Law firms are taking a look at legal process outsourcing providers and saying: ‘Anything you can do, we can do better.’
Herbert Smith kicked off the New Year by announcing a major expansion of its onshore center in Northern Ireland, which provides document review work competing against offshore providers who have been offering that service for years.
“Do-It-Yourself” Finding Traction
The prominent London-based outfit is not the only law firm encroaching into LPO territory. US firms Orrick and WilmerHale, with low-cost centers in West Virginia and Ohio, have also realized they don’t have to compete with external providers in India if they can perform basic legal tasks internally.
The trend is a testament to the growing influence of LPO techniques, as well as the demands of clients for lower bills. But setting up a world class legal outsourcing center isn’t as easy as it looks.
The Industralization of Legal
As Ron Friedmannpoints out in a recent article in Law Practice Today, LPO isn’t just about moving jobs where manpower is cheaper. “We can now look back to the early buzz about LPO – moving legal work to India – and understandthat it missed the main point. Location matters less than implementing industrialized processes,” Friedmann writes.
Indeed, these industrialized processes – utilizing technology, breaking down legal services into rule-based tasks, and applying project management – are alien to many law firms, which have evolved to sell high-end tailored legal advice to large companies. The question of whether law firms have the expertise and drive to enter this highly competitive space remains as yet unanswered.
The low-cost, high volume model might also put pressure on profit margins and, consequently, on partners’ earnings.
The example of telecoms company BT demonstrates how challenging the ”do-it-yourself” process can be. The BT legal department set up one of the largest offshore captive centers in Gurgaon, India to help with commercial contracting and antitrust regulation. Several years later, the company divested the whole operation to a specialist legal outsourcing firm.
Several challenges, cited by BT Global Services general counsel David Eveleigh at the time of divesting the Indian operations, included the need for both, “industry best practices” and “global scalability.”
Beating LPOs at Their Own Game?
The basic premise of outsourcing remains that it is cheaper and easier for someone else to do a job for you, especially if the person is an expert at that particular job. The BT examples shows, it’s not easy to beat the LPO providers at their own game. But going forward, as evidenced by Herbert Smith’s expansion, clients might think it’s worth a try.
Until next time,
The Fronterion team