2012-2018 India's population is on the rise. The increase in the population in 2015 was not only due to migration and natural increase, but also due to the formation of two new states of the Federation - the Republic of Crimea and the city of Sevastopol. 

Diagram 7. Dynamics of the population of India, as of January 1, 2012-2020, million people, thousand people

General trends in macroeconomic indicators can also be traced in such a value as real incomes of the population, which determine the level of effective demand. 
...

Economic

GDP is a macroeconomic indicator that reflects the market value of all final goods and services (that is, intended for direct consumption) produced per year in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used. It is the main, most complete official indicator of public welfare. The absolute and relative values ​​of GDP give an idea of ​​the general material well-being of the nation and the dynamics of its growth / decrease, since the higher the level of production, the higher the welfare of the country. 
...

Let's take a look at some experts' assessments:
...

Thus, experts disagree significantly about the real dynamics of India's GDP in 2020.
...

The industrial production index shows the total volume of all industrial production, utilities, etc. in terms of money. 
...

Even under the current conditions, the decline in production volumes will occur inertially, and not all at once, since the industry can work “for storage” for some time. In addition, the quarantine measures taken have affected it to a much lesser extent compared to trade and the service sector.
...

Rate of inflation.
...

technological

Licensing of legal activity causes a lot of discussions and questions. Currently, a license for legal activity is not issued. The Federal Law of India ""On Licensing Certain Types of Activities"" does not establish such a requirement in relation to firms and individuals providing legal services. The quality of legal assistance is not clearly regulated by legal acts. The general criteria for the level of services provided are:
timeliness of assistance;
efficiency - assistance in solving the problem;
protection of the interests of the individual.

Since a license to conduct legal activities has not been established, the circle of persons capable of providing these services is not limited. Thus, any person with broad knowledge in the field of law and a sufficient level of professionalism can provide legal assistance.

To date, the state guarantees the licensing of exclusively advocacy. This is regulated by the Federal Law ""On Advocacy and Advocacy"". 

The legal services market is experiencing significant external influences that affect court decisions on disputes about the quality of legal assistance, on reimbursement of costs for legal representation. Direct state regulation of the behavior of legal consultants and their clients is also possible. In order to ensure the sustainable development of relations in the right direction, the Association “Non-profit partnership “Association of Corporate Lawyers” initiated work on the creation of a Code of Rules and ethical standards in the legal market. 

Industry innovation. The legal market in India and the US is extremely conservative. For centuries, lawyers have positioned themselves as carriers of secret knowledge, the profession was considered very prestigious. All this resulted in a consumer-unfriendly legal business model, the sale of man-hours, which is especially common in Western markets. It is hard to imagine that a law firm operating on the model of selling lawyers' man-hours would welcome advances in technology and innovation that inevitably reduce those man-hours. Often, well-known and authoritative representatives of the industry take hostility to the emergence of new legal start-ups, and even advocate increased regulation of the market by the state.

Clients, and among them especially entrepreneurs, are interested in reducing the financial and time costs for solving legal issues. This is a powerful incentive for innovation in the industry, which is gradually changing the legal market, increasing competition and making it more transparent.

Currently, innovation is being developed in the following areas:
automation of typical legal services, as a result of which clients can already now independently, without the help of a lawyer, solve online such tasks as registering a business, declaring income, preparing simple statements of claim and contracts;
launch of various sites in the catalog format, MarketPlace, which help reduce the cost of legal services due to more transparent competition;
automation of the work of the lawyers themselves - these are various CRM, document management systems, etc.

Political

The peculiarity of the market causes a significant impact in changing legislation on the development of the market. 
...

The main objective of the Concept is the formation of a unified legal framework for the provision of legal services in India, which involves:  
increasing the level of legal protection of recipients of legal services;
improving the institution of the legal profession, including by eliminating restrictions that impede the organization of effective advocacy;  
creating conditions for preventing low-skilled lawyers from providing legal services, conditions for excluding unscrupulous consultants from the profession;  
creation of a system of professional legal assistance that meets generally recognized international standards, and the creation of conditions for the integration of the institutional environment of the bar into the global legal space.

Despite the ambiguity of the provisions of the concept, most market participants agree that the implementation of the concept will have a positive impact on the legal market and create a favorable competitive environment.

Table 2. STEP-analysis of factors influencing the market of legal and advocate services

1.7. Analysis of sectoral indicators of financial and economic activity

Consider the financial and economic indicators of the legal and attorney services market for 2015-2019. 

Gross margin
Gross margin is gross profit divided by sales revenue (excluding excise taxes and VAT). Gross margin shows how much gross profit falls on a unit of revenue. Gross profitability serves as an assessment of the economic efficiency of an enterprise, which reflects the rational use of labor, material, monetary and other resources.
...

