By a Factor of Ten
August 22, 2007 | Filed Under Offshore Services
Many stories on offshore legal services lack hard data. Today, one exception.
Bloomberg reports on the experience of one Chicago company:
Bruce Masterson, chief operating officer of Socrates Media LLC, asked his outside counsel to customize a residential lease for all 50 U.S. states in 2003. The firm’s estimate: about $400,000. He rejected that price tag and hired QuisLex, in Hyderabad, India, which did it for $45,000.
Pangea3 co-CEO David Perla (whom we interviewed here) notes the two options available:
“Some firms are coming to us because in-house clients suggested it or pressured them,” Perla said. “Others want to come to the client first and offer a solution.”
I’d suggest that the proactive approach is better in the long run.
Excellent reporting from Bloomberg, who is trying to break the Thomson/West–Lexis/Nexis hammerlock on providing premium legal information services.
Offshoring: Take the Fifth
June 14, 2007 | Filed Under Offshore Services
The Economic Times of India provides an update on legal work being done in India. And it’s going upmarket.
New York firm Smith Dornan Dehn has established an affiliate in Mysore, India. Over 40 people are working on various projects, including litigation related to the film Borat.
The client list is impressive (including HBO, Sony Pictures Television, Universal Pictures, MTV Networks, and ABC). Here’s a sense of the economic driver from SDD president Russell Smith:
Office space in Mysore is 43 times cheaper than in Manhattan. In New York most legal fees go to real estate. We have eliminated that. We pay $2,000 rent per month for a three storey building in Mysore. For that kind of money we won’t get anything in New York.
And neither in Mumbai or Delhi. Also, Mysore is over five times cheaper if you consider legal services fees. We charge $30 to $90 per hour compared to $200 to $700 per hour in the US.
A one-off or a leading indicator? As Borat would say: “High Five!”
Hat tip: slaw.com.
Outsourcing Moves Up the Value Chain
April 4, 2007 | Filed Under Offshore Services
Yesterday, auto supplier Delphi announced that it was sending 650 corporate accounting jobs to India’s Genpact to consolidate some of its finance workforce in a more lower-cost (and still high quality) environment.
Today the New York Times looks deeper, noting that the stereotype that outsourcing necessarily involves lower-end “backoffice” jobs is no longer valid:
But that has been changing in recent years, and increasingly the jobs of Western white-collar elites in fields as diverse as investment banking, aircraft engineering and pharmaceutical research have begun flowing to India and a few other developing countries.
Companies such as Boeing, Cisco Systems, Eli Lilly and Morgan Stanley are also growing their presence in India. Perhaps even more relevant for legal services are the activities of a certain well-known professional services firm:
Accenture, the global consulting giant, has its worldwide head of business-process outsourcing in Bangalore; by December it expects to have more employees in India than in the United States.
Those last few words that I’ve bolded really caught my eye.
If you can have jet aircraft designed in India, you can probably find someone to draft the leveraged lease to buy it.
I’ve covered this subject before. I still hear some skepticism in the marketplace as to whether legal services are primed to make the jump in a big way. Some companies I know of see opportunity in moving certain legal work from Manhattan to the Midwest as a first step in lowering transactional costs.
I would suggest that law firms representing blue-chip companies (such as those mentioned above) watch this trend closely. When your clients are moving work offshore, they may ask how you are integrating global sourcing into the service mix.
The answer “Huh?” may not be a relationship-extending one.
The World DuPont Model
September 11, 2006 | Filed Under Law Firm Trends, Offshore Services
BusinessWeek profiles the moves of DuPont to take more legal work offshore, in this case with OfficeTiger. Here’s some interesting quotes by the numbers:
– “By going offshore, DuPont aims to save 40% to 60% on document work and cut up to $6 million from its annual $200 million-plus in legal spending.”
– “If DuPont does well with this, you will find other companies taking a good look,” says Bradford W. Hildebrandt, chairman of the legal consulting firm Hildebrandt International Inc., which estimates U.S. firms can save 25% to 35% by farming legal work to Asia.
– “For OfficeTiger, success could mean a surge in business. By the end of 2007, [they predict the] Asian legal team could reach 1,000 with several hundred lawyers.
The entire article is worth a read. Some have been thinking this offshore trend was always years away. Certain (most?) law firms might prefer to ignore the news; forward-thinking firms would be wise to consider how they can be involved in developing higher value solutions for their clients.
If they don’t, someone else will…
Once companies get comfortable with document and discovery related services, you can bet they will start moving up the offshore chain.
A tip of the Wired GC cap to DuPont for making a move that many Fortune 500 GCs are probably thinking about, but up until now have settled for “… you go first.”
Here’s a summary for the visual types among us:
MOTO LEGL
November 16, 2005 | Filed Under Offshore Services, Managing
UK publication The Lawyer has an interesting profile of Motorola’s legal department and its GC, Peter Lawson.
The article puts in concrete terms the staffing and budget constraints a GC faces on a daily basis.
While Motorola quarterly earnings are at record levels, since 2000 the legal department is apparently half the size it was then. Total legal spending and the number of outside firms used are also down by half.
Motorola has also decreased sharply the spending on pursuing and maintaining its IP portfolio. One of the tools is employing Indian firms for some of the early-stage work.
Mr. Lawson puts complex issues into a clear focus:
“Like any commercial business, we’re under a lot of pressure to reduce costs,” Lawson states matter-of-factly.
Tomorrow, a brief lesson for managing partners who want their firms to continue to make the cut.
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