In Conversation with Sandeep Kapoor, Founder and Managing Partner, Algo Legal

Mr Kapoor, you’ve been conferred with many prestigious awards, including GC of the Year-2018 and Innovative Lawyer Asia Pacific 2020 by renowned global platforms. You are also a member of many coveted national and international forums like the Institute of Chartered Secretaries and Administration, U.K., and ABA Section of International Law and the International Bar Association. Would you please take us down the memory lane and share with us where this illustrious journey began. 

The legal field has always been enticing. What fascinated me was how finite the field of law is, one can find an intimate co-relation to science principles if looked into closely; the predictability and sequence of what is and the logical deduction and application of the facts to the matter at hand is something that I truly enjoyed exploring and deep-diving into in every matter I work on till date. My initial years of working as a young lawyer from 1996 to the early 2000s were very interesting because these were the initial years post the opening up of the Indian economy. These were exciting times with changes happening in the industry and the profession alike with tremendous opportunities to learn, grow and succeed if one had the right mindset. India saw a sudden steady flow of inbound foreign investments, unique and complex transactions, a flurry of regulatory changes, and the remodelling of corporate law firms to adapt to these new times. The fact that I was located in Delhi, the epicentre of the legal and regulatory bodies were all opportunities that I’m grateful to have stumbled upon at the start of my career, along with some amazing mentors and seniors who I worked with initially. Looking back, right from my time At Luthra and Luthra right through to Sequoia Capital and now to my entrepreneurial journey at Algo Legal, I have always believed in finding new opportunities and new ways of practising law. While I’m sure I speak for most people, no one works towards getting awards but it’s always humbling being recognized for the mission you set out to achieve. For me, my innovation journey has just about begun. 

In your long career so far, is there any hurdle that you found particularly challenging to handle? How did you power through it? 

During my tenure at Sequoia Capital India building and leading the legal team, I realized that over the years our volume of transactions had increased multifold and the time and effort involved in managing these multiple transactions was getting tedious, challenging and repetitive. It was clear that we were missing out on optimizing our work and bandwidth, though I knew then that throwing money at the solution and getting more resources to the team would not solve the core problem. The team at Sequoia embarked on a full exercise of modernising the processes of the venture firm to include the use of technology to enable the company to work quicker, smarter and with more impact. We invested in creating tech-based systems, processes and tools that allowed our team at Sequoia to manage over 100 transaction closings every year, and keep sight of, and make positive contributions to, over 200 portfolio companies.  

The corporate/business law market in India is not as structured as in the West. What is the biggest stumbling block in our path and why? 

We should not be looking at the West yet because laws and markets mature over time and India is still a very young market as opposed to the West. Having said that, in the last few years there have been a flurry of reforms where the government has attempted to simplify laws. The approach makes sense as a lot of archaic laws plague business operations and in trying to simplify and reduce such laws we are moving in the right direction. Other than that, we can take a leaf out of financial hubs to see how they have come up with very niche and specific structures such as variable capital companies or protected cell companies which are targeted solely at the fund industry, whereas in India we are yet to provide such specific structures, although India does see a lot of capital inflows. From a technology laws perspective as well, India is not very regulated as compared to how advanced the Western laws are. But these processes take time and Indian laws will evolve over time. The high regulatory barriers faced by foreign law firms in entering the Indian market may also be a contributing factor to our slow pace of evolution; the liberalization would likely intensify the pace of structuring and professionalization of the market. 

Your firm focuses on venture capital & PE, corporate restructuring, M&As and general corporate advisory. What would you say is the major issue plaguing one or more of these areas right now and what would be your advice to your clients to combat it? 

As far as the venture capital and private equity industry is concerned, the biggest concern seems to be sudden changes in regulatory policy and the behaviour of regulators which are impacting some key sectors such as the financial services. A good example for this would be the RBI’s refusal to entertain NBFC applications from Indian companies which have investments from funds domiciled in Mauritius. Mauritius being a popular route finds itself on the FATF greylist, which has presumably caused the RBI to go cautious. The government is absolutely within its rights to regulate critical sectors, but often there’s not enough clarity for the stakeholders. Similarly, the recent PN3 notification has also caused a lot of uncertainly in relation to PE/VC investments into India, especially for funds which have Chinese domiciled holding (even where such holding is a significant minority) or participation in management. Further, there is also a lot of ambiguity in relation to exits for such funds which are already holding positions in various portfolios. In a positive move, the associations linked to VC/PE communities are now approaching regulatory authorities to address the practical difficulties faced by stakeholders and pushing for more investment friendly regulations to encourage inbound investments. Uncertainty in the taxation laws might be another area of concern for the clients, different positions by various courts on direct and indirect investments in India have made the clients anxious, this is further fueled by the fact that the regular litigation cycle usually takes up to a decade to reach its finality. In such cases we advise our clients to structure investments post evaluating the options available to them and being cognizant of the present situation of the tax and regulatory environment while planning their investments; keeping a  regular track on such changes will considerably help in mitigating risks and addressing challenges swiftly. 

