India's top companies are estimated to have spent ₹69,000-72,000 crore on legal matters in the fiscal year ended March, representing a significant increase from ₹60,000 crore in FY25. According to Ritvik Lukose, chief executive officer of Vahura, a governance search and consulting firm, legal expenses are set to rise by 15-20% in FY26, driven by expansion of in-house legal teams, creation of specialist roles, investment in legal tech, and increased external legal fees. The spending growth follows a pattern of consistent increases, with FY24 legal expenses at around ₹52,568 crore.
The surge in legal spending is attributed to shifting regulations, geopolitical risks, and rising compliance demands. As reported by Mint, law firms including Khaitan & Co, JSA Advocates & Solicitors, and Singhania & Co are seeing clients become more cautious amid new laws and geopolitical uncertainty. Prasenjit Chakravarti, partner at Khaitan & Co, noted higher legal advisory and compliance spending due to more complex regulations, especially around data, ESG, and sector rules. Recent changes include the implementation of new labour codes in late 2025, Digital Personal Data Protection Rules 2025, and changes under the income tax framework, along with SEBI's ESG disclosure requirements under the BRSR framework.
Geopolitical tensions and sanctions have significantly increased legal work, particularly in cross-border deals. Law firms are experiencing more queries on force majeure clauses and MAC clauses (material adverse change), especially in contracts linked to conflict-hit regions. The war in West Asia and disruptions around the Strait of Hormuz have pushed companies to seek legal advice on supply chains and contract risks. According to Cyril Amarchand Mangaldas, international sanctions are making compliance more complex, as regulators in the US, EU, and UK now examine control and influence, not just ownership, under the 50% ownership rule.
Looking ahead, experts expect companies' legal spending to continue rising in FY27, with particular growth anticipated in litigation, restructuring, insolvency, and compliance areas. Rohit Jain, managing partner at Singhania & Co, noted that tax and corporate compliance remain particularly active as clients seek clarity before committing to transactions or restructuring. The ongoing US-Iran war, which started in February 2026, has severely disrupted global supply chains across sectors, with the full impact expected to be clearer in FY27. Technology-related compliance areas including AI governance, data usage, cybersecurity obligations, and automated decision-making documentation are also emerging as growing focus areas.
