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The Art of the Deal

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Legend has it that Zia Mody cannot sleep at night if she has not read every legal draft being worked on at the Mumbai headquarters of India's premier corporate law firm AZB & Partners, which she has co-founded. Another legend has it that the 55-year-old Zia, former advocate general Soli Sorabjee's eldest daughter, does not sleep at all — that she is blessed with super natural powers that allow her to stay awake and alert 24 x 7 x 365.

There is some truth behind both these stories. In the first decade-and-a-half of her career, while setting the foundations of her firm, Zia would read every word of all drafts being sent to clients and make the corrections. Even today, when the firm has grown to 17 partners and 200-plus associates, and the volume of paper work is immense, Zia finds it hard to let go. "I am a very control-oriented person," she admits, smiling disarmingly.

The second legend has cropped up simply because of the work hours she keeps. Every morning, when she is not travelling, Zia is at her office by 10.30 am or 11 am. At 10 pm, she lets her driver go home. On an easy day, she drives back in her four-year-old Honda Accord to Mody mansion at around 1 am. Mostly, however, she does not come back before 3 am. And she can carry on with this schedule for days on end.

Zia is a bit of a super woman, agree her colleagues, clients and even rivals. Her drive and attention to detail have played no small part in propelling AZB to the top of the charts in the rarefied world of corporate M&As. (AZB comes from the first names of the three founder partners Ajay Bahl, Zia Mody and Bahram Vakil).

In the past few years, practically every marquee deal has seen AZB vetting and drafting the final contracts and advising its clients on the finer details. Let us run through those quickly: Tata Steel's Singapore $486.4 million-acquisition of NatSteel in 2004; Tata Steel's $12-billion Corus deal in 2007; Tata Motors' $2.4-billion purchase of Jaguar-Land Rover; Aditya Birla group's $6-billion acquisition of Novelis; Bharti's aborted bid for MTN and later its $8.97-billion deal with Zain; Reliance Industries' (RIL's) $7.2-billion deal with BP; even Vedanta's deal with Cairn India....

As a result, Bloomberg's Global Legal Advisory M&A Rankings for Indian deals in 2010 ranks AZB at the top with a volume market share of 40.7 per cent. Globally, it was 15th with a share of 1.7 per cent. At the half-way mark in 2011, it is still at the top with a Q2 market share of 40.8 per cent, having handled $10.27 billion of the $25.17 billion worth of deals in India. The global ranking has fallen a bit to 19, and market share to 1 per cent. M&A, incidentally, is the cream of corporate law (senior partners charge between Rs 20,000 and Rs 50,000 an hour). In visibility, it far outweighs every other practice. AZB's big gain recently has been in the ‘India Equity IPO Issue Advisors', according to Bloomberg League Tables, where it climbed from No. 4 in 2010 to No. 1 in Q2 of 2011, with its share growing from 9.6 per cent to 40.5 per cent.

One of the reasons, say clients, is the round-the-clock availability of Zia and her ability to react quickly — she gets back with suggestions within minutes of being mailed or SMS-ed. "Zia and Ajay are always accessible and a phone call away. This is what sets them apart," says Sunil Bharti Mittal, chairman of Bharti group.

"In the 1970s, I used to wait for two hours at a time to meet senior lawyers," says HDFC chairman Deepak Parekh. This was before he became THE Deepak Parekh, of THE HDFC. Zia, of course, is grateful to Parekh for sanctioning a Rs 3-lakh loan when she was setting up her practice. He never has to wait at AZB.

Former IMF chief economist Raghuram Rajan, who chaired the committee on financial sector reforms, says, "(Zia is) absolutely top class (and) fully informed. I got immediate responses to emails sent at 3 am India time."

