The news of the last couple of weeks has reflected what may be a sea change in expert opinion regarding the future of Western law firms. Providing the focus of much of the discussion was a recent conference at the Georgetown University Law Center, titled "Law Firm Evolution: Brave New World, or Business as Usual?" (Twitter: #GtownLFE). For example, an online article from American Lawyer about the conference featured the headline, "The Change Agenda: Is Mega Law a Dead Man Walking?" And what was the reporter's summary of the message delivered by the general counsels, academic experts, and law firm partners who participated in that debate? The traditional large law firm model is "dead, dying, and changing."
Georgetown Law Professor Milton C. Regan, Jr., the Co-Director of the conference sponsor, The Center for the Study of the Legal Profession, both began and concluded his written presentation with the topic of legal outsourcing to India. He noted, among other things, that mining giant Rio Tinto's decision last year to outsource legal work to India shows how law firms are facing "increasing pressure to disaggregate their services and engage in at least some outsourcing to compete effectively in the legal services market...."
Although the conference by no means was devoted exclusively, or even mainly, to the topic of legal process outsourcing (often referred to as "LPO"), observations on that subject were confirmed by events in the real world. British Telecom recently reported it is sending commercial contracting and anti-trust regulatory work to the India offices of outsourcing provider UnitedLex. Microsoft has joined Rio Tinto in announcing the transfer of legal work to CPA Global, also in India. Here at the India offices of SDD Global Solutions, one of the world's largest insurance companies has kept two teams of our Indian lawyers busy for the last two months, researching and drafting dispositive motions for litigations in multiple U.S. cities. Last year, SDD Global made world headlines by handling the legal research and drafting for the precedent-setting dismissal of a high-profile Los Angeles libel suit, Doe v. HBO. (This led to defendant and Hollywood star Sacha Baron Cohen issuing his first commercial endorsement, saying publicly that "SDD Global Solutions will go down in history as a group of revolutionary lawyers.")
Richard Susskind, Columnist for The Times of London, IT Advisor to the Lord Chief Justice of England, and author of the influential books, "The Future of Law" and "The End of Lawyers? Rethinking the Nature of Legal Services," reports that developments like the Rio Tinto deal and others could signal "further good news for the legal process outsourcing industry, whose combined turnover in India is already more than $400 million, and whose credibility was recently enhanced by Rio Tinto’s statement that, in its first six months of outsourcing legal work to CPA Global, it had saved $14 million."
Shortly before the conference, the international mega firm, Eversheds, released an eye-opening study, entitled, “Law firm of the 21st century -- The Clients’ Revolution: a Report on the Post-Recession Legal Sector in 2010.” The authors of the report refer to the situation now faced by large law firms as a "perfect storm." The study involves a survey of 130 general counsels and 80 law firm partners. On the subject of sending work to legal outsourcing companies, the survey shows that the percentage of general counsels either already doing this or interested in it has increased to 66%, up from 49% in the same survey only two years ago. Here are some highlights from the 2010 Eversheds report:
"This report shows that the legal landscape has changed permanently and more quickly than anyone imagined when we produced our original 21st century law firm report in 2008. Even before the credit crunch, it was clear that business people were disillusioned with ever increasing fees, wasteful practices and an unwillingness to change. Harsh economic times have pointedly polarised these issues."
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"The research identified four major factors which are driving change. In order of importance, they are:
• globalisation – the move to the East
• increasing professionalism and status of the General Counsel
• the Legal Services Act in the UK.
The conﬂuence of these four factors, stimulated by the recession, has created a perfect storm in the legal market. The storm and its aftermath are investigated in this report."
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"THE PERFECT STORM
The recession has accelerated the globalisation of the legal profession. Whilst cost pressures force General Counsel and firms to look to low cost jurisdictions to resource work, the inexorable shift of the economic fulcrum to the East means that many international law firm leaders are now starting to envisage moving their HQs from the West to China or India. The developing markets in the Middle East, Asia and Latin America are also attractive pools for new work."
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"The aftermath of the perfect storm:
This could be described as a revolution where the stakeholders in the legal market have finally become appropriately aligned. The client has in effect moved to the centre of the legal services solar system, whilst the premium law firms have been relegated to an orbiting position."
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"76% of legal clients and 75% of partners say that the current balance of power in the client-lawyer relationship is now with clients. A majority of both groups believe the shift to a client-led market will be permanent."
