Friday, August 31, 2007
Monday, August 27, 2007
Clients are pushing law firms like Jones Day and Kirkland & Ellis to send basic legal tasks to India, where lawyers tag documents and investigate takeover targets for as little as $20 an hour.
"The objective is to have only the most valuable people in London or New York, and the others in India, China or Columbus, Ohio,'' said Robert Profusek, co-head of the mergers and acquisitions practice at Jones Day in New York, who sends low-end work to the cheapest locations and plans to open a document center in India. "Lawyers are service providers. We are not gods.''
General Electric Co. sends about $3 million a year in routine legal work to its Indian affiliate, said Janine Dascenzo, the Fairfield, Connecticut-based company's managing counsel for legal operations.
"India has very talented lawyers,'' she said. "But it's a misconception that you can just send work there and it gets done. You need proper supervision and security.''
Kirkland & Ellis, the seventh-largest U.S. law firm, works with offshore attorneys at the client's request, said Gregg Kirchhoefer, a senior partner in the firm's outsourcing and technology transaction practice.
"I'm not an advocate of offshoring legal services, but having worked in this area for so long, I understand the value of the model,'' he said. Typically, clients hire a provider and Chicago-based Kirkland helps manage the attorneys, Kirchhoefer said.
Armed with the knowledge of how little law firms might pay for offshore work, corporations can use the threat of cutting them out and sending legal tasks overseas on their own to force law firms to reduce fees.
Corporates first, then corporate directed law firms, and then law firms themselves. Small attorney firms all along. That, in two sentences is what I hypothesized the offshoring of legal services will be, and I am glad that is being ratified to a reasonable degree.
The conference is aimed at in-house and outside counsel, law firm executives, general counsel, and chief operating officers of corporate legal departments and aims to provide insight into the multi-dimensional practices of outsourcing legal work and support services.
Interested East Coast readers may also want to read my post on LPO Summit 2008.
Thursday, August 16, 2007
The two day conference promises to cover a breadth of topic including future LPO trends, drivers for outsourcing, value proposition, modus operandi, potential pitfalls etc. There would also be a workshop walking the participants through all the steps from thinking about LPO to benefitting from it or as Kubler-Ross would put it, from denial to acceptance (only in the most positive sense!).
For further information, contact Ms. Rupande Mehta (r [dot] mehta [at] americanconference [dot] com) or 212-352-3220 ext. 482
Watch this space for more on the Summit!
Wednesday, August 15, 2007
After investing in a wine company, Jaithirth (Jerry) Rao, non-executive chairman of MphasiS, has set sights on a legal processing firm (LPO), incidentally in which his son is an active member.
Jerry Rao has become an angel investor in a company called JuriMatrix, based in Bangalore and according to industry information, it is in the process of raising $12 million from a few of venture capital funds.
Perhaps, having the older Mr. Rao around also lead to inerest from known names ...
Rajat Gupta, former MD of McKinsey and Hema Ravichandar former HR head of Infosys are advisors to the firm.
Papa don't preach, just invest and bring your friends!
Tuesday, August 14, 2007
Thursday, August 09, 2007
Sony Pictures had to prepare an ‘opinion letter’ (outlining the activity and the risks involved) for insurance firms in order to secure cover for shooting a movie, and the movie’s fate hinged on the letter and the cover.
Preparing the letter was a 400-man hour job which would have cost $250,000 to get done in the US and Sony gave it a second thought. Eventually, the job was done in India for $43,000.
In comes Stratify, which has developed proprietary software, eDiscovery, which has automated document search and collection and tracks production of legal documents, a soft of product lifestyle management for law firms.
Stratify helps do away with many of the labour-intensive legal research processes and crashes time and effort needed to collect documents and communication relating to a particular case.
“We help reduce costs, errors and timelines,” said Ramana Venkata, President and CEO, Stratify, funded by the VC arm of the CIA In-Q-Tel, Intel Capital and Mobius VC. It plans to invest $10 million over three years in organic growth and much more in inorganic growth.
I am glad to see my hypothesis that 'LPO growth can be rather fast (in fact phenomenal) if LPO vendors embrace Legal Tech more aggressively' seeing some proof albeit the other way round (legal tech companies embracing LPO!). I think developing and leveraging technology not only lowers costs, betters turn around times but also lends a notion of measurability to the offshored process. And that can make a big difference in a prospect's mind. After all, a vendor using tech can quote Peter Drucker, "If you can't measure it, you can't manage it!" to say they can manage it!
Integreon released this press note on the findings of the fourth annual “Black Book of Outsourcing,” the Brown-Wilson Group's prestigious annual survey of outsourcing vendors and advisors.
Results published in the survey were compiled using information received from more than 22,000 global outsourcing users, decision-makers, analysts, employees and customers.
At the face of it, 22,000 would seem like a very reasonable number for a survey and results would seem worth their salt. But, things start to make little sense when one reviews the vendors being asked about in the survey from the participants - the list contains some of the mammoth IT services companies including EDS, CapGemini, IBM, SAP, CSC, Accenture, the Indian bunch of Infosys, TCS, Wipro, Satyam, HCL and so on and on!
Ah, you say - so how many of those 22,000 were actually LPO users? Well, its anybody's guess!
Anyway, here are the LPO-relevant rankings:
It is normal to seek salt while you re-read the pieces!