"There are other very competent firms but my management found that the response time with Zia was faster. In an M&A, where everything is predicated on timelines, time is of essence," says Bharat Vasani, group general counsel for Tata Sons. "The determinant is her availability. It is like in a hospital — you feel most comforted when a senior doctor examines." AZB's other founder partner Ajay Bahl, who runs the Delhi practice, says accessibility is ingrained in the firm: "We make it clear to our clients that they can connect with any of us, any time."

Large firms such as AZB (225 lawyers), and even larger ones like Amarchand & Mangaldas (over 400 lawyers), have one other advantage. They can quickly ramp up the number of associates — sometimes by as many as 20-25 — working on a complex deal. Companies also tend to stick to lawyers for years because they are privy to transactions and business secrets. "People don't like to change their doctors and lawyers unless they have misadvised you," says Vasani.

The biggest factor, of course, is being good at what law firms are supposed to do: sew up the deal by accounting for all legal, regulatory and tax provisions, while minimising the principal's risks. "Cutting through M&As is tough. All deals have royalty, taxation and IP (intellectual property) issues. Companies are looking for track record. If one goes to one firm, then everyone goes. Probably, to be on the safer side," says Gunjan Paharia, managing partner of Delhi-based intellectual property law firm ZeusIP.
Luck And Grit
In August 2010, Zia was waiting for a flight to Mumbai in the lounge at London's Heathrow Airport when she bumped into Vedanta Resources' London-based chairman Anil Agarwal. Barely acquainted till then, Anil and Zia got chatting about someone they both knew well —Zia's brother Jehangir Sorabjee, who is also Agarwal's doctor. In Mumbai, Anil invited himself to dinner at the Sorabjee family home on Napean Sea Road, prompting Zia to rush there with a dabba (packed home meal). Days later, she received a call from him. "Can you help us with this deal?" he asked, referring to Vedanta's purchase of Cairn India.

Of course, AZB's biggest deals have not all been because Zia has just happened to run into some business tycoon. She spends enormous time wearing the networker's hat. "I like putting good people together, and not necessarily getting anything out of it," says Zia. "She will even participate in a commercial negotiation with you," says Cyrus Guzder, chairman of AFL, who sold the logistics business to Fedex in a deal structured by AZB. Not that she ever forgets about work even in the middle of a party. HDFC's Parekh says she has always gone back to work after every party he has invited her to.

Partner Ajay, who heads the Delhi team, led the $9-billion Bharti-Zain deal. He has cultivated clients Bharti, Hero Honda (structuring the transaction for the split with Honda), Max group, Religare and Fortis over three decades, well before founding AZB. But he insists AZB is hopeless with marketing itself. "We have had this debate that farming (clients) is better than hunting," says Delhi partner Hardeep Sachdeva.

Cultivating the Tata group, for instance, has been toil and sweat over 15 years. It began with small jobs, until 2004, when Tata Steel went to acquire Singapore's NatSteel. It was, what Zia calls the "breakthrough" deal for AZB. The Tata senior team was struck by her accessibility and aversion to "adventurous and aggressive advice". Tata group executives say she has no hesitation in speaking her mind, even if it offends them. Her famous quote being, "This doesn't pass the smell test."

Says Max group chairman Analjit Singh, "Compared with international firms, they are grounded. You have to factor in the mood of the country, the regulator, etc." The trickle turned into a flood as the Tatas hungered to expand abroad, and turned to Zia for every big deal. Both the Corus and JLR deals had her working closely with Ratan Tata, Tata Steel vice-chairman B. Muthuraman and Tata Motors vice-chairman Ravi Kant. "She can deal with Ratan Tata or the junior-most person and give the same respect," says Tata Sons' Vasani.

As the group confided in her, Zia even suggested that some deals be dropped. "Where she raised red flags, we dropped the transactions," says Vasani. "She always gave us a sense of what was right, and what might be the pathways to reach it," says Rajan, whose panel navigated legal issues on banks, financial markets and governance. "Intellectually speaking, she is quite merciless. She will keep peeling off all the fuzziness," says AFL's Guzder.

