The trajectories of large corporate clients and major law firms shows increasing divergence:
1. Large Corporate Client–Microsoft. News broke today that the software giant sealed an outsourcing deal wiith LPO firm CPA Global. Microsoft has been active in outsourcing legal work to India for some time. This follows on the actions of mining company Rio Tinto with CPA Global (the latter who this week hired Rio Tinto managing attorney Leah Cooper).
2. Major Law Firms–Take Your Pick. Just yesterday, the news started to break that a number of large law firms are reporting higher profits. Some show a growth in revenue, most cut headcount (including partners).
This pop in profits for many large law firms may not be indicative of long-term trends. Stock market fans might say we are seeing a secular uptick in what is a long-term bear market in legal work from major corporate clients.
Microsoft isn’t just converging work from 20 large law firms to two. As legal outsourcing work moves from process and discovery to product and transactions, it is gone forever. So as more of this happens in 2010, 2011 is looming as a real shakeout year, when increasing client cost control measures (in-source, out-source, and re-source) hits the mainstream.
(I follow only a handful of people on Twitter, Ron Friedmann and Jordan Furlong are in this group, and both have insightful things to say on this.)
By 2011, the Am Law 200 may more closely resemble America’s Top 40.
