The Indian law firm market is experiencing an existential churn. Managing partners and senior leadership at law firms are grappling with restructuring their models from a collection of individual practices sharing overheads under an established brand to creating institutions that outlive their current partners.
Commenting on the existing models adopted by most law firms, Vasu S, Co-founder, Leverage, a firm specialising in transformational areas related to Leadership development and performance systems, states: “For decades, many Indian law firms have operated under the eat-what-you-kill model. The logic is intuitive: partners are compensated based on the revenue they personally generate through client origination and matter execution.
You bring in business, you execute the work, you keep the profit. The firm provides brand and infrastructure, but partners operate with significant independence.” This, avers Vasu, creates predictable behaviours. Partners control their own books. Client relationships belong to individuals, not the institution. Collaboration happens when it serves individual economic interests. Talent development competes with billable work. The firm functions less as an integrated institution and more as a platform enabling individual entrepreneurship.
Transitioning to Institutional Growth
Confesses Pallavi Shroff, Managing Partner of Shardul Amarchand Mangaldas, which has over a 1000 lawyers, “given the limitations of this model, which can spawn toxic control and creation of fiefdoms by partners within the law firm, SAM follows a modified lockstep model which remunerates everyone at a certain level equally, resets are done regularly based on performance etc. Thus, we are able to preserve performance differentiation while incentivising institutional behaviour and recognising that some years are good/better for some practices & partners than others. Our compensation model is such that everyone contributes to increasing the value of each point or unit. Rather than compensating partners purely on individual revenue, modified lockstep assesses contribution across multiple dimensions: revenue generation certainly, but also talent development, practice building, client relationship expansion, strategic initiative leadership, and governance participation. Partners receive points based on holistic contribution.”
Concurs Ankita Malik, analyst with leading legal talent search firm Vahura, “we are seeing a clear shift towards lockstep models, particularly among mid-tier and boutique firms. Even at the top end of the market, while pure eat-what-you-kill structures continue to exist, there is a noticeable move away from compensation being driven solely by financial metrics. Firms are increasingly introducing calibrated elements that reflect broader market expectations, without fully abandoning performance-linked economics.”
As Anand Desai, Managing Partner, DSK Legal, views it, “What we strive for is a firm aspiring to scale, serve clients across multiple practices, and build a merit-based institution that transcends the current generation of partners. This approach changes what gets rewarded. Instead of incentivising only individual revenue generation, institutional contributions are compensated. A partner is not just a rainmaker who gets revenue to the table – for us, he is also someone who trains and mentors junior members of our firm to create a cohesive functional firm.”
What has also necessitated firms to course correct is the fact that client service has evolved. While 10 years ago, clients engaged firms for discrete matters handled by single practice groups, today sophisticated clients expect integrated service across practices and jurisdictions. Talent dynamics have changed. Mid-level associates and junior partners evaluate firms based on development infrastructure and clarity on partnership pathways. “Young associates need partners invested in their growth,” says Balanand Menon, Head, Vahura Consulting, adding, “succession has emerged as perhaps the most acute pressure. When partners retire or move, client relationships often disappear with them.
Further, scale itself creates friction. Firms with 5-10 partners can coordinate informally, and talent development occurs organically. But firms growing past 10-20 partners find informal coordination insufficient. The transaction costs of negotiating every collaboration or cross-sell become prohibitive. These pressures are converging. Indian law firms pursuing growth, competing for sophisticated clients, and seeking to retain top talent are discovering that eat-what-you-kill creates ceilings. The model worked brilliantly in earlier market phases, but becomes limiting precisely when firms try to build institutional capability.”
Modified lockstep structures are being adopted by leading global and Indian law firms. Internationally, elite firms including Linklaters, Cravath Swaine & Moore, and Clifford Chance have all modified their traditional lockstep systems in recent years to better reward high performers while maintaining a collaborative culture. In India, firms such as Shardul Amarchand Mangaldas, DSK and Trilegal have successfully implemented modified lockstep models.
The trend is accelerating as firms recognise that continued growth requires an institutional foundation. Firms valuing collective building, legacy creation, and multi-generational sustainability increasingly require institutional economic models.
Global law firm restructuring guru Moray McLaren, Co-founder of UK-based Lexington Consultants, which works with several Indian and international law firms to steer change, tells FE, “globally, we are seeing a clear move away from purely individual, personal-production-based measures of success and profit division. Law firms are increasingly recognising group effort over individual effort, a firm-first rather than individual-first mindset, and the need to reward both financial and non-financial contributions to the partnership.”
Adds Hardeep Sachdeva, Senior Partner, AZB & Partners, “the profession has long debated the virtues of different compensation models. At its core lies a common objective: to reward merits while motivating the next generation and building institutions with consistent growth in practice. The traditional “eat-what-you-kill” model strongly incentivises individual rainmakers, but it also entrenches silos. By contrast, a thoughtfully modified hybrid model better reflects the collaborative needs of legal practice, where clients increasingly expect integrated teams, cross-practice expertise, and enduring institutional strength. Many firms are moving, or will move, inevitably, toward a balanced approach. Such models sustain long-term trust, collective commitments, encourage mentorship, and still allow significant meaningful recognition of individual performances.”
McLaren also feels India is in a comparatively fortunate position. “Structural economic change is driving demand for higher-value legal services, creating strong underlying performance across many firms. Precisely because performance remains robust, now is the right time for firms to review and update their economic and remuneration systems, rather than waiting until growth slows or tensions increase. Remuneration should not be the starting point. When partners believe there is growth and increased profitability ahead, discussions about how profits are shared become far more constructive and significantly less adversarial.”
Impact of International Entry
Advocating change and restructuring, McLaren also argues that “with a number of international firms now looking to open in India, recruit local lawyers, or merge with local law firms, this is imperative. It is also crucial for Indian firms to align more clearly with international standards, in order to attract the best people. Where partners have been judged primarily by financials, developing a very competitive and sometimes sadly a very toxic culture. Our own research shows that in some Indian law firms, partners have been competing against each other. Even reducing the prices to win work away from colleagues.”
Sherbir Panag, co-founder of boutique firm Panag and Babu, a firm which follows an amalgamated model that resembles both but tries to address unique challenges, sums it up, “Indian firms have always been behind the curve on equity fairness and client relationship ownership. It’s a long road ahead to find balance for what the Indian market needs, and till then, the flux is here to stay.”