RIL has been nurtured painstakingly over many years by one of her young partners, even though there is a Nita Ambani connection (Zia's husband Jaydev Mody's mother and Nita's grandfather were step-sister and brother). The RIL-BP deal was a culmination of work AZB did for RIL over the years. Says Bahram, "We have strengthened the relationship with the top 20 clients. Many consult us at every step."

The relationship with the Aditya Birla group began in 2007 with the acquisition of Utkal Aluminium, with Alcan on the opposite side. So when the Novelis acquisition (where again negotiations had to be done with Alcan) came through, Zia got a call from Hindalco managing director Debu Bhattacharya.

A Matter Of Faith
Four Mercedes Benz sedans, one BMW, two Volkswagen Beetles and one Toyota Innova jostle for space in the underground parking of Mody mansion, bordering August Kranti Maidan's posh neighbourhood in Mumbai. "You have a Nano," says Zia's 75-year-old mother Zena, who is a senior national representative of the Baha'i community in India, referring to the yellow car parked on the driveway. (Most of the family has adopted the Baha'i faith, though not Soli). "Really?" asks Zia. "Look, I have no idea." At home, it is a different Zia Mody — one who is unacquainted with many details of her household. "It's for errands," explains her mother.

The large first floor living room has an eclectic collection of art work on the walls. In the middle is a huge bone china cup and saucer "bought at a sale when the Chinese were wrapping up an exhibition". Do you have Hussains? "No." Which artists do you have at home? "I don't know," says Zia as she sits down in a reflective mood.

Zia admits that the endless late nights have taken a toll on her family, which includes three daughters. "My family tells me — not as often as they should — there has been an imbalance.

Often, the family has been sacrificed. In hindsight, wrongly. Just because the pressure of work has been so much. The wish is to step back." But in the same breath, she continues, "The problem is there is always the next exciting deal the next week; it is so much fun. What do you say ‘no' to?"
"I keep getting ‘deep breath' lectures from Bahram and I keep telling him, you take too many deep breaths," says Zia. Her brother Jehangir, a doctor with Bombay Hospital, never misses a chance to advise his patients from AZB to quit the firm and lead a less stressful life. "He tells everybody, just to bug me," says Zia.

As we sit down for a vegetarian (the family is vegetarian) lunch with Zia at the head of the table, we gawk at the boardroom type, 20-seater dining table. Zena explains, "Jaydev loves to host friends and family." Doesn't Zia fear burnout? "Oh, I do! My mother tells me there is nothing (worse than) sleep debt. My family tells me I should not push his (God's) tolerance." What about health? "God is kind. As you can see, I don't exercise much," says the stocky four-feet-something Zia.

She unwinds occasionally. Early this year, the Baha'i followers in the family went on a pilgrimage to Israel to celebrate Zena's 75th birthday. Hormazd, the youngest sibling, and Autocar
India's editor, drove them around in a hired car.

Firm Comes First
AZB executives say Zia expects nothing less than full commitment from her associates, earning her the sobriquet of a slavedriver. Late nights are a norm and slack draws ire. "We have tried to calibrate, but we have that reputation. When there is a deal, sawal hi nahin hai (no question, you have to be there)," says Zia, who unwinds too little, though she likes music.

"Her hours are crazy. But that doesn't mean every lawyer works like that," says Bahram, who love sports, music and travel. The firm itself unwinds at an annual retreat over a long weekend. The last one was in Thailand.

What do you do when things are not up to the mark? "I yell. My door is always open. If it is closed, the person inside has a problem," says Zia, with a wry sense of humour.

"Zero tolerance issue is quality. When people do not respond to clients and we get chasers, it gets to her," says 31-year-old partner Essaji Vahanvati, son of Attorney General Goolam Vahanvati, who worked on Cairn-Vedanta deal.