Wednesday, August 08, 2007
Beyond the Back Office:How Legal Services KPOs Are Moving Further Into High-End Work
SDD Global's presentation will touch on such areas as:
-- Debunking the myth that LPO means the handlingof only commoditized, routine functions that do not require legal knowledge or talent.
-- Showing how legal services offshoring companies are attracting corporate clients instead of only law firms, starting a global paradigm shift in the delivery model for legal services.
-- Discussing how an affiliation with a Western law firm can propel legal services offshoring tohigher levels on the value chain.
-- The real truth about the percentage of legal work that can be offshored to India (most of it!).
Other presentations will include:
What is and is not considered LPO, The advantages and disadvantages, Case Studies
o Murali Neelakantan, Partner, Arnold & Porter (UK) LLP
Success factors from the US/UK point of view
o Ganesh Natarajan, President & CEO, Mindcrest
User's perspective decision making drivers for customers and why we are able to address those drivers here in India
o Matthew Banks, Senior VP, Global Legal Services, Integreon
More details on the conference are available at http://ms.timesofindia.com/ads/consilience/index.html.
Monday, August 06, 2007
Earlier post from May '06
A recent Economic Times news item titled, 'LPOs here head for consolidation' talks about the consolidation in the space - something that has been on the grapevine for a while now.
1. Presently, the sector sees little high-end work as most Indian LPO companies restrict themselves to areas like accounting, document management, agreement formatting and other secretarial services - (Hey, accounting, document management, agreement formatting aren't LPO services - they are secretarial services - and are, ofcourse, not high-end)
2. There are a little over 100 companies in the LPO space but only a handful are actually influencing intelligent decisions - (I agree with the nature of work many self styled LPO companies are doing, but not necessarily the number. I mean 100 sounds a little too high, that is when my own list includes tiny players too)
Add to the above list, recruiting trouble, lack of any location being very ideal, uncontrolled wages and hikes, training challenges fuelled by inexperience, and the herculean task of selling outsourced legal servicesThe Opportunity
1. Despite challenges in the industry, the opportunity is estimated at $200 bn for the US alone, not considering the equally high-potential European market. India is likely to receive 60% of around 40,000 legal jobs outsourced by the US by ‘10.
2. “The revenues to be generated by such Indian companies will be approximately $56m during July ‘05-July-’06”
I agree with the immense potential, especially for Intellectual Property work from the European region to get outsourced - the firms currently serving that market are way too expensiveSo, given the drivers and the opportunity, sure consolidation will happen, but not sure if this is the right time. Even if some level of buying out et al happens, it won't be for mouth-watering sums, why should they be, the industry is too nascent still.
Allowing foreign firms to set up shops locally may trigger this, but no one knows when is it happening. The lawyer lobby is way too strong to allow that to happen any time soon.
So, consolidation - we'll will be watching you!
Two committees of the Florida Bar have taken notice of the practice and have decided, so far, that legal outsourcing is acceptable under certain conditions. Reviewing documents, for example, is fine, but the Indian lawyers — who are licensed to practice law in India but not in Florida — are not permitted to give legal advice directly to clients here, says Lori Holcomb, director of the Florida Bar’s unlicensed practice of law department
Here's the piece on the ABA opinion. Some snippets:
The opinions maintain that foreign legal outsourcing should be subject to the same ethical requirements as domestic use of nonlawyer services, in particular targeting the following functions for the U.S. lawyer: Supervise the foreign lawyer’s work, preserve client confidences, avoid conflicts of interest, generally bill only for the direct cost of outsourcing, and obtain advance client consent in certain circumstances.
Foreign legal outsourcing “will expand exponentially because of discovery costs,” agrees Robert R. Simpson, Hartford, CT, Cochair of the Section’s Corporate Counsel Committee. He cites the new federal civil rules on electronic discovery and “sophisticated clients who see legal outsourcing as one vehicle to consider in keeping costs down” as driving demand for outsourcing. Law simply may be “a step behind the curve” of businesses that have set up call centers and technical support abroad, he notes.
Quality may be an issue now, but “as the services offering foreign legal outsourcing become more sophisticated and experienced, people will begin using them for more subjective functions,” predicts Simpson. He agrees, however, that law may be less readily amenable than other businesses to foreign outsourcing because of the “additional level of supervision that is required by lawyers. Lawyers are often poor managers. ‘Out of sight, out of mind’ is the problem. It is hard enough to manage people in your department,” he says.
Sunday, August 05, 2007
Since most people fear change and the unknown, this could be a daunting choice. But interestingly, all law firms are LPOs. Traditional India-based law firms outsource Indian legal services to Indian or overseas clients who prefer not to handle their Indian legal matters internally within their organisations. What people call LPO today simply refers to companies that provide legal services to corporate clients and overseas law firms (mainly in the US and Europe) about legal matters that do not relate to India. The irony is that both are technically “legal process outsourcers”; it is just that the term LPO has come to refer only to the latter.
He then lists some advantages of working for LPO companies versus traditional law firms:
- Diversity of work exposure
- Training in LPO
- Growth for those not sons and daughters of promoters!
For any hope on working for foreign law firms, when[ever] they [are allowed to] setup shop in India, see this post from Mark Ross'. It ain't happening anytime soon though, I think - Lawyers are a strong lobby.