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"The greatest change over the past two years has been among clients whose appetite to outsource and use technology has increased. Just over a third (38%) of General Counsel were actively implementing or considering outsourcing low-level work to low-cost jurisdictions and a further 29% were receptive to the idea of outsourcing provided they had suitable work."
* * *
"For Western law firms, the shift to the East is well underway both as a move to follow a global economic trend but also as the drive to efficiency dictates that low-cost jurisdictions are a key component of cost base reductions. Has there been a paradigm shift since Eversheds released its 21st century law firm report in 2008? Yes. The client prediction that the model was unsustainable has come to pass. Few law firm leaders now believe that old models will survive. Some may occupy the role of trusted adviser, but even this has been assumed by General Counsel who, whilst wanting collaboration, will put value for money first. And with the power resting with General Counsel for some time to come, what they want (and need) will dictate how the market develops."
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"The change that was predicted to take place over the next 10 years is here now, and it will be those firms who respond to the trends identified in the report who will see the real benefits. Richard Given, Legal Director, Emerging Markets, at Cisco, adds: “Law firms need to make sure they listen to their customers, understand their needs and recognise that change will happen. Firms cannot go on believing that the hourly rate is still an acceptable way of billing; the market is at a tipping point, and it is those who can address the change that will be the ‘next generation’.”
For a full copy of the report, click here. Eversheds is not just talking the talk. By being the first major UK law firm to set up its own offshore legal process outsourcing company, it is walking the walk. The venture, announced only three months ago, is in South Africa, and apparently it is still in the pilot stage. In the U.S., at this point, the only law firm running an offshore legal outsourcing company is New York-based SmithDehn LLP, which manages SDD Global Solutions in India.
A couple of weeks ago, yet another groundbreaking report was released, this one more U.S.-oriented. It's title is "The Future of the Legal Professsion: A Conversation with the Legal Community's Thought Leaders on the Front Lines of an Industry in Transition." The conclusions dovetail with the Eversheds report. This second survey was conducted by Ari Kaplan, a veteran "big law" attorney and best-selling technology and marketing author, who was the keynote speaker at last month's American Bar Association Techshow. Kaplan interviewed 30 experts, including practicing lawyers, academics, in-house counsel and CEOs, and he found that 74 per cent of them agreed that the legal services industry is in the process of profound and permanent change. Part of that change is the rise of legal process outsourcing. Below are some highlights from Kaplan's report:
"85% of the respondents had heard of instances where a corporate client would not pay for first year work on their projects. Part of the reason for that accord is the acceptance that outsourcing is a positive trend and helps to create value. 'You will see a lot more firms and companies using outsourcing companies to do work more efficiently,' predicted [David Van Zandt, Dean of Northwestern University School of Law]. 'Having a big firm associate do it is less efficient than having an organized outsourcing firm do it,' he added."
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"Whether they have benefited the legal profession or not, 74% of the participants agreed that the changes will be permanent. Actually, 'it is quite likely that we will look back on this period as one of less dramatic change than the period that is coming,' said [David B. Wilkins, Harvard Law School Professor and Director of the Program on the Legal Profession]."
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"With respect to the transformation of the industry, [Larry Bortstein, Former Global Head of Technology Law at Lehman Brothers] said, 'it is more expensive to tear down the Empire State Building and build a new one than to just build a new one.' Given the difficulty of large established institutions to reorganize quickly, he predicts the growth of alternative providers and the rise of legal process outsourcing."
At the GtownLFE conference, many of the speakers had deep practical experience and strong opinions on these issues. For example, Susan Hackett, Association of Corporate Counsel ("ACC") vice president and general counsel, warned that traditional law firms probably have only 12 to 18 months before they lose their clients to legal service companies and other non-traditional alternatives: “The window is open for another year to year and a half for firms before clients start walking and looking at firms they've never looked at before.” Hackett went on to point out that “the legal industry has become used to using time as the only way of measuring value, so we base fees and budgets on that, rather than on the importance of that work to our business.” She correctly noted what is now obvious and intolerable to most general counsels today, namely, that "law firms can rack up huge bills for cases that the company ultimately loses, engage in all sorts of work that perhaps isn’t necessary for the case, or assign it to a more senior person than is required, and the company is faced with a bill that has no relationship to the outcome of the work.”
