“It’s a culture thing,” said one law firm chief executive to me last week. “Of course, I’d have to look at outsourcing at some point, but we’d probably northshore it or use one of the jurisdictions we’re in already.”
I suspect he hadn’t seen the data. As our feature on page 14 reveals, the differentials in overheads really are extraordinary. Take newly qualifieds: in the City they’d expect to earn between £45,000 and £65,000. However, according to data provided by OMC Partners, the equivalent worker in Manila will earn between £7,000 and £10,000.
The Philippines may be of more interest to US than UK firms, but the point also holds when you look at salaries in India or South Africa. How far can culture stretch? When presented with those sorts of savings, which firm would not investigate the outsourcing option?
And yet, and yet. There is a clear trend for firms to choose less cheap options closer to home. Northern Ireland’s tasty subsidies to rich London law firms have helped, but the fact that A&O and Herbert Smith plumped for Belfast has stemmed the flow towards India. Similarly, Addleshaws’ internal parsing project and pricing research shows that there are regional solutions. That said, I’m not convinced Addleshaws won’t nominate a preferred LPO provider if its clients get tough on this, much as Slaughters had to when Carillion put its foot down. There are also persistent rumours surrounding DLA Piper and Integreon, which rather suggests that DLA Piper is not using its national network to greatest effect. Something for Tony Angel to investigate, perhaps.
There’s a wider issue, too. A pressure group called ’Occupy the Inns of Court’ has recently been appropriating the rhetoric of ’Occupy LSX’ and ’Occupy Wall Street’. Their beef? They’ve done the legal training, there are no jobs and they want to get physical. I don’t buy much of their argument, which smacks too much of entitlement, but it signifies something bigger, related to the growing crisis of a million young people unemployed in the UK.
The costs data may seem compelling, but only as a starting point. Culture - shorthand for doing the right thing - trumps spreadsheets every time.