Return on profit

Diagram 13. Profitability of profit before tax (profit of the reporting period) in the field of legal and advocate services in comparison with all sectors of the Indian economy, 2015-2019, %

Current liquidity

The optimal value of the coefficient is 1,5-2,5 times. A value below ""1"" indicates a high financial risk - the company is not able to consistently pay current bills. A too high current ratio is not desirable, as it may reflect insufficiently efficient use of current assets or short-term financing.
...

Absolute liquidity
...

For Indian companies, the normative value of the absolute liquidity ratio is in the range of Kal> 0,2-0,5 times. A higher absolute liquidity ratio may signal too high a share of non-performing assets in the form of cash and funds in accounts. 

Table 4. Absolute liquidity in the field of legal and advocate services in comparison with all sectors of the Indian economy, 2015-2019, times

Business Activity Indices
...

Financial stability
Financial stability indicators in 2015-2019 in general for the industry were above the normative value (10%), which indicates a sufficient amount of own working capital in the industry, necessary for its financial stability. 
...
Thus, the industry has higher rates of profitability and liquidity in comparison with all sectors of the Indian economy. Also for 2015-2019. there was a significant decrease in the value of the indicator, which is a positive trend - the organization becomes less dependent on external sources of funding. The legal and advocacy services industry has enough of its own working capital necessary for its financial stability. 

Part 2. Competitive analysis in the market of legal and advocate services in India

2.1. Major players in the market 

Standard associations of specialists in the field of law are represented by small businesses. Associations usually employ no more than 5-7 people. As a rule, the state has versatile specialists, thanks to which the firm can cover a wide range of issues or bring difficult situations to the discussion of the board. According to the analysis of the legal market, more than 110 thousand different organizations represent the profile business in India. The legal services market can be called young. Almost half of the current legal organizations have been registered within the last eight years; another quarter - in the period 2007-2011.  
...

Open sources contain financial information on the activities of legal organizations, but only for every fifth. Most of the information is for law firms (about one in three), while it is completely absent for individual entrepreneurs and lawyer offices. 

2.2. Market shares of the largest competitors

2.3. Profiles of major players...
XXX
...
XXX
...
 XXX
...
The dynamics of the total revenue of the Top 5 operators of the legal and attorney services market in India is linear ...

Part 3. Analysis of the consumption of legal and lawyer services

3.1. Estimation of the volume of consumption of legal and lawyer services per capita

Since 2016, the volume of consumption of legal and lawyer services per capita has been unchanged ...

Diagram 18. Consumption of legal and attorney services per capita, 2013-2019, Rs./person

3.2. Market Saturation and Estimated Market Potential in India

The Indian market for legal and advocacy services in India has serious growth potential. 
...

In the growth stage, competition intensifies and the number of players increases greatly, as the growing market segment attracts new players looking to make quick profits. At the same time, competitors enter the market with improved, more competitive products. Strong major players are the first to enter the market, able to switch current consumers to themselves and capture the formed market share due to high investment opportunities.

Pricing is becoming one of the ways to compete. As a result of increased competition, cheaper analogue products or more affordable variations of services appear - all this leads to lower prices, to large discounts and price promotions.

The main task of marketing at this stage is its maximum extension, which is achieved by using all sources of growth and building entry barriers for new players.

3.3. Description of consumer preferences 

A specific feature of the studied market is its closeness. The main asset that law firms and practitioners have is reputation. In this market, they know, first of all, specific specialists, in whose names business is done. The main advertising, according to a number of experts, on the market is word of mouth.
... 

3.4. Price analysis

The dynamics of prices for legal and attorney services is determined by the general level of consumer inflation, rising labor costs, and the level of competition in the market. 
...

Part 4. Assessment of factors of investment attractiveness of the market

Negative factors of the investment climate in the market of legal and attorney services dominate over the positive ones. A comprehensive assessment of the factors of investment attractiveness is ""minus"" 0,14 points - a neutral investment climate.

The most significant positive factors. 
...
To the most significant negative factors 
...

Part 5. Forecast for the development of the market for legal and attorney services until 2024

Every economic crisis in one way or another has changed the Indian legal and advocacy market. 

A crisis for lawyers is a change in the vectors and rules for the movement of capital. What is observed is not a vertical reduction in growth rates, but a redistribution of financial flows between participants. Requests for certain services are changing while maintaining the need for legal services. Part of client orders either passes from one legal service provider to another, or is closed to internal legal departments. Therefore, the crisis turns out to be a test of the strength of the business models of law firms.
...

Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators 

There are currently several dozen international law firms operating in India, among which key players from the US and the UK stand out. The largest share (both in terms of the number of transactions and their amounts) is occupied by international law firms in the field of M&A (primarily in terms of cross-border transactions). The positions of Indian firms are strongest in the field of tax law and tax disputes, intellectual property protection, securities transactions, and antitrust laws. 

Firms, associations and associations organized by practitioners remain in the leading positions in the Indian market.
...

The processes in the country's economy, as well as factors influencing from outside, have a negative impact on the market. In general, the impact of macro factors on the market of legal and advocate services can currently be assessed as negative of medium strength. A group of economic and social factors has a negative impact. The lack of licensing of legal activities also negatively affects the industry.

Political factors have a positive impact, as well as a number of technological ones: licensing of advocacy, the creation of a Code of Rules and ethical standards, innovations in the industry. These factors allow us to expect an increase in demand in the market in the future, in the medium term. 

When developing a marketing strategy, market operators are advised to pay attention to the fact that the market is at the stage of growth and communication activities such as:
...

Entering the market should be preceded by working out all the existing shortcomings of existing operators. Despite the attractiveness of the market, working on it requires a certain level of knowledge and skills.


Diagrams

Diagram 1. Structure of the global legal services market, %
Diagram 2. Dynamics of the market volume of legal and attorney services in value terms in India, 2013 - 2019, billion Rs.
Chart 3. Dynamics of the volume of legal and advocate services in physical terms in India, 2013-2019
Diagram 4. Structure of paid services to the population, %
Diagram 5. Market structure by customer type, %
Diagram 6. Compact location of companies in the industry in certain regions, %
Diagram 7. Dynamics of the population of India, as of January 1, 2012-2020, million people, thousand people
Diagram 8. Population forecast in India for the period 2021-2024, million people
Diagram 9. Dynamics of real incomes of the population of India, 2015-2020 (H )
Diagram 10. Dynamics of India's GDP, 2015-2019, Q1 2020, % to the previous year, trillion Rs.
Chart 11. Monthly dynamics of the US dollar against the rupee, 2015-2020 (Jan-Sep) Rs. for 1 US dollar
Chart 12. Dynamics of the inflation rate in India, 2015-2020 (6 months), %
Diagram 13. Profitability of profit before tax (profit of the reporting period) in the field of legal and advocate services in comparison with all sectors of the Indian economy, 2015-2019, %
Diagram 14. Current liquidity (total coverage) in the field of legal and advocate services for 2015-2019, times
Chart 15. Business activity (average turnover period of receivables) in the field of legal and attorney services, for 2015-2019, days days
Diagram 16. Shares of the largest competitors in the legal and attorney services market in 2019, %
Diagram 17. Dynamics of the total revenue of the largest operators of the legal and attorney services market (TOP-6) in India, 2015-2019, billion Rs., %
Diagram 18. Consumption of legal and attorney services per capita, 2013-2019, Rs./person
Figure 19. Market life cycle stage of legal and advocacy services in India
Diagram 20. Channels for promoting legal and attorney services, %
Diagram 21. Costs of clients for the services of lawyers/lawyers, %
Diagram 22. Forecast of the volume of the legal and lawyer services market in 2020 - 2024 – in case of a single quarantine scenario
Diagram 23. Forecast of the volume of the legal and lawyer services market in 2020 - 2024 – in the scenario of two quarantines


Tables 

Table 1. Industrial production index by state of India (in % of the previous year), 2015 - 2019
Table 2. STEP-analysis of factors influencing the market of legal and advocate services
Table 3. Gross profitability of the legal and advocate services industry in comparison with all sectors of the Indian economy, 2015-2019, %
Table 4. Absolute liquidity in the field of legal and advocate services in comparison with all sectors of the Indian economy, 2015-2019, times
Table 5. Financial stability (security of own working capital) in the field of legal and advocate services in comparison with all sectors of the Indian economy, 2015-2019, %
Table 6. Main companies participating in the legal and attorney services market in 2019
Table 7. Basic information about the market
Table 8. Basic information about market participant XXX
Table 9. Basic information about market participant XXX
Table 10. Basic information about market participant XXX
Table 11. Basic information about the market participant ""XXX""
Table 12. Basic information about market participant XXX
Table 13. Consumer price indices for legal services in the Union Territories of India, %
Table 14. Average prices for an oral consultation with a family law lawyer in the Union Territories, 2015-2020, Rs./consultation
Table 15. Assessment of factors of investment attractiveness of the legal and attorney services market
Table 16. Assessment of the impact of recent crises on the industry


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