Another GtownLFE presenter, Leah Cooper, formerly Managing Attorney at Rio Tinto, and now Director of Strategy at outsourcing company CPA Global, suggested that part of the solution is the availability of low-cost staffing options, and for inside and outside counsel to have conversations and an understanding at the outset of legal assignments, to set metrics and goals regarding fees. As Cooper said, the pursuit of value "must also allow employment of a low-cost staffing option. Legal departments just aren’t having the appropriate conversations before work starts. The project isn’t defined; it just starts and later a bill arrives, so there are no expectations to meet or be measured against.” In making the plunge to join a legal outsourcing company herself, Cooper offered the following public statement:
"Outsourcing is changing the legal landscape, and CPA Global is at the forefront of that change. Over the past year, I’ve worked closely with CPA Global to develop a new legal model [for Rio Tinto] that has delivered high quality, cost effective legal services. Joining the CPA Global senior management team is an incredible opportunity to continue to revolutionize the increasingly competitive legal services market."
Larry Ribstein, a University of Illinois law school professor, who also spoke at the conference, offered a particularly bleak assessment for "Big Law":
"My hypothesis is that for the big law firm we'll see a downhill slide that the horse drawn carriage experienced.... [W]hat can firms do? Nothing. They're dead."
In his presentation on "The Death of Big Law," Ribstein discussed legal process outsourcing to India in particular:
"Big Law’s clients themselves theoretically could hire cheaper foreign lawyers and avoid the middleman of a U.S. law firm. This practice is currently limited by the fact that outsourced lawyers are not licensed in the U.S. to represent U.S. clients. Big Law avoids this problem through a rule that enables lawyers to outsource as long as they exercise reasonable supervision over the supplier. However, corporate clients could exercise comparable supervision through in-house counsel, which already hire outsourcers to assist them in their own work. This could effectively expand the capacity of in-house counsel offices and reduce the amount of work clients need to send to outside lawyers."
In another large (54-page) presentation made to the conference, by Milton C. Regan, Jr., Georgetown Law Professor and Co-Director of the Center for the Study of the Legal Profession, the discussion opens with legal services outsourcing to India and specifically references the future outsourcing of "more sophisticated and strategic work":
"An announcement on June 18, 2009 by global mining company Rio Tinto sent a powerful message to law firms that the world is changing. The company declared that it had entered into an agreement with legal process outsourcing (LPO) company CPA Global to perform legal work on a scale that would reduce Rio Tinto’s annual legal expenses by an estimated twenty percent, or tens of millions of dollars. This work currently was being done by lawyers in the company’s legal department. Traditionally, if a company’s inside lawyers did not handle legal work, the company engaged an outside law firm to do much of it. Rio Tinto’s managing attorney Leah Cooper, however, explained that the company no longer wanted to pursue that option: 'For a long time,' she said, 'we’ve been asking law firms to provide us with ways to better control and predict our costs, but at best they offered a discount or a cap in fees.... In the end, we decided to take the initiative ourselves.’ A team of CPA lawyers in India will be dedicated to working for Rio Tinto, and Cooper has said that she wants them to function as does any other Rio Tinto office. At the time of the announcement, CPA had already completed forty projects for the company, including contract review, legal research and analysis, merger and acquisition due diligence work, and draft joint venture agreements, as well as gathering fifty lawyers within forty-eight hours in Washington, D.C. to handle an electronic discovery request from the Federal Trade Commission. The majority of the work that the LPO will be performing is relatively routine, but Rio Tinto stresses that most of it 'is not volume-based; it’s day-to-day work that requires constant communication.' Furthermore, the mining company wants CPA lawyers to take on more sophisticated and strategic work."
Below is the beginning and end of Regan's conclusion:
"The Rio Tinto contract with CPA Global suggests that law firms are likely to face increasing pressure to disaggregate their services and engage in at least some outsourcing to compete effectively in the legal services market.... The economic downturn therefore could mark a moment of transition for law firms less because of its immediate financial impact and more because it has highlighted and accelerated the trend toward the disaggregation of legal services that had begun before it. This trend reflects the maturation of the legal services sector into a highly competitive industry driven more forcefully than ever by pressures for efficiency. How law firms, clients, and organizations connected with this industry respond could shape not only the future of law firms, but of the legal profession itself."
