Outsource routine lawyering

It’s been a long time coming, but someone has finally seen the sense in outsourcing not just support functions but more routine legal work. Rio Tinto are parceling up their more everyday lawyering to an outfit called CPA Global in India:

It works like this: Rio Tinto is building a team of CPA lawyers in India who will operate, effectively, as an extension to its in-house legal department. That will free Rio Tinto lawyers to focus on more complex tasks. More ambitiously, on all assignments involving external law firms, Rio Tinto will ask these firms to pass tasks that can be done by lower cost lawyers to CPA people in India and elsewhere. [Source: The Times]

As Prof. Susskind (specialist subject: “the Future of Law”, or at least the future of legal practice) notes, the system already demonstrably works: “A team of 50 CPA lawyers was assembled in under 48 hours to work with a US law firm on a document review for the Federal Trade Commission. This yielded savings of $1 million (£600,000).” Ouch. Scale that up and you are looking at a lot of lost revenue for the big firms.

Now as I have never had the pleasure of working for one of the huge shops, I’ve only looked at their business model from the outside, so take what I say with a pinch of the proverbial. While I can see the financial sense of it (to them), it’s long struck me as a bit odd that clients didn’t see that there were cheaper and better ways of getting much of the work done, though I put it down to a combination of the old boy network (albeit in its modernised form) and the ‘never get shot for using IBM’ mentality. The sort of work I do is fairly ‘partner-intensive’ and therefore there is limited scope for having armies of assistants ploughing through vast amounts of paperwork (which is in any event pretty easy to deal with now with the help of electronic tools). It is also more intellectually stimulating, which is, of course, part of the reason why some of us get into the job in the first place. But I’ve little doubt that an awful lot of transactional work and even some aspects of contentious work could be handled relatively easily by less specialist, less expensive people elsewhere.

Susskind is correct, of course, to point out the step-change here: the impetus comes from the clients, not the law firms. While there has been a certain amount of tinkering from the firms in sending back-office functions offshore, that has really been aimed at saving money for the firms, money which then goes straight to the equity partners, for pensions or Bentleys as the case may be. Here, the clients are demanding–and getting–an overall reduction in costs and requiring that their law firm ‘partners’ accept that they are going to be bearing the cost of that themselves.

Novel? Not really in the wider global economy, but perhaps new in the legal world.

Generally, the puritan in me thinks this is a Good Thing for lawyers and for the profession generally. I like things done efficiently–doing them inefficiently, and thereby making more money, has always struck me as Not a Good Thing.