26 Nov 09 Of Lawyers and Outsourcing

Last week in London, at a conference titled Legal Process Outsourcing and Offshoring [http://www.sourcingnotes.com/content/view/580/1/], I had the unique opportunity to interact with senior lawyers representing both private practice and general counsel. And, as the day progressed, a few impressions congealed in my mind.

First, don’t expect British lawyers to be too happy about this encroachment into their comfortable world. Interest in the subject of outsourcing is driven by necessity, rather than choice. As corporations (who eventually foot the legal bills) desperately look for ways to cut costs, legal expenses are an obvious target. And these corporations now have a strong bargaining tool – in the form of offshore providers of legal services, also called LPOs (short for legal process outsourcing). They are either directly dealing with LPOs or arm-twisting their lawyers to bring down costs by employing such vendors.

Naturally, this has not gone down well with most lawyers. Some are fearful, others downright skeptical and disbelieving. The fears stem from likely job losses, to continuing erosion of pricing power, to reduced career and training opportunities for junior lawyers, to various other vague and not-so-vague uncertainties and threats. The skeptics trot out all kinds of objections; from data security to poor quality to the sustainability of offshoring itself.

But the reality of client and cost pressures can overcome almost any objection. Mid-way through the conference, there was a consensus (even if reluctant) that the legal industry in the West faces unprecedented challenges, and must change. The combined forces of globalization and technology will disrupt the (hitherto insulated) industry, like it has so many others.

The well-designed conference agenda combined with the extremely mature audience enabled much stimulating debate. Will we see greater consolidation, and the survival of only the large law firms? Will the legal industry resemble accounting where a Big 4 dominate? Will LPOs and law firms merge into a seamless new type of law firm? Will there be any room for small and mid-sized law firms?

There are no easy answers, nor a crystal ball. However, every cloud has a silver lining – even if not immediately obvious. First, intermediation provides an opportunity for lawyers and law firms that understand the nuances of outsourcing. Second, there’s money to be made, and nobody says that British or American lawyers cannot start or invest in LPOs. Third, outsourcing may actually enable small law firms to compete for large contracts by leveraging outsourced capacity and capabilities.

And finally, even though the legal industry will be forced to restructure and align itself with the new realities, I personally don’t believe that this will lead to sustained or significant unemployment of lawyers in the UK, or US or anywhere else. Economic growth in emerging nations and globalisation are ensuring that the demand for legal services is growing faster than global GDP. In the long run, demand for specialised skills will only grow, and countries like India will be forced to open their markets – creating many more opportunities for these lawyers.

If you’re interested in the outsourcing of legal services, you might want to look at these links:



Arun Jethmalani

Arun is one of the founders of ValueNotes. Apart from trying to build a high-quality research business, he has spent the last 27 years researching, analyzing, and dissecting companies and industries. He has worked with clients of all shapes and sizes, from all parts of the world – in providing them insights that make a difference to their business.
Prior to ValueNotes, he was an equity analyst/advisor, and wrote extensively on investing – including a column titled “Value for Money” which ran for 10 years in the Sunday edition of the Economic Times. To this day, he remains an avid “value” investor.
He has also been published in several other publications, and is a regular speaker at events related to technology, investing, competitive intelligence, business process management, Internet, etc. See: Valuenotes Events
He has been instrumental in developing a community of research and intelligence professionals in India, and is the founder and current chairman of the SCIP (India) Chapter. Arun holds a B Tech from IIT, Bombay and an MS from Duke University, NC, USA. LinkedIn Profile

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