A legal chief at a tobacco multinational has highlighted the challenges of offshoring back-office functions, a move that is being increasingly adopted by international law firms and businesses.
Alexander Rohde, director of operations and communications at Philip Morris International’s law and compliance department, told in-house lawyers at a conference in London last week that offshoring back-office functions for all of the company’s services to Krakow, Manila and Buenos Aires took time to work properly.
Rohde said: ‘People in Poland are less costly than if they are employed in Switzerland. But there are a couple of negatives. There is a geographical difference and a cultural difference. But mainly people are completely disconnected.
‘People who do certain HR functions or finance elements of our payment system… can only execute what they have been told. They don’t know the big picture and that’s the big issue.
‘Managing teams which are not only global but also teams which are cross-functional is not so easy it turned out. It took us quite a while to make that work properly.’
The 230-lawyer law and compliance department has also set up a ‘steering committee’ consisting of associate GCs ‘who look into everything and anything that goes on with outside counsel’ such as fee rate approval, conflict of interest questions and information security.
New guidelines focused on what external firms can and cannot invoice for has helped to reduce cost, Rohde said. Invoices above $500,000 are reviewed by a committee member. Rohde acknowledged that the review does not help with that particular invoice, ‘however it alerts you on certain things’.
Measures to reduce cost on the personnel side include replacing departing lawyers with those on lower salary grades and ‘localising’ expatriate posts.