More major corporates are likely to hive off parts of their legal function, according to a solicitor who acted for telecoms giant BT in its legal outsourcing project.

International firm DWF this year won a five-year contract to become a ‘strategic legal partner’ of BT. DWF will provide insurance and real estate services, and staff from BT’s in-house claims and corporate property teams will transfer to DWF’s managed services practice. Over 40 BT employees are ‘in scope’ to transfer to DWF and would become DWF employees.

Public and commercial law specialist Sharpe Pritchard, which advised Thames Water on its legal services outsourcing, acted for BT.

Justin Mendelle, Sharpe Pritchard’s head of construction, told the Gazette that the London firm advised BT on what the commercial model was, the legal structure that BT wanted, the business means of achieving service delivery, and developing the strategy before the procurement began.

Mendelle said the move could pave the way for other major corporates to explore doing something similar.

The workstreams that have been outsourced, and associated spend, are significant, he said. ‘For those looking to dip their toes in the water or take a more staggered approach, looking at particular workstreams, they can quite easily be separated out. They need to be self-contained.’

Benefits include potential economic efficiencies, as standard and complex work is handled by the outsourced partner.

Mendelle also acknowledged risks: ‘The work is going to an external firm so, in that sense, there is less control, along with the personnel issues that come with transferring people to an external organisation. By virtue of being external, an outside firm may not have the full picture and clear understanding of all of the drivers within the organisation that the in-house team has access to.’

Even if more businesses outsource parts of their legal function, Mendelle says in-house teams are ‘big operators’, observing that their prestige has increased over the past decade ‘and it seems a much more demanding position to be in now’.