How has Covid-19 impacted your practice?  What are the most critical changes that we must make in the wake of the pandemic to face the future effectively? 

Algo Legal has been a tech driven firm using legal tech solutions to deliver service and value to its clients. From day one, to continue seamless work and cater to our clients virtually was business as usual for Algo teams. However, the Covid-19 pandemic did pose industry-wide challenges in terms of new business requirements, multitude of regulatory changes and keeping pace with these in terms of applicability and implementation for clients, being relevant and responsive to client requirements. With the entire ecosystem undergoing change, I feel being agile to the needs of clients and ensuring client engagement will be the key focus area. We must continue to develop deeper relationship with our clients that will come with effective client engagement, understanding and being responsive to client needs and offering the right advice per the changing environment.  

You have advised your clients on the creation of numerous tools that have reduced complexity and accelerated on-boarding, negotiation, compliance, and approval of legal transactions. You are also credited with transforming the in-house legal practice of Sequoia in India when you were the Director—Legal. Your mission for Algo Legal is also to leverage technology and drive innovation to provide a client-centric experience and distinct value-add. Do you have any top picks amongst legal tech solutions and tools in the market that, in your opinion, law firms and in-house lawyers must adopt to stay futuristic? (question to be tweaked) 

I believe the future of law firms and legal departments will have a considerable focus on leveraging technology to deliver services in new ways. Adoption of integrated technology systems that touch the client and support the delivery of services in a more meaningful and user-friendly manner is the way forward. There are several systems today available in the industry that provide huge collaboration and integration capabilities depending on the type of legal services provided by a law firm/lawyer or based on the requirements of in-house legal departments.  

However, it’s not about the stand-out tools that are worth recommending. More than the tool itself, law firms globally are all grappling with the idea of adoption of technology rather than availability of technology. A simple google search will leave you quite lost as to where one should actually start their legal tech transformation. At Algo, we spent over 6 months researching before we even made our first investment. In fact, not many people know, but the innovation team was the first team I hired, even before the lawyers themselves. 

Alternatively, innovative law firms are also venturing to develop their own customised legal tech solutions that cater specifically to their line of business and legal services. From the onset, Algo had subscribed to the legal tech solutions developed by its sister concern Quant LegalTech for its virtual data room (CapLinked), contract automation and lifecycle management (Contractum) and regulatory compliance management software (Complius) which helps our internal teams and clients collaborate and work together seamlessly with efficient delivery of these services online. Simultaneously, Algo Legal has started customizing its bespoke integrated system with technical support from Quant LegalTech that will now stich together all of the above systems that are key for its legal service delivery. 

Who are the people who have inspired you the most in this profession and how? 

There is something inspiring in every interaction with the people you meet in this profession. Honestly, no one in particular - there have been numerous lawyers, technologists, and business leaders across the span of my career that have inspired me in the most unimaginable ways.  

With the emergence of LegalTech and AI in the Indian legal market, other than good legal acumen, what are the other important skills you’re looking for in lawyers joining your team?  

A willingness to adopt to changes and learn about opportunities and processes that can improve the quality and efficiency of work, an entrepreneurial attitude to explore various tools or workflows that might help make their work more efficient, the resilience to face challenges and a collaborative spirit. 

Your message to the new crop of lawyers trying to make a mark in the profession. Is there a secret sauce to success? 

I think it important for lawyers to remember that the disruption in the legal market is inevitable, the pandemic has only accelerated the pace of these changes. Lawyers will soon be looking at interesting and completely new models of working with technology being deeply integrated into their way of work.  While as a lawyer you will be appreciated and recognized for your core expertise of ‘lawyering’ and the understanding and application of facts to the matter, we must understand that processes and tools are equally important for lawyers as they aid you in performing the collateral tasks faster and more efficiently. Lawyers must also consistently keep increasing the depth of our domain knowledge by reading up on relevant judgements, reports and trends that concern our practice area. Being up to date with the legal implications of trending news and updates across the globe and a regular reading of the papers to analyse these issues from a legal standpoint will help one build an edge and niche that will be well respected and be much in demand in the legal industry. 

I think success has a lot of contributing factors, there is no secret sauce that works for all; hard-work, resilience and a positive attitude are qualities that will sail you through challenging times and keep you focused on your goal.  

Thank you so much for doing this interview with us. As a final note, would you please recommend to our readers your favourite book, quote, or movie that left a lasting impression on you. 

Tomorrow's Lawyers: An Introduction to Your Future by Richard Susskind is an all-time favourite, one that crystallized my vision for the future of law. This is a book that I would recommend that every lawyer must definitely read at least once.