The State of Sourcing

Having done a report earlier on e-discovery and document review, which is by far the most outsourced service in the legal services outsourcing domain, our next stop was most definitely going to be outsourcing of contract management – the next big thing in outsourcing of legal services. As we started speaking with the people who deal with contracts, some of the variations and facts that came out were mind boggling. Here are some examples –

• Contracts may need up to 5-10 drafts by conservative estimates
• Contracts may need up to a year to finalize
• Contract values range from USD 10 – 1,000 million
• Hundreds of types of contracts
• Legal team sizes ranging from 6 – 1000+
• More than 40 countries across which contracts are managed by a single firm

Continue reading ‘Contract outsourcing – outsource to manage better’ »

“TCS eyes slice of legal process outsourcing market” – a new day, another entrant to the LPO market. The recent announcement by the CEO of Tata Consultancy Services (TCS) regarding exploring of opportunities in the LPO segment should come as no surprise to players in the IT-BPO or KPO sector. The LPO market has grown by leaps and bounds since its inception, examples of which are evident through the number of players in the market currently and their growing client base spanning 3 continents.

A primary reason for Thomson Reuters’s acquisition of Pangea3 and UnitedLex’s of Lawscribe in late 2010, in my mind, was to meet growing demands by organizations and law firms alike to cut costs and increase process efficiencies. These acquisitions saw these market heavyweights expand their businesses, core strengths and the ability to offer clients additional solutions. The market is primarily serviced by pure-play providers, like CPA Global, Pangea3, UnitedLex and Mindcrest, who offer legal services as their core focus. The last 2-3 years has seen IT-BPO players entering the market to add to their top line and expand into new service areas. Their only competition is from these large pure-play providers who have established themselves globally because of their head start.

Continue reading ‘Would you like a slice of LPO pie?’ »

“Some of the service providers that I have visited have invested a lot of time, effort and money in data security. However, there is still a factor of risk associated with offshoring that will be overcome only with time”, according to a Managing Attorney from a New York based law firm in response to a query on whether buyers have adequate confidence in data security initiatives of offshore service providers.

In spite of the fact that India has enacted legislations such as the Information Technology Act, data may not always be tamper-proof. This is an area of concern for the buyers of outsourcing services as well as for service providers. With significant increase in offshoring, clients as well as service providers are realizing the need for security/privacy around data that is being processed at the offshore location.

Continue reading ‘Is Your Data Safe with the Offshore Service Providers?’ »

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!’ »

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’ »