This is the topic for an upcoming ALI ABA seminar (by the American Law Institute / American Bar Association). The choice of topic speaks volumes. As the brochure for the seminar says, a "seismic shift to a buyer's market for legal services has transformed the business of law firm revenue generation." The seminar faculty includes partners from BigLaw firms, and the organizers quote Dan DiPietro, head of Citi Private Bank Law Firm Group, regarding the following "three harsh realities: (1) demand for legal services, especially for full-price U.S. law firms, is trending downward, (2) law firm billing rates are trending downward, and (3) cost-reduction strategies (by which PPP levels were sustained in 2009-2010) are exhausted and not repeatable."
The organizers argue that "[s]ustaining PPP [profits per partner] levels must, ultimately, come at the expense of other firms." However, no mention is made of LPO in the brochure. This is despite the fact that offshore legal outsourcing is one way for law firms to distinguish themselves and attract new clients. Perhaps legal outsourcing is one of the strategies to be revealed at the seminar!
As we noted in a blog post earlier this year ("12 Ways Off-Shore Legal Outsourcing Could Shake Up the Law World in the New Decade"), "if law firms can't adapt to a client-centric world and start living up to the values and practices of the companies they represent, they will be toast." On the positive side, "[i]n the new decade, smart law firms will continue to form new models, adapt to change, embrace legal off-shoring, and learn how to make all of this serve not only the interests of their clients, but their own."
Meanwhile, stark facts from the real world tend to inject themselves into the debate. LawWeek magazine recently reported that UK construction giant, Balfour Beatty, "is set to review its roster of UK legal advisers, [and] planning to ramp up its use of legal process outsourcing (LPO)." The company uses 24 law firms worldwide. One of them said this: "The motivation for the review is to cut costs, and law firms need to respond by developing innovative outsourcing initiatives. LPO is on its way in, and there is nothing we can do about it, but being able to supervise our own outsourcing is the lesser of two evils."
BigLaw partners can and should discuss various strategies to increase revenues. But "when clients are in the driver's seat," it is the clients who will have the loudest voice. If law firms want to keep clients and attract new ones, they cannot afford to ignore offshore legal outsourcing.