Legal process outsourcing comes to the fore as companies look to slash costs

 
CREDIT CRUNCH: firms' ability to farm out straightforward tasks influences contract awards

Enquiries about legal process outsourcing have climbed sharply since the credit crunch took effect, a number of outsourcing companies have told the Gazette.

General counsel are also ramping up the pressure on law firms to outsource aspects of their legal services as legal spend is squeezed. In addition, firms striving to win places on corporate panels are bolstering deal pitches by proving they are using outsourcing as a means of reducing costs.

Mark Harding, general counsel at Barclays and former chairman of the GC100 – the association for the general counsel and company secretaries of FTSE 100 companies – said the issue of encouraging law firms to outsource simpler work was becoming increasingly important across the group.

Harding added that, following on from a successful commercial contracts outsourcing pilot in New Zealand, he intended to send more work there.

The news comes as the South African High Commission is set to host its first legal process outsourcing seminar in London, to be chaired by Kerry Underwood, senior partner at Hertfordshire firm Underwoods.

Underwood told the Gazette: ‘Every law firm should be looking at outsourcing. The assumption that London and the US have a monopoly on the best lawyers is wrong.’

He added that firms looking to take advantage of external investment under the Legal Services Act would need to outsource to show investors they had an attractive ?business model.

Andrew Loach, a vice-president of business development for legal outsourcing company CPA’s European Legal Services Unit, noted that one ‘very large’ UK law firm pitching for corporate panel work was taking a ‘blended’ approach by outsourcing simple legal tasks, such as contract review, to paralegals in India. The most important tasks would still be undertaken by the firm’s own lawyers.

He said: ‘Law firms recognise times are getting tougher and clients are demanding more creativity when it comes to billing.’

Kesh Sharma, a director of legal services outsourcing company Magellan Consultancy Services, said his company had recently benchmarked the fees charged to a ‘large international firm’ by its current panel firms and its potential new panel – with the result that all the firms were asked to look at outsourcing as a means of cutting costs.

He also noted high-street firms had recently started to look at outsourcing bulk commodity processes such as conveyancing.

Ian Prince, chief executive of outsourcing consultancy Prince OMC, and Robert Glennie, chief executive of legal services provider NewGalexy, said their companies had experienced a greater number of outsourcing enquiries of late from both law firms and general counsel.

James Dean