In the early years, Zia would get paranoid if anything went wrong. And that, she says, led to a small band of intense people but not much growth. "One of the wrong decisions I took was not to let the talent blossom," she admits. The perception outside AZB is still that all roads lead to Zia. "Let them have that perception. We have 17 partners, 225 lawyers. How many minutes of the day can every road lead to Zia?" she asks.

The flock has mostly remained intact as Zia, Ajay and Bahram try to work closely with junior associates. But there are setbacks. Last year, Bangalore-based partner Anup Shah split 18 months after he had merged with AZB. "We are a corporate M&A firm. His expertise is real estate. We thought his clients would come to us and ours would go to him. Unfortunately, it didn't work," says Bahram.

A similar disenchantment led to dissolution of the "best friends" agreement with  UK's Clifford Chance. "We were hoping the market would open for foreign firms. They were more hopeful. The work we sent them and what they sent us was equally disappointing. Commercially, it made no sense," explains Bahram.

Industry buzz is that AZB has a no-poaching pact with Amarchand. "We try and avoid people from each other. We do pick up the phone and chat," says Zia.

To some extent, hard work and long days are compensated with eye-popping pay cheques. Even drawing a protest from Soli, who complains that corporate law firms are taking away the brightest from law schools. Fresh associates at AZB get paid about a lakh a month, the highest in the industry. Often there are handsome bonuses after a deal. "She is very generous," says Zena. So which sobriquet does she prefer: ‘best slave master' or ‘best pay master'? "The latter! How could you like the former?" says Zia.

Even if Zia avoids getting paranoid herself, she makes sure AZB remains paranoid about being ahead on the knowledge curve. "Not knowing is death," she says. All lawyers are constantly updated bi-weekly about each new development. AZB also has monthly updates on video conference to discuss developments, individual views and experiences. Any critical news is relayed immediately. "(I am) very stressed about it," says Zia. "When people are so passionate and they see quality go down, they tend to take it personally," says partner Vineetha M.G.

Under Fire
Beauty parades are rare in corporate law because word of mouth, relationships and referrals drive business. "We have never been to the market. That's what Ajay says is a weakness," says senior partner Raman Sharma. But it still happens as companies deal with high costs. That is where the rivalry with big firms such as Amar-chand & Mangaldas, J Sagar Associates and Luthra & Luthra plays out. "We play the game up to a point and then we don't," says Zia.

Two factors are straining the fees. First, while this year is a bumper year for M&As, deal sizes have shrunk. "In large deals, the sensitivities towards costs are lower," says Abhijit Joshi, the newly-minted CEO of the firm. Second, companies are cutting expenses. "Rallis and Voltas (cannot) afford Zia's fees. They go to Tier 2 and Tier 3 firms," says Tata Sons' Vasani. Tata group  fixes a ceiling on the lawyer fees in a transaction. It has also negotiated aggressively with AZB, and other firms. "We have been told we are expensive. We are very reasonable with our clients," says Ajay.

Technology, however, is neither Zia's strength, nor her firm's. "That is a fair criticism," says Zia, who has taken AZB to the Cloud. "Something is hosted somewhere — with Microsoft. And something happens. So our server is free. Aisa kuchh hai (there is something like that)... All I know is that my BlackBerry works," laughs Zia. "She knows gadgets on a need-to-know basis," says Hormazd, himself a tech fanatic. Zia has not changed her BlackBerry set in years and still uses a first-generation Nokia Communicator.

All Indian law firms are criticised for rarely using technology in processes so drafts vary from very good to very bad. In foreign firms, irrespective of the person, drafts are standardised and documentation management sophisticated. "We have many different templates too. Documentation standardisation is an over-rated concept," says Delhi-based partner Vinati Kastia. AZB has a database of drafts, of which 70 per cent could be common. "That 30 per cent is where the intellect comes in. You cannot standardise brains. Our drafting and quality is international. I don't buy that criticism," says Ajay.

