ADR Remains Preferred Mode For Settlement Of Disputes For All Large Corporates: Saloni Kothari, Group General Counsel, BDO India

How has BDO India’s growth journey impacted the responsibilities and priorities of your legal team? 

When I joined BDO India with a dispute/ ADR background around 7 years ago, my employee code was 847 (indicative of our approx. staff count) and today, we are a prominent group with almost 10,000 staff, 14 entities and 20 offices across 14 cities. With a formidable growth rate, and the diversity and scale of our service offerings, the very axis of our business has undergone a massive shift, leading to a direct impact on our legal team. The nature of our legal requirements has monumentally changed to evolve into a mini law firm that caters to large sub-functions such as corporate governance, legal strategy, contracts, regulatory & compliance, insurance etc. that branch out into sub-functions requiring knowledge and expertise in M&A, dispute management, employment and labour laws, TMT law. 

Our evolving business portfolio with certain regulated services as well amongst others, requires the team to remain constantly committed to keeping abreast with legal updates, key amendments and best practices, and be hands on with every aspect of the function to deliver what’s needed. From quintessential contract reviews and providing compliance advisory, the need is now for multifaceted functions that bring deep commercial understanding of varied offerings across the globe and the ability to foresee legal requirements. 

The global nature of services further requires us to work alongside foreign regulators which adds another dimension to existing priorities and complexities. 

What is your team size and what does a day in your shoes look like? 

We are a growing team of legal advisors, currently with 20 experts across sub-functions. 

A typical workday for me commences with utilising the first 30-45 minutes getting organised and planning my activities including the day’s agenda for the team.

I prefer spending the first half of the day, when interruptions are minimal in reading, reviewing, and drafting and generally reserve the second half for calls and meetings. 

I cherish my quiet time in the morning to arrange my thoughts and develop strategies required to attend to my work objectives.

I also meet the senior leadership at least once a day to catch up on the firm’s requirements and ensure regular cadence with the team to close open points. 

Since I also have a business role, some days involve clients / counsels’ meetings, speaking or attending conferences, representing our India member firm at BDO Global Legal meetings and gatherings, involvement in our IBC practice. 

In many ways I am a perfectionist, and generally prefer to think ahead of the work weekday, month and even year (with reasonable provisions) and try to plan pace accordingly.

Beyond work, I enjoy sports and a healthy family and social life, complemented with occasional short breaks outside the city. I strongly believe in the mind-body-soul concept of being aligned, to achieve personal and professional goals.

How is the legal industry shifting towards building robust practitioners within in-house teams rather than relying solely on external counsel? 

Legal teams of large corporates are strengthening capabilities to handle their legal requirements in-house by hiring the right talent and upskilling existing resources. The nature of the department itself is undergoing a shift beyond its traditional capabilities that were restricted to just contract management and co-ordination with external counsel. 

To effectively and efficiently manage in-house legal requirements, a strong and dynamic team of legal practitioners is required to make strategic decisions and reach out to external counsel for specialist advisory and litigation. 

The shift is noticeable in the profiles that are sought for in-house roles and the compensation and benefits packages that are now being offered. 

Often, I find that the in-house legal teams are far better equipped to handle and address legal challenges of corporates than external counsel, owing to their commercial understanding and more than anything else, the overview they have of any transaction. The access and ability of being able to work with the leadership also proves to be beneficial as it makes us develop a commercial acumen which goes a long way in strategic decision making. 

In what ways is technology transforming legal operations and creating new opportunities for in-house legal teams? 

Technology is playing a crucial role in legal operations. Several offerings are available for legal departments, be it contract management solutions, litigation management, cloud storage, trainings, etc. While technology can be leveraged to manage legal administration and legal teams have automated certain work, there is a large part that needs expert intervention. 

Using technology for administrative or standardised work provides legal teams more time to focus on the bespoke part of their work. Technology also helps detect trends that can be utilised for better understanding by the legal teams. 

What are the main legal risks you encounter, and how do you manage them proactively? 

To truly proactively mitigate risk, not only does one need a structured way of identifying, assessing and mitigating it, but also of collecting the legal data to identify, track and report on those risks. 

We have a group of many legal entities, some regulated and some not, with diverse services and products. For the regulated ones, aligned with industry practices, our primary mitigation is regulatory action. To manage this, we have in place detailed global and local guidelines and protocols that are ably managed by a large back-end team. The teams routinely review relevant service deliverables and conduct trainings and knowledge management sessions to ensure our teams are adept and up to date with the latest regulations. 

