FoxMandal looks for external funding as firm struggles to pay staff
FoxMandal Little is considering external funding options as the firm grapples with an increase in late payments by overseas clients. The Indian law firm has admitted that the majority of its Delhi-based fee earners were not paid last month after around 70% of the firm's overseas clients failed to pay bills on time. The firm said that many payments had been delayed from a minimum of around 90 days to up to six months.
July 23, 2009 at 07:27 AM
2 minute read
FoxMandal Little is considering external funding options as the firm grapples with an increase in late payments by overseas clients.
The Indian law firm has admitted that the majority of its Delhi-based fee earners were not paid last month after around 70% of the firm's overseas clients failed to pay bills on time. The firm said that many payments had been delayed from a minimum of around 90 days to up to six months.
This resulted in the non-payment of salaries for fee earners from all ranks in FoxMandal's Delhi office; the firm's largest base, with around 130 lawyers. The firm's other Indian offices and its five-lawyer London office were unaffected.
The firm runs four separate partnerships as Indian Bar rules limit law firms to a maximum of 20 partners.
FoxMandal is hoping to reach a solution to the problem in August. Managing partner Som Mandal said that the firm is currently reviewing its options to secure temporary external funding to enable it to pay its staff.
Mandal said the firm has considered options ranging from private equity investments to bank loans, although Indian banks do not normally grant loans to law firms.
He stressed that the problem does not reflect on the firm's financial health, pointing to 45% revenue growth in the financial year up to 31 March this year, while he also predicted revenue growth of at least 30% for the current financial year.
He said: "Western firms depend on the banks, but we do not get bank loans so we have to depend on payments coming in. The clients that are affected by the global financial downturn will pay late so we have to look at other alternatives. It is a short-term cashflow issue which does not reflect the overall health of the firm."
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