LEGAL COSTS OF FIRMS ROSE 56.73% IN LAST FIVE YEARS

MUMBAI: In the five-year period between 2013-14 and 2017-18, India Inc.’s legal and compliance costs have increased 56.73% from ₹14,486 crore to ₹22,705 crore.

On a year-on-year basis, legal and other professional expenses went up just about 4%, shows a Mint analysis based on Capitaline data.

Listed companies spend a fair share on professional fees, regulatory filings, penalties and general stamp duty, besides on litigations and arbitrations, and expansion in newer geographies.

In 2017-18, additional expenses following the rollout of the goods and services tax (GST) and the Insolvency and Bankruptcy Code (IBC) contributed to the rise in legal costs.

“There is a degree of maturity among domestic companies and they have understood that good legal services don’t come cheap and the cost of not complying is now very huge,” says said Chandubhai Mehta, managing partner of law firm Dhruve Liladhar and Co. “Indian companies are also expanding overseas, which has also contributed to cross-border arbitration and litigation where the stakes are getting bigger.”

The top 10 spenders, which remained the same albeit not in the same order, accounted for ₹6,841.6 crore, or about one-third of the total expense in 2017-18. Mukesh Ambani-controlled Reliance Industries (RIL) topped the chart with ₹1,187 crore, down from ₹2,329 crore in FY17, but at par with its FY14 figures of ₹1,184 crore.