A&O signs outsourcing deal with LPO provider Integreon
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Allen & Overy (A&O) has become the first magic circle firm to outsource legal work as an increasing number of UK firms embrace legal process outsourcing (LPO) in a bid to reduce their overheads.
The firm has partnered with LPO provider Integreon to outsource basic litigation document review to teams in New York and Mumbai, in what could generate a 30-50 per cent cost saving.
A&O litigation support specialist Vince Neicho said: “We put together a suite of options [for clients] including offshore outsourcing, a reduced paralegal rate in our London office and the [improved] use of technology.”
A&O has chosen to work with Integreon on a case-by-case basis, rather than signing a deal for a dedicated team.
Neicho explained: “The main reason is the fluctuation in the workload, we might go a few weeks with nothing at all, or a client might opt for another of our suite of options. Outsourcing offshore is new in this country, we’ve some clients that may feel uncomfortable with it. If we put our own captive team together and push outsourcing it’s not good for them or for us.”
This is the first time that a magic circle firm has outsourced legal work. Rivals Clifford Chance and Linklaters have both outsourced support functions, while Clifford Chance has a wholly-owned Indian subsidiary that carries out document review work and other legal support tasks previously undertaken by onshore paralegals and trainees.
Neicho’s comments were made at The Lawyer’s inaugural conference on Legal Process Outsourcing and Offshoring and come as more law firms chose to outsource lower-value work in a response to requests from clients to bring down costs.
Managing attorney at mining giant Rio Tinto Leah Cooper took the radical move earlier this year of outsourcing legal work to a team of 15 Indian-based lawyers sourced by LPO CPA Global. No in-house jobs have been lost as a result but, with less work going out to panel firms, it is estimated to have saved the company around $8m (£4.8m) (18 June 2009).
Earlier this year The Lawyer revealed that Pinsent Masons had become the first firm to outsource work normally done by UK-based lawyers to a dedicated offshore team through a deal with LPO company Exigent (22 June 2009). The firm now plans to expand this further (28 September 2009).
Last month Clarke Willmott laumched an LPO pilot in its Birmingham office with the aim of rolling it out across its UK network (12 October 2009).
The trend towards LPO and offshoring has gathered such momentum that even one of the City’s more traditional names - Slaughter and May - has been in talks over outsourcing legal work. This is believed to have been triggered by a request from a particular client (5 October 2009).
Outsourcing and offshoring - a cut out and keep guide
| Firm | What | Comments |
| Allen & Overy | Document review | Transaction specific. US and India |
| Clarke Willmott | Support functions | South Africa. For more click here. |
| Clifford Chance | Document review and due diligence. Support - IT and document production. | Document review and IT offshored to CC wholly-owned Indian subsidiary. Document production work outsourced |
| Eversheds | Support - document production | Outsourced offshore. For more click here. |
| Linklaters | Support - finance, leisure, accounting | Looking to outsource an onshore picture administration centre and knowledge process outsourcing |
| Lovells | Litigation document review. Real estate document production | Transaction specific. South Africa and India. For more click here. |
| Osborne Clarke | Non-strategic support functions | Onshore - £1m saved annually Plans to extend |
| Pinsent Masons | Secretarial work, Document review and due diligence | Estimated 50 pc saving on low level legal work. Dedicated outsourced team in Cape Town. For more click here. |
| Simmons & Simmons | Document review, due diligence and research | Dedicated outsourced team of 5 lawyers in Mumbai. For more click here. |
| Slaughter and May | Document review and due diligence | Triggered by request from specific client. For more click here. |
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Readers' comments (16)
David | 18-Nov-2009 2:02 pm
it's clear that this is the future, there's no going back. Just look at the extensive list of firms that have jumped on the bandwagon.
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Golden Mean | 18-Nov-2009 3:43 pm
How come A&O haven't done a Clifford Chance an open in India themselves? In the long run they'd keep control of the process as I doubt they'd just keep on a low level, case by case basis. Give it a year and there'd be enough work to justify a permanet team in Mumbai.
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Worried Mollie | 18-Nov-2009 3:48 pm
But where will it end? First stop basic document review next stop more complex legal work. As India and other jurisdictions become more educated and more sophistocated the UK is going to be less and less able to compete. It's happened with the primary and secondary sectors and the tertiary sector, including legal services, will follow. Soon we will hear UK firms lobbying clients to Buy British!
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Anonymous | 18-Nov-2009 3:50 pm
Golden Mean - doing a CC is an expensive endeavour. All these individuals are on the firm payroll. It's CC that has to recruit them and train them. If you haven't got buy-in from all your clients then it starts to add up
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Anonymous | 18-Nov-2009 4:08 pm
@golden mean -- opening up shop in india is more difficult than opening up in other markets. India has particularly restrictive laws on foreign firms entering the market (see, e.g., http://asia.legalbusinessonline.com/law-firms/india-benefits-from-legal-market-restrictions/1085/30725 )
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Orijit | 18-Nov-2009 10:32 pm
I agree with David that this is the future of legal services.
Regarding setting up a captive service center it is not the easiest of activities. If one were to look at other areas of the economy where offshoring has already taken place e.g., Finance & Accounting, IT, HRO ... the experience of many players has been that setting up and running a captive has been a bundle of trouble. Many are set up, but in a few years time many more get sold to third party service providers. A captive requires economies of scale, process excellence and the ability to demonstrate a clear career progression for the associates.
Here is where third party service providers manage to steal a march over captives. I anticipate that the offshoring of legal work will follow a similar trajectory as F&A.
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Anonymous | 19-Nov-2009 11:29 am
Is the drive to outsource really client driven? Or a ploy by the Baby Boomer Generation of partners to reduce their UK workforce (their largest cost) and provide a lower quality service to clients while maintaining PEP? Is offshoring legal work simply a means of avoiding paying UK salary, tax, NI contributions and (possibly) pension contributions? Does offshoring really benefit HM Treasury? Are UK trainee solicitors (hopefully tomorrow's partners) receiving proper training if work they should be cutting their teeth on is sent offshore? Does offshoring signal the beginning of the end of a commitment to provide young UK trainee solicitors with proper training?
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Anonymous | 19-Nov-2009 11:58 am
If UK lawyers do not review documents, why a client should rely on his advice? He basically knows nothing of the content of those documents!
and if reviewing docs will be outsourced abroad, how can newly UK qualified lawyers learn to do it?
Dear "collegues", you are going down the sink!
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MG Rover | 19-Nov-2009 1:52 pm
There are undoubtedly a proportion of clients who will welcome outsourcing if it reduces their bill, regardless of whether or not the quality isn’t always quite up to scratch. These people inevitably shop at Primark.
As a young lawyer, for the reasons so eloquently outlined by others above; the concept of outsourcing legal work stinks. It is a fundamentally PEP driven vehicle masquerading as bowing to client’s interests. Pre-negotiated fixed rate fees for low end work is the obvious move if we want to stop the rug being pulled from under us. This will maintain client loyalty and high standards, as well as the future development of young British/British-based talent.
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Anonymous | 19-Nov-2009 4:05 pm
I feel very sorry for today's law degree students.
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