The State of Sourcing

When Clifford Chance, the world’s largest law firm decided to offshore in 2007, the news came as a huge surprise and law firms the world over (especially in the UK) took notice. What appeared to be a bold move is actually an imperative today.

Over the last two years, several other firms have started giving offshoring a serious thought. Some of the well-known names in this area are Allen & Overy, Linklaters, Lovells, Eversheds. Recently, Pinsent Masons and Osborne Clarke joined the list where Pinsent Masons outsourced its litigation work to South African LPO, Exigent and Osborne Clarke awarded a legal services outsourcing contract to Integreon. While most of these firms have primarily outsourced their IT and F&A functions, few of the recent deals include the legal services component along with support services. Even within the legal services, activities offshored by law firms so far are limited to services such as word processing, legal transcription, coding, indexing and scanning documents, contract drafting, legal research and trademark searches.

As businesses globalize, UK law firms are looking to cut costs of maintaining their international networks, to be able to compete with the US law firms. Cost cutting (especially in these challenging times) and better utilization of in-house lawyers by outsourcing low value tasks is a compelling reason for law firms to consider outsourcing/offshoring in their strategy. Further, offshoring and its cost-economics will lead to a situation where in-house lawyers will be able to focus on high value and wider range of legal services.

Continue reading ‘UK Law Firms: Catching up on offshoring!’ »

“No more offshoring for us. We have not been convinced about the service providers’ ability to maintain quality.” This was the reaction from one of the disgruntled customers, a US based Law Firm that tried & rejected offshoring.

There are some law firms and corporates that have tried and rejected the offshoring initiatives. During our course of research, we found a number of buyers who cited unsatisfactory work quality for abandoning their offshoring initiatives. Several of them were unhappy about the inconsistency of the work delivered and non-receipt of the quality promised. Understandably, taking into account the delicate nature of legal work, quality of work delivered is of paramount importance in this industry.

Why the low score on quality? Outsourcing is not a simple process, and takes considerable commitment from not just the service providers’ side but also (and more importantly) from the buyers’ side. Most problems arise because buyers expect a lot, and/or service providers promise more than they can deliver. One of the most critical success factors is setting and communicating realistic (and achievable) expectations before the commencement of a project. A managing partner at a law firm rightly puts it, “Regular communication, internal preparation and preparation of documentation and setting processes for smooth transitioning - these are crucial to make a success out of offshoring.”

Continue reading ‘No Compromise on Quality!’ »

“How do law firms select their offshore legal service providers?” one of my colleagues asked me. Aren’t the fundamentals more or less same across verticals or segments, was my initial thought. I’ve seen my own marketing team ponder and debate on what might impress (and what might put off) a prospective customer.

Luckily, I had an answer for my colleague from the recently conducted ValueNotes survey of US and UK based law firms. The survey findings revealed that the strength of the management team, company reputation and end-to-end service capability are the most important criteria when selecting an offshore legal service provider.

Continue reading ‘How do law firms select suppliers?’ »

In his 2009-10 budget speech, Finance Minister Pranab Mukherjee said: “I propose to extend service tax on advice, consultancy or technical assistance provided in the field of law. This tax would not be applicable in case the service provider or the service receiver is an individual.”

Law firms across the country are unhappy about the application of service tax, especially at a time of economic downturn. Not that law firms have been doing badly! With the increase in the number of cross border transactions over the last two years, the legal services industry in India has grown at a rapid pace. A large number of multinationals are also expanding their existing operations in India. On the other hand, several Indian corporations are aggressively venturing into global markets (acquiring companies or expanding their operations). These companies typically require legal advice on financing, mergers and acquisitions, immigration, etc., which translates into greater work for Indian law firms. However, of late the slowdown has affected the transactional practice done by corporate law firms. The imposition of service tax will also hurt some of the LPOs who are catering to the domestic market. While lawyers have expressed their disappointment and displeasure on the imposition of service tax, it is likely that the service tax burden will shift to litigants.

Of course, a commonly held view outside the legal industry is that law firms have been pampered with the exemption of service tax. The finance minister appears to agree with this view. But obviously, this view is not shared by the legal industry!

Continue reading ‘Legally Taxed!’ »

While the offshore legal services industry garnered a lot of media attention, the recent survey of US and UK based law firms conducted by ValueNotes revealed that less than 3% of the respondents had any past experience of offshoring legal services.

Initially, even I was intrigued by this finding. But when we started digging deeper, we found that a sizable proportion of the legal community has not considered outsourcing legal services to lower cost destinations. There is a low perceived benefit of outsourcing legal services amongst law firms.

Continue reading ‘Lawyers Shy Away from Offshoring’ »