By Krishna Yadav & Yash Tiwari
India Inc.’s legal bill is rising as companies spend more to avoid costly missteps in an environment shaped by tighter regulation and geopolitical uncertainty.
Top companies are estimated to have spent Rs 69,000-72,000 crore on legal matters in the year ended March 2026 (FY26), according to Vahura, a governance search and consulting firm.
‘From our conversations with general counsels and law firms, we estimate a I5%-20% rise in legal expenses for corporate India (in FY26),” said Ritvik Lukose, chief executive officer of Vahura. “This includes expansion of in-house legal teams, creation of specialist roles, investment in legal tech and increased external legal fees.”
In FY25, the spending was up a little over 14% at Rs 60,000 crore. For FY24, the amount was around Rs 52,568 crore, as per Vahura.
While routine work is increasingly handled in-house through standardized processes, the biggest spending is on high-stakes litigation, merger and acquisition (M&A) activity, and capital markets work, Lukose said.
Law firms, including Khaitan & Co. and JSA Advocates & Solicitors and Singhania and Co., said clients are seeking legal advice earlier in decision-making as the cost of non-compliance outweighs the cost of caution.
For Khaitan, demand has been strong for cross-border deals, regulatory and governance advisory, data and privacy compliance, environmental, social and governance (ESG) work, and disputes.
“We are seeing higher legal advisory and compliance spending in FY26 compared to FY25,” said Prasenjit Chakravarti, partner at Khaitan & Co. “This is mainly due to more complex regulations, especially around data, ESG and sector rules, higher governance expectations, cross-border risks, and more detailed advisory work.”
Since late 2025, the rollout of labour codes, the Digital Personal Data Protection Rules, 2025, and changes to the income-tax framework have added to compliance burdens. At the same time, the Securities and Exchange Board of India’s ESG disclosure requirements under the Business Responsibility and Sustainability Reporting (BRSR) framework have increased the need for legal support.
“This approach is driven by the fact that the cost of non-compliance can be much higher than legal costs,” said Ashish Suman, partner at JSA Advocates & Solicitors. “Sanctions can affect a company’s operations across countries, while non-compliance with laws like data protection or labour rules can lead to penalties.”
Geopolitical tensions and sanctions are also increasing legal workload, especially in cross-border deals. Law firms are seeing more queries on force majeure clauses and material adverse change (MAC) clauses in contracts linked to conflict-hit regions. The West Asia war and related disruptions in the Strait of Hormuz have pushed firms to seek legal advice on supply chains and contract risks.
Force majeure clauses allow companies to pause or avoid obligations if events like war or sanctions disrupt business, while a MAC clause allows a party to exit or renegotiate if a major negative event affects the transaction.
“Even normal cross-border contracts today involve more discussion around sanctions, supply chains, data protection and geopolitical risks than before,” Chakravarti of Khaitan added.
Media reports said that sanctions are driving many insolvency disputes in India, as companies struggled to honour contracts involving sanctioned entities. Amid rising global uncertainty, companies are scrutinising such clauses and increasingly seeking legal advice on them. An April blog by Cyril Amarchand Mangaldas said international sanctions are making compliance more complex. While businesses earlier relied on the 50% ownership rule—where an entity was treated as sanctioned only if a designated per-uncertainty son held 50% or more—regulators in the US, European Union, and the UK are increasingly examining control and influence as well.
Legal spending is expected to remain on an upward trajectory in FY27, experts said.
COSTLY COMPLIANCE
BIGGEST spending continues to be on high-stakes litigation, M&A activity and capital markets work
RISE in expenses was driven by higher dispute costs, global deal activity, growing compliance needs
LEGAL spending is expected to remain on an upward trajectory in FY27, experts said
LAW firms said clients are becoming cautious amid new laws and geopolitical
