Outsourcing In-House Lawyers

A trend or a tactic?

Legal Week reports on a potential deal between Thames Water and UK law firm Berwin Leighton Paisner to transfer a significant portion of the former’s in-house legal department to the firm. (The Lawyer has more here).

BLP has formed a managed services group that is focusing on this option. A BLP partner, John Bennett, sees this as a big deal:

“This is a paradigm shift for the legal sector. The project itself is very exciting and a win-win-win situation. The client gets guaranteed performance standards, reduced legal costs, budget certainty and greater focus on its core business. There are also significant benefits for the general counsel and in-house team, as well as for BLP.”

(BLP is apparently seeking talent for this group here).

Legal industry veterans will experience a bit of deja vu, and recall a full-on outsourcing of Continental Bank’s law department to the Mayer Brown firm about 20 years ago. That deal had some one-off attributes and certainly didn’t start a trend (I think the Continental Bank GC became a partner of Mayer Brown, for example).

In this case, 13 out of 20 attorneys at Thames Water would go to BLP. One of the seven remaining lawyers includes GC Joel Hanson, and the sense is this frees him up (and the others staying) to focus on higher-value, strategic counsel.

The Thames Water/BLP arrangement could go from an outlier to a pacesetter. But you really need to understand the staffing model of the law department (and a roughly how it benchmarks headcount-wise against the competition). Also, the business dynamics of the corporate client may require it to consider this approach across other shared services such as finance, HR and IT. This sort of deal has been done with IT groups for years.

Kudos to Thames Water and BLP for exploring different ways to deliver legal services. It’s a reminder that some of time spent focusing on alternative fee arrangements can be used to pull back a bit so the bigger picture can be taken in.