Also, although there are specialists in broad areas such as M&A, project financing, etc.,
super-specialisation is non-existent. "AZB could do with making inroads into litigation as well as IPR. They are too specialised in M&A," says Tata Sons' Vasani. "It is a factor of need. We feel there must be greater domain knowledge because that is of comfort to the client," says Ajay.

Life Beyond The A, The Z And The B
Rebellious and argumentative, only Zia followed her father's footsteps. "She was hard working. Always a topper," says Hormazd, eight years her junior. After a law degree from the University of Cambridge and an LLM from the Harvard Law School in 1978, Zia worked with the world's largest law firm, Baker & McKenzie, in New York until 1983. In 1984, she returned to Mumbai, married neighbour and long-time beau Jaydev (a realtor and owner of Delta Corp) and started her own law firm — grandiosely named Chambers of Zia Mody (CZM).

How Zia's CZM and Ajay's ABC became AZB is a tale driven by circumstances, the need to expand, and fate. The three of them — Ajay, Zia and Bahram — had all earned their spurs in their respective capacities. Bahram is the second generation in a family of lawyers. His father Naval, who was senior partner of India's oldest law firm Little & Co., died early but he gave Zia's father Soli his first brief. A project finance specialist, Bahram had been with Little & Co. for 20 years before joining hands with CZM. "When I joined, naturally I said CZM should become CZB," says Bahram, who studied with Zia in nursery before heading for Doon School.

Delhi-based Ajay Bahl, son of a doctor, is a rare amalgam of a chartered accountant and a lawyer. He was persuaded by politician N.K.P. Salve to study law. Salve also recommended him to intern with Soli. After the internship, Ajay  began practising from his garage in Malcha Marg in Delhi. "Little did I know that 20 years down, Soli's daughter's and my paths would be joined," says Ajay who accepted Bahram's proposal to merge Ajay Bahl & Company with CZB to form AZB in 2004. "It was an instinct that we should get together," says Ajay.

Why are lawyers such narcissists that they name firms after themselves? "Probably, they are. But in a younger firm, how do you associate?" says Zia. Wouldn't her maiden name ‘Sorabjee' get her instant traction? "My father asked me to keep my maiden name. When I broached it with my husband, he told me I could stay single. So I stopped messing around and took my husband's name."

Perpetuity of the firm is a priority for Ajay (57), Zia (55) and Bahram (55). "The idea of an institution is that it carries on smoothly after the founders," says Bahram. The second rung of 17 equity partners, and more who will become partners, will get to increase their stake over time as the founding partners' stakes go down. "There must be a perpetuation model. You have got to share from your heart," says Ajay.

Equally, the three of them have at least one of their children — Ajay's son, Zia's daughter and Bahram's son — studying law, and is likely to join AZB. "They will have an entry. But will they make partnership? How the person does is up to him," says Bahram. "Will they be seen as calling the shots? No," says Ajay.

But what is the arrangement between them? After all, they refuse to share details of their equity and none of them has a designation on the visiting card? "From a hierarchical point of view, AZB has a very flat structure. Ajay runs Delhi and Zia, with Abhijit's help, runs Mumbai," says Bahram. "Bahram and I were both supposed to run Mumbai but he has seconded his  duties to me," says Zia. "We are all founder members of the firm. That is good enough. We are very sensitive. If there is a decision that I think is important, there is no way I will not consult Zia and Bahram," says Ajay avoiding a direct answer.

"Partnerships are rarely successful. The three have a lot of wisdom. There is respect, patience and tolerance between them. They are not myopic," says Max group's Singh, who has known Ajay from college days and Bahram, two years his junior, from Doon School.

"We have the most unlawyer-like approach. We knew that there will have to be give and take; there will be values we will bring to the table. And it will all evolve," says Ajay, a fitness and cricket freak who unwinds with music.

Not that all those explanations make you any wiser. But so long as AZB continues to gather momentum on the shoulders of the A, the Z and the B, should it matter, really?


(This story was published in Businessworld Issue Dated 29-08-2011)