Can South Africa Challenge India as the LPO Destination of Choice?

I blogged a couple of weeks back on Magic Circle firm Evershed’s report, Law Firm of the 21st Century. Although the report itself makes no overt reference to legal process outsourcing and offshoring, the firm itself has clearly been proactive in instigating what is to all intents and purposes an LPO relationship with a South African law firm.

Legalweek.com reported on Thursday that Eversheds is set to outsource legal work to its new South African ally Routledge Modise. According to the article,

"Eversheds has pinpointed the firm as an especially lucrative partner because, in addition to the low cost-base, the country has a similar legal system and native English-speaking lawyers."

Click here for the full article.

While we’re on the South African theme, I noticed that on June 5, my former senior partner from Underwoods Solicitors, Kerry Underwood chaired a seminar program for the South African High Commission on legal process outsourcing to South Africa. The event was apparently a great success with representatives from several FTSE 100 companies in attendance. Click here for a pdf of the conference agenda.

My own interest in legal process outsourcing was of course initially fostered while practicing at Underwoods under Kerry’s guidance. South Africa has certain advantages over India; not least that for U.K. law firms there is only a one hour time difference. In terms of a cost comparison between the countries however, India’s talent pool is still considerably cheaper. Given that the quality to a certain extent is dependent on the level of U.S. and/or U.K. involvement, and that cost remains the ultimate driver, whether South Africa can mount a realistic challenge to India, as the LPO destination of choice, remains in my opinion unlikely.

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IAOP's 2nd Legal Outsourcing Chapter Webinar Announced

The Legal Outsourcing Chapter is hosting its second webinar on July 16, at 11am EDT.

The topic for the webinar will be Legal Outsourcing: A Practical Perspective. For anyone interested in attending the webinar, please feel free to contact me. The agenda follows below:

Chair's Introduction

I'll be providing a brief introduction of the expert panelists. Following my recent gripe about repetition and the lack of "real-life" cases studies in several LPO conferences to date the intention is to provide attendees with an opportunity to delve beyond the rhetoric and obtain a practical understanding of where the legal outsourcing industry currently stands. Case studies from Legal Process Outsourcing "buyers" and "providers" will hopefully offer the insight I feel has been lacking on some conference panels to date.

Market Overview

Arun Jethlamani and Neeraja Kandala from leading independent research company ValueNotes, the "Go-To" source for information on the Indian legal process outsourcing sector, are the webinar's first expert panelists. Based on their in-depth research of the market the ValueNotes team will provide insight on the two major legal functions, "Document Review", and "Patent Support", currently accounting for the majority of offshore legal outsourcing deals.

Document Review Case Study:

Assistant General Counsel for Sun Microsystems, Connie Brenton will provide the webinar's first in-depth case study dealing with Sun's decision to "offshore" a large-scale document review project, the search for a provider, the RFP process and Sun's analysis of the project's outcome.

Patent Support Case Study:

U.S. Attorney, and LawScribe Vice President of Intellectual Property, Anthony DeJohn will then present the webinar's second client case study. This will relate specifically to a leading technology company's decision to outsource offshore all their patent searching activities. The case study will include an examination of the practical requirements incumbent on the client corporation to ensure full compliance with the U.S. Export Control Regulations as they impact on the export of technological information.

Panelist Q & A

Following the case studies there will be time for Q and A with the panel speakers.

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Law Firm of the 21st Century

U.K. magic circle firm Eversheds recently released a report entitled Law firm of the 21st century. Eversheds commissioned RSG Consulting to research and prepare a report into how the legal profession will look ten years from now. In his introduction to the report, David Gray, the firm’s Chief Executive remarks that the results are enlightening and sometimes unexpected. While I found the report an interesting read I don’t entirely concur. Those interviewed included partners from the world’s 25 largest international law firms (by turnover). Providing the clients’ perspective were General Counsel, Legal Directors and Finance Directors from leading corporations and investment banks. The report’s findings are on the whole predictable if on occasion somewhat illuminating.

Although LPO advocates may on a first glance feel a touch disillusioned at the omission of any specific reference to India, Outsourcing or Offshoring, if one delves beneath the surface it is clear that the drivers fanning the flames of legal process outsourcing are well and truly acknowledged. While none of the aforementioned buzzwords appeared within the text what I did find were repeated references to the drivers of the legal process outsourcing industry, namely, cost control, globalization and legal services commoditization.

There appears to be an intriguing divergence of opinion on the issue of costs. Only 21% of law firm partners believed that providing better value for money and justifying their costs would present a challenge in the decade to come. Well if the partners aren’t worried then we can all pack our bags and go home! Hang on just a second that might be the case if the partners paid their own bills. Well over half of the clients surveyed (57%) identified controlling legal costs and achieving value for money as the major challenge. One anonymous client (someone clearly after my own heart) is quoted as saying that law firms need to “wake up and smell the roses. The demands they have made in terms of their fees are simply enormous and it can’t go on inevitably”. I think he meant to say “indefinitely” but we all get the general gist.

Congruence of opinion was apparent on the issue of commoditization and standardization being important trends affecting the legal profession generally. Most partners and clients agreed on this issue but felt that this was for “bread and butter” routine legal work. Unless I’m unaware of some of the subtle nuances of first pass document review work I would place this peg firmly in the whole of “bread and butter” legal work. We’ve all read this figure many times over now, but I’ll reference it once again – KPMG estimates that such work accounts for between 58-90% of the total cost of litigation in the U.S. That’s one hell of a chunk of legal work in the process of being commoditized, standardized and suitable for LPO.

For those readers who are interested in reading the whole report click here.

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