One thing about new sourcing solutions for corporate legal services–the spotlight is on.
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).
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?