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. |
Readers' comments (17)
Anonymous | 19-Nov-2009 5:24 pm
Outsourcing makes sense. For clients, they get a reduced bill; for competent lawyers who aren't insecure about the value they believe they add, it lets them focus on the more complex aspects of work. Most of the aforegoing comments seem to come from lawyers in law firms. If, for just a moment, some law firm associates stepped outside of their (arrogant) world, they just might realise outsourcing makes commercial sense - and clients rightly expect law firms to achieve their objectives via the lowest possible cost. As regards training, most of the time inhousers have to educate expensive law firm associates anyway, so I doubt much would be lost there.
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Anonymous | 19-Nov-2009 8:02 pm
No one would argue that clients should always receive value for money from their legal advisers. Solicitors are supposed to act in their clients' best interests (there's a professional practice code that dictates this). But have partners in these firm's really exhausted every avenue possible to deliver client service using GB plc talent within clients' budget expectations? Why are a significant proportion of clients/in house counsel fixated on instructing a coterie of firms to provide their legal services? Isn't that a recipe for large legal bills? Why are a similar proportion of client's still enslaved by the external law firms' "chargeable hour"? Are clients really comfortable knowing that the next generation of senior UK lawyers/partners have not had practical experience of so called "less complex" tasks (e.g. document review is being outsourced - if this relates to litigation, that process is called "discovery" and is a critical part of the litigation process) graduating to more complex aspects? Don't the partners in law firm's set the hourly rates of their associates? All external lawyers (young and old) usually have a learning curve when advising a new client/industry sector. Are clients really content that young UK lawyers starting out should not receive training, safe in the knowledge that if these people do not understand the clients' business, there is someone overseas who does? Isn't it right that home grown talent should be nurtured?
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Anonymous | 20-Nov-2009 7:02 pm
In respect to the outsourcing of discovery document review , lpo's have been marketing directly to GC's with great success here in the US. Touting significantly less hourly rates for 1st pass review than big law can afford for the filtering out of non relevant documents which can be hundreds of thousands in the digital era of Litigation. It should be noted that further cost saving efficiencies can be provided with technology such as pattern matching and auto coding for relevancy and the human element is reduced further from reviewing the irrelevant set allowing big law to focus on the relevant issues and documents to the litigation thereby removing the lpo need all together.
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Bubba Gump | 22-Nov-2009 3:47 pm
Lower operating costs = higher profit. Let's hope that there is no compromise in quality.
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Anonymous | 25-Nov-2009 5:10 pm
Probably makes the most sense for the absolute top tier practices - the focus for the likes of A&O is really on the high end quality work that requires more innovative and clever legal thinking. That inevitably brings in a certain volume of lower end work that can be commoditised and outsourced/offshored. Done properly, that doesn't need the same quality of lawyer and means those firms can run on a much leaner basis in expensive locations like London whilst focussing on fewer clients and higher value work.
I suspect it's more of a threat to associates at the likes of DLA who tackle exactly that tier and type of work.
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Anonymous | 25-Nov-2009 5:15 pm
Those who think that this is an ominous development for law graduates may not have actually conducted a 400,000 document review. The retention rate of lawyers actually increased in a certain firm's New York office when outsourcing was introduced on that side of the pond, since the lawyers were actually able to do what they are good at, lawyering, rather than reviewing traders' e-mails for relevance.
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Madan | 1-Nov-2012 11:20 am
Thanks to Luke for articulating the enormous growth of LPO industry. Most of the US law firms have started outsourcing their legal work. Sourcing work to low cost centers helps the firms achieve cost savings, quicker turnaround time and higher quality services. India is one such region for providing quality graded, cost conscious services. TaurusQuest also provides high quality legal services at lower cost.
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