In our opinion, the most interesting commentary on the conference came from the consistently insightful Jordan Furlong, a prominent legal industry consultant and author of the award-winning blog, "Law21: Dispatches from a Legal Profession on the Brink." For one thing, we agree with his point that one of the most telling aspects of legal services outsourcing is the fact that sophisticated investors are betting on it, and in a very big way. If you "follow the money," you'll learn that some presumably very smart people are investing 440 million pounds to buy a 37% stake in CPA Global. That speaks volumes. Below are a couple of cogent excerpts from Furlong's comprehensive post, "The Blind Side":
"[F]or me, the penny dropped during the dinnertime address by Richard Susskind, whose remarks included a heartfelt plea for conference delegates to lead a change for the better that the profession and justice system desperately need. One of Richard’s topics was the Legal Services Act in England & Wales, and its soon-to-be-active provisions allowing alternative business structures (ABSs), including non-lawyer equity investment in law firms and legal enterprises. Richard, however, has been speaking with investors who are actively engaged in preparing entry to this marketplace, and he reported that law firms are not their primary target; in fact, their interest is coalescing around legal service providers that we now consider to be on the fringes of the profession, like legal processing outsourcing companies."
* * *
"Already, Intermediate Capital Group has made a £440 million investment in CPA Global, the LPO firm that famously took a huge chunk of legal work from Rio Tinto last year. That purchase effectively placed a marketplace value on CPA Global approaching $1.4 billion. How many law firms, if they were to go public today, could aspire to a $1.4 billion market cap?"
We also agree with Furlong's assessment that legal process outsourcing is moving toward higher value work, even if the vast majority of the current assignments are low-level, especially involving document coding:
"LPOs, it has to be emphasized, are not just doing first-year associates’ grunt work, not anymore. They are moving up the value chain steadily and with surprising speed, taking on the work of second-, third- and fourth-year lawyers -- not just by using lower-cost labor, but by doing the work more systematically and efficiently. As I said a while back, these companies will not be content with basic work forever; they see no reason why they can’t eventually do the toughest legal jobs. Billion-dollar legal services providers, unfettered by traditional lawyer restrictions, can go global instantly and almost effortlessly. They’ll have more than enough money to acquire the top talent from the best firms worldwide, to invest in new systems and innovations that will reduce costs even more, and most importantly, to change clients’ expectations about what a law firm can deliver. They will be law firms, in effect, and even if lawyers in a given jurisdiction somehow succeed in keeping them out, the landscape will have changed: clients will demand their lawyers compete on the same playing field."
* * *
"The prospect that emerges from all this is a legal services marketplace in which many law firms are simply irrelevant — they’re not structured in ways that deliver maximum value to clients and they can’t compete with rivals that are. There was a lot of talk at the Georgetown event about whether 'BigLaw is dead,' and I have to agree with those managing partners who dismissed the notion: these firms are obviously up and about and making a great deal of money, and it’s absurd to pretend they’re dead men walking. The worry, for me, is that many firms, of all sizes, aren’t ready for the radical ways in which the playing field is about to change. Their focus is either straight ahead, on their clients, or internal, on their own condition and competitiveness. They’re like a quarterback whose gaze is either locked downfield on his receivers or focused dead ahead on the defenders in his path. As a result, he never sees the hit coming, from his blind side, that flattens him and turns the ball over to the other team. It’s not just lawyers and clients who matter anymore. New players, with an unprecedented combination of size and speed, are charging onto the playing field like a storm and rewriting the rules of the game as they come."
For Furlong's full blog post, click here.
The move of legal outsourcing up the value chain from low-end work like document-coding to higher-value assignments, such as legal research and drafting, is inevitable. For economic and other reasons discussed below, it seems that sophisticated investors would not value CPA Global at $1.4 billion solely on the basis of its prowess in document review. But, as also discussed below, there is no reason why the move into higher value work necessarily must be in competition with, or detrimental to, Western law firms. At SDD Global, we deliberately have chosen to focus almost exclusively upon higher value work, even though we have been nearly alone in an industry dominated by document review.
For starters, and for the same reasons Western lawyers loathe it, no one at our company is interested in document coding. Below is a colorful description of what is left of very gray document review for large law firms in the U.S., from a leading blogger and experienced Western document coder:
"Packed elbow to elbow in stifling broom closets and windowless backrooms, these “losers” (many of whom are laid-off graduates of so-called 'elite' schools) stare into the alkaline glow of their monitors and click thru reams of the dullest, driest, most pointless shitpaper mankind has ever produced. Many arrive home at night with their eyes weeping blood. The fun quickly wears off after the twelfth hour of scanning a Global Broker-Dealer Bilateral Sub-Agreement to see if Paragraph 14(b)9vii contains the word 'if' as opposed to 'shall.' Picking fly shit out of black pepper would be a more intellectually stimulating (and probably better paying) job."
