You are only Jong 1200 times

By | 9th July 2010
I make no apology for returning once again to the subject of Legal Process Outsourcing or LPO as it is colloquially known. The phenomenon is also known as Legal Services Outsourcing or LSO, making both sound like performances from the Royal Albert Hall rather than the relatively new process of instructing foreign lawyers to carry out legal tasks in a different country for a fraction of the price you would pay in this country.

LPO/LSO appears to be pretty high on the agenda of managing partners of law firms and others at present, presumably because the notion that you can use lawyers offshore to carry out tasks for a fraction of the cost of your own lawyers within the jurisdiction is irresistible in these straitened times. I am not sure what the army of paralegals and others who would have been engaged on the various tasks in this country think about it; they are surely going to be out of work if outsourcing increases, but for present purposes, I propose to leave consideration of that aspect of LPOs to one side.

LPOs operate from a number of hubs around the world. India appears to be the favourite hub at present doubtless because most outsourcing is done by lawyers and organisations whose mother tongue is English and India contains a high proportion of native English speakers or at least those whose command of the language is at the higher end of the scale. Also, insofar as we are talking about legal work being done by Indian lawyers, it is a considerable advantage that the legal system in India is based on the English system.

Other hubs exist in Japan, France, South Korea, Australia and South Africa. Coming up on the rails are China and Sri Lanka, although China will have to train more of its millions to speak a higher level of English and will have to review its internet policies before it can rival India.

CPA Global’s deal with Rio Tinto last year which resulted in General Counsel Leah Cooper moving from the mining company to CPA after effecting a 20% reduction in the company’s legal bills, stands out as one of the more successful pieces of outsourcing. Other companies come into the frame such as Pangea 3 and United Lex to whom BT outsourced its commercial contracting and anti-trust regulation work.

But the largest deal to date has been won by Integreon who are reported to have signed a whopping $852m deal over 10 years with CMS Cameron McKenna, covering marketing, accounting, HR, training and IT. Integreon also claim that they undertake work for 32 of the 50 biggest law firms including Clifford Chance, Allen & Overy, DLA Piper and some of the world’s largest organisations.

Investors are falling over themselves to get a slice of the action. India is investing heavily in infrastructure and IT as well as in training lawyers and ensuring their people speak a high quality level of English. It will be fascinating to see what the Chinese in particular make of all this. There is already a nascent LPO industry in that country and reports suggest that the Government in Beijing is intent on training 200 million and more Chinese to speak English fluently. Evidently, they cannot bear to see their great rivals India walk off with the prize but there is a long way to go before outsourcing to China will feel as comfortable as it does to India, not least because of their highly publicised censorship and control of the internet.

We have seen many instances of outsourcing in relation to legal review recently. The experience has been a bit of a curate’s egg, to be frank, as can be seen from my previous post. [Technophobia alive and well and living offshore, 2nd July, 2010] 

Nonetheless there are some impressive instances of successful outsourcing out there and if even a small proportion of the deals which have hit the headlines prove successful for the participants, outsourcing will have become a truly global phenomenon.

It is always easy to nitpick about new initiatives and this is something which should be avoided if possible. I am, however, interested to learn how those who have been involved in outsourcing or those who are thinking about it have been able to reconcile the problems which undoubtedly exist. Surely, it cannot all be about money, can it?

If you accept that you are going to go for outsourcing of, say, legal review, there are obviously a number of issues you have to overcome. I do not pretend that the list is exhaustive, but questions will surely include:

  • How you choose an outsourcing company.
  • Does its location matter?
  • Will it have sufficient resources.
  • Is a different time zone a problem? India goes to bed as America wakes!
  • Data Security.
  • Adherence to quality standards.
  • Cost
  • Confidentiality.
  • Quality control.
  • Liability of service providers.
  • Lawyer/client privilege.
  • Language abilities (English)
  • Training of lawyers carrying out the review. Will they have enough training to be able to grasp complicated concepts and the needs of the outsourcers to make the process worth while.
  • What happens if, despite best endeavours, the work is less well done than hoped for so that the work effectively has to be done again in the country of origin at higher cost and involving a considerable waste of time?
  • Lawyers at the other end may not be subject to the same professional regulations or ethical standards.

None of this is intended to suggest that the issues cannot be resolved. After all, US $582 million ought not to be wrong, although the credit crunch and the banking crisis may be examples of how wrong one can be!

However, they are matters which need to be considered, and as reflected in my last post, outsourcing should not be viewed as a universal panacea for problems of cost and resource. I do not seek to comment on issues such as HR and marketing but in relation to legal review there will be circumstances, and personally I will be surprised it this is not more often the case than not, when an efficient application of the technology here in the UK coupled with a review based on the results of that application will deliver a better and more reliable result at less cost.

Currently I am preparing a short questionnaire on legal outsourcing which will be emailed to selected recipients canvassing their views. The carrot is that the questionnaire will be short (no more than 6 questions), easy to complete and I propose to offer lunch on me for the best reply (judged by me)!

That said, if there is anyone out there with an interest in the subject who would like to be included in the mini survey please let me know. You can add a comment at the foot of the post or you can contact me via the contact form on our website.

Talking of India and China, I read an article in The Economist recently on the issue of title inflation. [Too many chiefs: Inflation in job titles is approaching Weimar levels, June 24th, 2010]  Do you remember when the ratcatcher became the rodent officer? Even if you do not, you will understand the concept of giving people fancy titles to make them feel superior and to deny them a pay rise or similar.

India and China were singled out as countries where there is a longstanding obsession with hierarchies. If you have more than a passing acquaintance with the lonely hearts columns of some Asian newspapers you will know that fancy job titles can be the key to getting a bride, as the article points out.

I had no idea that Southwest Airlines has a chief Twitter officer. Equally, it has passed me by that Coca Cola has a chief blogging officer and that Kodak has one of those as well as a chief listening officer.

The article is full of such splendid monikers as Sanitation Consultants (lavatory cleaners), vision controller of multiplatform and portfolio (our old profligate friend the BBC) and, of course, the Chancellor of the Duchy of Lancaster (sorry Lord Strathclyde).

But the best “title-fluffing” is reserved for the man with no fewer than 1200 official titles, including apparently guardian deity of the planet, lodestar of the 21st century, eternal bosom of hot love and the greatest man who ever lived. Step forward, not the Right Honourable the Baron Mandelson of Foy in the County of Herefordshire and of Hartlepool in the County of Durham, Privy Counsellor and formerly First Secretary of State, now Shadow Secretary of State for Business Innovation and Skills, but our old friend the North Korean dictator and all round monster, Kim Jong IL!!

I do not know whether the burgeoning buildings in Gurgaon, 30 miles outside Delhi and a few miles only from the Indira Gandhi International Airport, are filled with people with fancy titles (The Economist suggests Chief Stationery Officer, Global Multi-Platform Paperclip Interface Ambassador and Lodestar of the Supply Cupboard). I am sure that, as in many organisations, there are some extravagant descriptions applied to a number of (self) important people. Indeed, The Economist reports that the number of members of LinkedIn with the title of “Veep” grew 426% faster than the membership of the site as a whole in 2005-9!

What is important is that we keep an open mind about LPO while never failing to ask the important questions. After all, that is what true consultancy is all about: asking the questions that people forget to ask because they think they are too obvious and then being surprised when the unresolved problems come back to bite them!