Biglaw, Outsourcing

Outsourcing: It’s Not Just About the Money

It’s been a while since we checked in with the coming junior associate apocalypse that is legal outsourcing. Rest assured, LPOs around the globe are working hard to make sure that the Biglaw junior associate becomes extinct — at least as we know it.

There’s a fascinating article on Law21 that discusses the evolution of legal process outsourcing — and what LPOs need to do next:

Still in its relative infancy, legal process outsourcing has already had a huge impact on the legal services marketplace: scoring major deals with the likes of Microsoft and Rio Tinto, garnering the attention of private-equity investors, and helping to expose the degree to which law firms have overcharged for the simplest legal work, among other accomplishments. But this impact has set off two important chains of events.

The first affects LPOs themselves: they now need to move their value proposition beyond cost savings in a market they helped to make more sophisticated. The second affects everyone: the legal profession’s response to LPO is having an unexpected effect on how legal work is distributed and how legal resources are allocated.

Some law firms still seem to be fighting the last war and are committed to fending off outsourcing until the bitter end. But other firms are preparing themselves for the next war: remaining the primary legal advisor to their clients in a world where the clients themselves can go to a number of providers to get the work done…

The point of the Law21 article is that LPOs have to continue to innovate because law firms, at least the smart ones, won’t sit around and allow LPOs direct access to clients:

If I were an LPO, I’d be nervous every time I read about a law firm that provided secondments, gave legal project management training, managed its workflow, unbundled its services, used decision trees, or even employed Lean Six Sigma, because it means they’re starting to adopt some of my stock in trade. The critical battleground in the legal services marketplace is not price, but innovation: inventing and implementing more efficient and effective ways to carry out legal work. That’s a tougher and far more important assignment than simply lowering the cost of associate work, and whoever figures it out first and best could, like Toyota and Sony, dominate this market. LPOs are in a strong position to compete in this race, but they’re not the only contestants.

The second development emerging from LPO’s appearance is that a surprising number of law firms are adopting — and adapting — the outsourcing model themselves. They’re figuring out that the important question isn’t which type of provider (law firm, LPO, whoever) gets to do what kinds of legal work; the question that matters is who will serve as the primary liaison to the client and direct the allocation and assignment of legal work.

So, law firms are fighting back against the outsourcing trend using classic “if you can’t beat ‘em, join ‘em” techniques? That makes sense; they’ve got to try something to maintain their “valued counsel” status.

But where does this leave junior associates? Juniors don’t have enough experience to “quarterback” legal services for their billion dollar clients, yet they’re too expensive to provide raw manpower in a cost-effective way for those clients.

As with all outsourcing discussions: juniors are left, in a word, f****d. The “smart firms” aren’t trying to make their juniors become as cost-efficient as LPOs; those firms are trying to show an ability to direct the appropriate grunt work to LPOs — the very same grunt work that used to keep armies of junior associates very busy.

You have to wonder what law schools will charge once law grads have to move to India in order to get a start on their careers.

The evolution of outsourcing [Law21]

Earlier: Prior ATL coverage of Outsourcing

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