India Inc sees marginal decline in legal spending during FY21 at Rs 36,973 crore

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• n a year beset by the pandemic, India Inc got a small relief in terms of a fall in legal cost. Legal expenses of listed Indian companies declined 1.67% to Rs 36,973.75 crore in the fiscal year ended March 31, 2021 from Rs 37,604.80 crore the year before, according to their annual reports. Pandemic-induced lockdowns, restrictions on travel and gatherings that led to virtual hearing of court cases and weaker appetite for deals amid uncertain times are some of the reasons being cited for this reduction in legal cost in FY21, when total costs too had come down for India Inc. Legal cost has been increasing every year before FY2021. While the spending in FY21 had reduced from the year before, it was still 12.42% higher than FY19. Legal expenses include spending on litigation and arbitration, professional fees, regulatory filings, penalties and general stamp duty. “With courts being moved to the virtual format, costs were also rationalised in terms of travel and hospitality expenses, which are usually billed to the client,” said Sujjain Talwar, a senior partner at law firm Economic Laws Practice.

• He said companies were also more focused on streamlining their operations to the new normal, so corporate restructurings and M&A deals were fewer. Besides, regulators gave relaxations on compliances, which too led to a fall in costs. The top five legal spenders last fiscal year were Sun Pharmaceutical Industries (Rs 2,023.54 crore), Reliance Industries (Rs 1,486 crore), Infosys (Rs 1,261 crore), Larsen & Toubro (Rs 1,239.15 crore) and Fortis Healthcare (Rs 884.35 crore). Anand Desai, managing partner of law firm DSK Legal, sees a number of corporate disputes getting resolved out of court, which is allowing companies to save both on time and cost. “I believe several disputes are being compromised instead of going to litigation or arbitration. This trend is likely to continue as the backlog of cases in courts have increased significantly in the past 18 months,” Desai said.