One thing about new sourcing solutions for corporate legal services–the spotlight is on.
Two days ago I wrote about the unbundling of corporate legal services. Since then, two fellow law.com network members continue their excellent coverage of this emerging story.
Yesterday afternoon, Bruce MacEwen raised a bit of a cautionary flag, wondering whether the outsourcing hype is getting a bit ahead of itself. He links to an excellent article in asialaw where he is quoted (look for the highlighting).
Then yesterday evening, Ron Friedmann notes (via Gerry Riskin) news of Orrick’s plans to offer back-office services to other firms from its West Virginia facilities.
So who is right? Time will tell; maybe all of us.
Some large firms seem to think (hope?) legal outsourcing won’t work in the long run. This is what I call the “corporate law is different” crowd.
When I recall the thoughts of Laura Owen of Cisco I am still intrigued by her point #3 that work moving to lower-cost providers could involve moving work from mega-firms in money-center locations (say NYC or LA) to large firms in less-tony regional locations. Bruce makes this point well in the asialaw article.
The danger for any AM Law 100 firms who may have their heads a bit in the sand: what is the difference to you if the work goes to a regional firm in Detroit, a lawyer in India or a web application on a server in Pago Pago?
When it goes, there’s a good chance it ain’t coming back.
Bruce quotes this survey of GCs by the ACC; items 5 and 6 show only 1.8% of those surveyed have gone offshore for services and 8% may do so in the coming year. While this may not yet be “serious traction,” 1.8% to even 4% would be more than a 100% increase.
Put in economic terms, take the gross billings of the AM Law 100 (Bruce has done the math for us for 2004): $46 billion. Take 2.5% of this and you have over $1 billion. And that’s just for the Am Law 100, not the 500 or 1,000.
Somewhere in all these large numbers is a starting point for an attractive business.
I do agree with Bruce that those who are doing corporate legal outsourcing may not be talking. There are solid strategic and political reasons for this.
This may be a tortoise-and-hare thing. But we know who to bet on, don’t we?