Outsourcing; you might have heard of it. It’s the trend whereby law firms send high man hours/low brain effort work overseas to workers who can complete the tasks at a fraction of the cost. Clients love it, consultants are pushing it, and law firms are struggling to add this new efficiency opportunity into their overall business model.
Well, not all law firms. Peter Kalis, managing partner of K&L Gates, gave a quote to the Legal Intelligencer where he called outsourcing “a gnat in an elephant’s ear.” Evidently, K&L Gates is the elephant, LPO’s are the gnats, and I’m not sure who the clients are supposed to be. Perhaps Peter “Aesop” Kalis can let us know in a future fable.
It’s not that Kalis has his head in the sand when it comes to cost savings that can be generated by moving work out of places like New York and Washington. It’s just that in his world he doesn’t view Mumbai as all that different from Pittsburgh.
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Maybe he’s right about that?
First, let’s look at Kalis’s money quote:
“I wish LPOs nothing but the best, but they are a gnat in an elephant’s ear when it comes to K&L Gates,” the firm’s chairman, Peter Kalis, said. There is more talk than action when it comes to LPOs, not only from the media, client community and LPOs themselves, but from major law firms whose overhead is “grotesquely swollen” because the bulk of their lawyers are in New York or London, he said.
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Yeah, former K&L Gates attorneys know all too well what Kalis does to grotesquely swollen overhead. But hey, his strategy works. Remember how excited Kalis and co. were at the begining of this year?
What’s really interesting about Kalis’s statements is his own philosophy of how to achieve the potential cost savings of outsourcing work:
“If you, within your platform as a law firm, can localize a lot of back office services and more routine-type services for clients in low-cost venues, you can achieve the same sort of outcome without risking attorney-client privilege, without worrying about transporting certain IP across national lines … and without having the long-distance management problems that always characterize those sorts of relationships,” Kalis said.
I get it. You don’t need to deal with any foreign legal work when you can put some of your client service capabilities in Pittsburgh, Harrisburg, and Newark.
So while it’s nice to hear a managing partner extol the values of good ‘ol American legal work, it’s not like Kalis is white knight for the associate opportunities (and salaries) of just a few years ago. K&L Gates will be looking to find low cost alternatives for entry level and menial client service work, just like everybody else.
But it’ll be trying to get that work done in the U.S.A. That will probably mean good jobs for somebody, just not recent law graduates carrying around six figures worth of debt.
Law Firms Feel Pressure From New Breed of Competitors [Legal Intelligencer]
K&L Gates Chairman Sees Outsourcing as ‘Gnat in an Elephant’s Ear’ [ABA Journal]