* * *
"Ah, how I tire. Age. Do we die all at once, or a little each day? The clock creeps all too slowly on these temp projects, though. Crawls. It’s sometimes as if time itself were submerged underwater, with minutes dragging on for days as if mired in quicksand. After all, we’re doomed to tedious and mindless make-work akin to Sisyphus of yore rolling his boulder up the perpetual hill. The terminally ill, I’ve often argued, could easily add 'phantom' years to their doomed lives just by showing up on a document review gig, where an hour of 'coding time' equals approximately four decades in the 'outside world.' A three-week project would to them equal a virtual second life."
Second, we've done the math. A low barrier to entry has led to well over 200 document review companies in India alone, and the resulting price competition is fierce. In India, there are many hundreds of thousands of lawyers and non-lawyers, who, after two weeks of training, are able and willing to do this kind of work for as little as a couple of hundred dollars a month. This actually is more than the average low-paid Indian lawyer in non-outsourcing practice is paid. And it is many times what the average Indian is paid. India's "demographic dividend," coming from the fact that the country has, and will continue to have, one of the youngest populations on earth, means that (a) back office work in India will continue to explode, and (b) the price competition among document review providers will continue to reduce profit margins.
On top of that, the economies of scale and technological advances created by top-notch document review companies, such as CPA Global, UnitedLex, Clutch Group, Integreon, and Pangea3, mean that only the very largest of providers, such as those five, will be able to make a substantial profit from document coding, thanks to the sheer volume of their operations. Speaking of high volume, the recent 440-million-pound funding of CPA Global indicates that in some ways, leading legal process outsourcing companies will come to resemble BPO and IT companies, rather than law firms. Indian IT provider Infosys has over 75,000 employees, and it seems that CPA Global, which already has 1,300 personnel on its payroll, and which now has the investment to hire many more and engage in expanded marketing, is on that path.
But back on the subject of the move to high-value work, we agree with Jonathan Furlong that even the largest document companies will not be content with the provision of only low-value services. Why should they chase after a dollar or two (or less) in profit margins from billings that effectively range from $3 to $10 per hour, when Indian talent and efficiency is able, with training, to generate top-tier legal research and drafting services at effective rates of $35 to $100 per hour? (We use the word, "effective," because hourly billing is rapidly becoming a dinosaur, not only in the West, but also in India.)
Will the provision of those higher value services in India threaten the very core of law firm profitability in the West? Our experience suggests the answer is no. Our own company's offshored legal services from India actually create more legal work in the West, rather than cutting it. Every time a deal is done, or a litigation is waged, because legal services are suddenly affordable, it means more work for the U.S. and U.K. lawyers involved in supervision, editing, and/or appearing in court.
This is not unique to SDD Global. For example, after mega firm Eversheds signed an outsourcing deal with an Indian legal service provider, which in turn is handling the drafting of commercial contracts for deals that normally would be too expensive, legal-wise, to pursue, the Eversheds spokesman pointedly noted, referring to the outsourcing of these matters to India, that “[i]t’s not taking work away from anyone. It’s actually creating work out of contracts that would –otherwise sit in a metaphorical drawer.” And it is work that will be supervised by Western lawyers, adding to their revenue.
At SDD Global, we've seen this creation-of-work phenomenon first-hand. A Fortune 100 client of our managing law firm, SmithDehn LLP, specifically requested that the legal research and analysis needed for a series of multi-million-dollar deals in the U.S. be done by Indian attorneys at SDD Global. This is yet another situation where, if not for a Western law firm’s outsourcing capabilities, no lawyers would have been hired, because typical Western legal fees would have made it prohibitive. The work would have been done either in-house, or not at all. Because the India team made it possible for the deals to happen, Western law firms ultimately got more business, handling the otherwise non-existent transactions.
A similar thing has happened in litigation, where corporate clients have chosen to defend themselves against meritless lawsuits, using both U.S. and Indian lawyers. Without legal outsourcing, there would be no lawyers hired for any significant work at all, because the cases simply would have been settled at the outset, just to avoid the usual U.S. litigation costs. Indeed, when it comes to litigation, offshoring of legal work is leading to an unprecedented new breed of benign tort reform, as defendants facing bogus or inflated tort claims could choose to litigate instead of settle. This in turn would discourage frivolous lawsuits. Yet legitimate plaintiffs would suffer no averse effects. Then, as now, no sensible corporate defendant would reject the chance to settle a meritorious claim at a reasonable price. That’s because outsourcing reduces the costs of litigation, but doesn’t give defendants the tools to win cases when the plaintiffs are right. To the contrary, legal outsourcing can be used by lawyers for legitimate plaintiffs to pursue cases that have merit, without worrying as much about the cost, or about a scarcity of resources to support the litigation. But all the money that otherwise would be spent by defendants on nuisance payouts could be plowed by corporations right back into the economy. And yes, some of that money will flow through the pockets of those Western lawyers who are smart enough to use legal outsourcing to get work that otherwise would not exist.