In addition to regulatory risks, we have other legal business risks like intellectual property infringement, breach of contracts, and internal and external disputes, that need to be subtly but swiftly managed and for this, experience and industry knowledge trumps proactive measures. 

Having served in this role for some time now, I can confidently say with time it gets easier to anticipate the potential risks and put in place mitigation protocols well in advance. 

As General Counsel, an important part of my role is to support the organisation in the strategic management of risks. 

Given the growing focus on data privacy, what steps are you taking to strengthen data protection measures at BDO? 

With the advent of new laws in the data protection space and our global lineage, regulatory as well as contractual requirements for strong data protection measures are paramount for us. We have onboarded teams that specialise in data protection who help review systems to ensure that our technology and protocols are up to date. Our legal teams are also familiar with the legal requirements per jurisdictions that we work with, so we ensure matters are aptly addressed at the contracting stage itself.  

How do you see the role of the Insolvency and Bankruptcy Code (IBC) evolving, and what reforms are needed to enhance its effectiveness? 

Along with my responsibilities as Group General Counsel at BDO India, I am also a Partner with the Insolvency and Restructuring Practice and have been actively involved in IBC projects since its introduction in 2017. We have handled some of the largest IBC projects in India and continue to manage several others with most of them being successful resolutions. I am also a part of INSOL India’s young practitioners committee and participate actively in the restructuring ecosystem globally. 

It’s been 7 years since the IBC was introduced by the Modi government as one of its big- ticket reforms. Even today, The IBC environment is continuously evolving and there is scope for further improvement.

A key intent of the IBC is to attain value maximation coupled with early resolution for the stakeholders of distressed entities, that if worked upon effectively would lead to a robust and mature IBC ecosystem:

• Although much has been discussed since the very first year, timely support from the judicial system is the need of the hour. An increase in the number of benches coupled with the relevant selection of members for the NCLTs would prove highly beneficial.

• Government agencies supporting and upholding the IBC will also go a long way in hastening the processes. Accepting the letter and spirit of Section 238 of the IBC [overriding provision] would help ease the conduct of the processes and lead to fewer litigations.

• Digitisation and use of technology would support in making it self-sustaining. Several stages of the processes can be handled with minimum human interface and the IBBI had also come out with a recommendation for the same.

• Another factor is swift decision making by CoCs/ SCCs, this can be done by ensuring that the persons from the CoCs/SCCs working on the cases and participating in meetings are decision-makers who can not only add value to the process in terms of guidance but also in applying their sectoral knowledge and experience from the 7 years of IBC. The pertinence of the CoC/ SCC decisions cannot be stressed enough considering the SC itself has repeatedly placed the commercial wisdom of the stakeholders as paramount in the IBC processes.

• Role of the IPs and their support entities along with legal professional is also key. The IPs and their support entities are crucial to the IBC process and their selection must be undertaken with great care given that the person/ entity is entrusted with such critical responsibilities. Sectoral knowledge combined with experienced and sophisticated teams is paramount as the practice is getting commoditised, with preference being given to an L1 over the better-suited candidates, which is not cost-effective in the long run.

• Provision of interim finance to a deserving corporate debtor would help in resurrecting the distressed entities and making them more valuable to potential investors. 

• Introduction of Cross-Border insolvency would also go a long way in strengthening the rights of creditors and opting for IBC as an effective recovery mechanism. 

• To avoid delays or failures in the sale process due to defaulting investors, IPs and CoCs must conduct thorough diligence of incoming investors and have watertight feasibility checks. A pre-defined working mechanism for plan implementation and stricter measures for defaults on approved plans after the demission of the IP and closure of the CIRP process can be brought in to ring fence stakeholders and deter non-serious buyers from participating. 

IBC has been revolutionary in many ways and is a formidable instrument for stress resolution. The future of IBC is bright and despite the room for improvement, the overall effectiveness of IBC in the distress space is unmatched.

How has the landscape for disputes and litigation changed in recent years, and what role does arbitration and alternative dispute resolution (ADR) play in this transformation?

With no particular improvement in the judicial systems, ADR remains the preferred mode for the settlement of disputes for all large corporates. This is being increasingly recognised by the Government as well and is reflected in the various centres of arbitration that are being proposed including the Gift City.

Ultimately, while deciding the seat of arbitration and jurisdiction on any contract, whether large or small, especially with global counterparts, it is acknowledged that ADR will be the manner for resolution of any potential dispute. Therefore, our legal team is equipped with senior ADR lawyers with over a decade of experience in the space. The skills that dispute lawyers bring can be leveraged for various legal strategic decision-making.