India’s booming IPO market in 2025 has become both a blessing and a burden for domestic law firms. With more than 60 Draft Red Herring Prospectuses (DRHPs) filed with SEBI since January 2025, domestic capital market legal advisors are facing severe workload pressures. As a result, they're now urging companies—even those launching small deals not marketed to the US—to hire international law firms to ease the legal process and workload distribution.

The Changing Landscape of IPO Legal Advisory

Traditionally, a typical IPO involves two law firms:

• One representing the issuing company

• The other representing the merchant bankers

However, the dynamics shift depending on the investor geography. IPOs aiming to attract US-based institutional investors are structured under Section 144A of the US Securities and Exchange Commission (SEC). These require the presence of an international law firm well-versed in US securities law to ensure compliance.

For offerings not intended for the US market, companies operate under Regulation S (RegS). These deals generally use only two domestic firms, especially if the issue size is small and foreign institutional investor participation is limited.

New Trend: Third Law Firm Even for RegS IPOs

A new trend has emerged, as revealed by several capital market lawyers speaking to Moneycontrol. Overloaded Indian law firms are now recommending or even insisting that issuers engage a third law firm—usually an international firm—even for RegS deals.

“We, as a firm, are not taking up two-counsel deals due to bandwidth and based on our lawyers’ feedback,” said a senior Mumbai-based capital markets lawyer.

This shift highlights how operational constraints are influencing the structure of legal mandates in IPOs.

Workload vs. Revenue: The Law Firm Dilemma

Capital markets lawyers point out that two-law firm deals disproportionately burden Indian legal teams. In these scenarios, the domestic company counsel often absorbs work that would have otherwise been managed by an international law firm, especially in cross-border regulatory interpretation and documentation.

While company counsels may charge a higher fee in these situations, the workload often justifies the inclusion of a third firm.

“You may deploy double the number of lawyers in a two-firm deal, which reduces your bandwidth for other IPOs,” explained another Mumbai-based lawyer.

Implications on Issuers and Legal Costs

The impact of this trend on issuers is significant. International law firms typically charge $300,000 to $500,000 per IPO, depending on the complexity of the deal and regulatory jurisdictions involved.

These fees are usually paid upfront or during the DRHP filing, unlike merchant bankers whose compensation is more performance-linked.

“Issuers will have to fork out more fees if they must hire a third law firm on their deals,” said a third capital markets lawyer.

For smaller IPOs, which often operate on lean budgets, this added cost may appear excessive. But with local legal teams stretched thin, issuers may have no alternative.

India’s IPO Boom in 2024-25: A Revenue Booster for Global Firms

In 2024, India emerged as the top IPO market by deal volume, raising approximately $20 billion, according to market data. This made India a significant focus area for international law firms, especially those with cross-border experience in capital markets.

Now, with even RegS deals opening doors to foreign legal firms, these international players stand to gain further.

Law firms from New York, London, and Singapore with capital market arms already engaged in Indian IPOs are now fielding mandates for smaller deals—an opportunity that was previously confined to domestic players.

The Bandwidth Bottleneck

The root of this change lies in limited bandwidth among Indian law firms. While demand has surged, the supply of experienced capital market lawyers hasn’t kept pace. Several firms are struggling to staff deals within internal timelines and fear compromising on quality.

Rather than expand rapidly and compromise on training, many firms are choosing to outsource the excess workload to international firms, which can quickly deploy experienced teams to handle IPO filings, due diligence, and legal drafting.

Fee Structures and Risk Management

Another factor at play is risk distribution. By having a third law firm, especially one with international jurisdictional knowledge, liability is spread more evenly, and legal risk is mitigated—an increasingly important concern amid evolving securities regulation.

Also, the inclusion of an international law firm often enhances investor confidence, especially for global funds that may participate via the RegS route despite not being the primary target.

Regulatory Nuance: Section 144A vs. Regulation S

It’s important to distinguish between the two dominant frameworks in IPO structuring involving foreign investors:

• Section 144A: Allows marketing to qualified institutional buyers (QIBs) in the US without full SEC registration.

• Regulation S (RegS): Applies to non-US investors, and is generally used for smaller IPOs or those not aiming to list in the US.

Previously, RegS IPOs remained purely domestic in legal advisory structure. That is changing fast.

Conclusion: A New Legal Playbook for India’s IPO Ecosystem

India’s IPO market is undergoing a fundamental transformation in legal advisory structure. The surge in DRHP filings, combined with overworked domestic legal teams, is ushering in a more internationalised legal framework—even for smaller deals.

While this shift may result in higher upfront legal costs for issuers, the benefits include faster execution, global compliance, and reduced risk. For international law firms, this marks a golden opportunity to strengthen their foothold in one of the world's most active capital markets.

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