A perfect example is the U.S. litigation work SDD Global has been performing for multi-billion-dollar media giant Channel Four Television Corporation, the UK's second largest commercial television network, which incidentally developed and produced countless award-winning films such as Slumdog Millionaire, The Crying Game, Trainspotting, The Last King of Scotland, and Four Weddings and a Funeral. Channel 4 was happy not only with the dismissal we helped two sets of U.S. lawyers obtain in a high-profile law suit, but also with the low legal fees that made the defense possible.
As noted by the client in an unusual press release it issued following the victory: “This action was fought with the litigation support services of SDD Global Solutions, the India arm of Channel 4’s U.S. counsel, SmithDehn LLP, in a groundbreaking case where ‘outsourcing’ has proved to be a creative solution to running a robust defense.” U.S. law-trained Indian attorneys at SDD Global conducted the legal research and drafted all of the preliminary drafts of court papers in the litigation, including Channel 4’s motion and brief for summary judgment, which allowed Channel 4 to fight and defeat the lawsuit, rather than settling in order to avoid burdensome legal fees. The unanimous California Appeals Court decision "protecting "the free speech rights of all comedy performers and humorists," is available here.
As Channel 4’s general counsel noted in the company's press release: “U.S. court actions are extremely costly to run and even where a defendant wins, little if any of their costs are recoverable from the plaintiff. As so often happens in cases like this, the ‘chilling effect’ of the threat of substantial damages and significant legal costs, forces defendants to settle with plaintiffs who have no justifiable claim. However, combining the skills and expertise of U.S. attorneys with U.S. law-trained Indian attorneys has proved to be an innovative and cost-effective way for Channel 4 to fight and win the suit.”
If anyone still doubts the capabilities of highly-trained Indian lawyers, or believes Indians are inferior to lawyers licensed in the U.S. or the U.K., guess again. For example, the Indian lawyers at SDD Global are so well-trained that a major Hollywood film and television studio retained them to oversee and correct the work of partners and associates at an AmLaw 100 law firm. This work included not only proof-reading and correction of English grammatical mistakes (!), but also strategic suggestions. This is not because the American lawyers were in any way incompetent, but because they were too busy, and they welcomed a second set of eyes to review their first drafts. And the client preferred to pay Indian attorneys to do this, rather than American lawyers living and working in one of the highest-cost jurisdictions on earth.
In short, and for all the reasons discussed above, law firms like Eversheds and SmithDehn LLP, who embrace legal outsourcing and use it to make their services cost-effective, can ride out the "perfect storm," keep and attract more clients, and emerge more profitable as a result.
Back in October 2007, we wrote a cover article for the LexisNexis legal magazine in India. The article was titled "BEYOND THE BACK OFFICE: How Legal Outsourcing Companies in India Are Moving Up the Value Chain." In it, we made a lot of predictions. Not all of them have come true. But here are a few that now seem to be not so unrealistic:
"We are witnessing the start of a positive, paradigm shift in the way that legal services will be delivered in the West."
"Corporations, not Western law firms, will drive the market in the years ahead. Law firms will hire offshore providers, but this will be driven mainly by the dictates of corporate clients."
"Another way that corporations will drive the market, indirectly, is by obtaining flat (or fixed) rate billing from their outside counsel, instead of hourly billing. This kind of billing can radically alter the dynamics of Western law practice, as law firms working for flat rates will have a compelling incentive to reduce hours and costs, instead of increasing them as before. Flat rate billing will cause many law firms to realize that offshore providers can be important allies in improving their bottom line, rather than competitive enemies."
"Every sector of the legal offshoring industry will grow dramatically, including lower end services, such as document coding and legal transcription. Ultimately, however, the biggest impact, the long-term mother lode, will be higher-value services such as legal research and drafting – services that constitute the bulk of the legal work now done in the West."
It would be nice to end on such a positive note. But instead, perhaps we should conclude with the "tough love" advice given to other large law firms by Orrick partner Patricia Gillette at the GtownLFE conference: “Change must be sweeping. If you do not change, you will die.”