Legal outsourcing trend gains momentum as clients get tough
12 October 2009 | By Margaret Taylor
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Outsourcing, it would seem, is the new black, but the fact that ultra-stylish, super-conservative Slaughter and May is bang on trend with this is more than a little surprising.
As The Lawyer revealed last week (5 October), the elite City firm is in talks with a legal process outsourcing (LPO) provider about the prospect of outsourcing low-level legal work, albeit this is at the request of a single client. This, says Osborne Clarke managing partner Simon Beswick, can be seen as a ”watershed moment for the UK legal industry”. But is it really so radical?
Inasmuch as few firms have so far embraced true LPO the answer is yes. Law firms in general are becoming more comfortable with the concept of outsourcing and are following tentatively where the banking world has already boldly gone. But to date the bulk of that outsourcing has focused on secretarial work. As reported on page 7, Clarke Willmott is piloting a scheme that will see its typing work sent to South Africa, while Eversheds and Lovells are involved in similar projects.
According to Berwin Leighton Paisner partner and head of outsourcing Mark Lewis, firms are beginning to look at LPO, but it will be at least 24 months before there is any kind of transformation in the legal sector.
“This industry is in its infancy,” he contends. “There’s not a vast number of mature providers for LPO. We’re all feeling our way and have to see what works and what doesn’t.”
Jones Day outsourcing partner Jonathon Little believes the sector is moving more towards LPO, although he points out that there is a big difference between a law firm choosing to do it and a law firm doing it because a client demands it, as in the case of Slaughters.
Without client demand it is almost certain that Slaughters would not even consider LPO. As one reader of TheLawyer.com posted: “If the firm is indeed outsourcing proper legal work to India, then the four horsemen of the apocalypse are about to appear on the horizon.”
This is the case for most firms, which, as Little says, are acutely conscious that “you can’t outsource responsibility”.
But according to Lewis, although general counsel are increasingly looking at ways of cutting their legal spends, practically none are really putting pressure on their firms to look at LPO.
“For all their talk UK general counsel haven’t pushed us hard enough to adopt it,” he says. “There are general counsel who say at every opportunity they want their law firms to cooperate with the panel, that they want the same service for less, but the reality is that no one’s pushing us hard enough.”
Rio Tinto managing attorney Leah Cooper is the exception. As reported by TheLawyer.com (22 June), Cooper took the revolutionary step of outsourcing part of her legal function to LPO provider CPA Global in India. As part of this scheme her panel, which includes Baker & McKenzie, Herbert Smith and Linklaters, is also expected to send work to CPA Global.
Cooper admits that it has been difficult to persuade some firms to do this. “It’s still a challenge - some have embraced it, others haven’t,” she says. But she insists that the benefits for her department make up for the stresses involved with setting up such a system. Externally, the biggest benefit is that costs can be cut drastically, while internally lawyer time is freed up to focus on what Cooper terms “the important things”.
According to Lewis, the mood after Rio Tinto signed its LPO deal was “touchable”. Cooper says that since it was announced she has been inundated with lunch invites from her counterparts at other companies.
Law firms take note: the LPO market is likely to become the general counsel’s new favourite thing, so get ready to get involved. After all, what the client wants the client invariably gets.