Legal Process Outsourcing

Legal Pressures in 2010

noreply@blogger.com (Gary) — Sat, 05 Dec 2009 15:25:00 +0000

Projections for litigation in 2010 present a daunting picture to corporate counsel struggling with shrinking legal budgets. Fulbright and Jaworski's recent study suggests that 52% of large cap companies will see an increase in matters in 2010, up from 34% in 2009.

During the downturn, it is expected that labor and employment and bankruptcy actions increase. However, it is likely that the current downturn will bring with it new, multifaceted regulation (and accompanying whistle-blowing), leading experts to believe that complex litigation will also grow.

Because of the downturn, companies have sought alternative fee arrangements from their law firms, and many law firms have responded by reducing costs. They have also sought other ways to cut costs, including Legal Process Outsourcing for both litigation-specific and non-litigation matters.

Because of the opportunity to reduce back-office legal costs dramatically, offshoring of certain portions of their legal work has become attractive for companies. Many law firms, wanting to be a part of that "wave," have inked deals to manage such resources. However, law firms do not have a long history or wealth of expertise in managing the process of outsourcing, while many large-cap clients have built-in expertise in their business units, putting them in a position to more effectively manage their outsourcing suppliers.

Thus, it may be wise for a client company to develop its own outsourcing relationships with Legal Process Outsourcing service providers. Aside from the obvious control issues, client companies are likely in a far better position to manage the outsourcing relationship, monitor its performance, and, most importantly, ensure the supplier's compliance with critical company policies.

At LawScribe, we believe that a direct relationship between client company and outsourcing provider can offer the most effective and efficient legal services. We get to know your company, its policies and its concerns, and can help develop an overall strategy to improve legal business processes.

Feel free to contact us to discuss your legal support strategy for the upcoming year. It shaping up to be a doozy!

Managing Partner Releases Implementing a Successful Legal Outsourcing Relationship

noreply@blogger.com (Mark Ross) — Mon, 05 Oct 2009 18:45:00 +0000

Managing Partner has released what I believe is the first comprehensive publication addressing the legal outsourcing profession. Authored by Fronterion Managing Principal, Michael Bell and with contributions from among others, Ron Friedmann (Integreon), David Hickey (Winston & Strawn LLP), and me, the report entitled Implementing a Successful Legal Outsourcing Relationship also includes comprehensive legal process outsourcing case studies featuring leading U.K. law firms and corporations.

The report promises to:

“help legal professionals gain a comprehensive understanding of the industry, recognise new opportunities, discover insight from prominent experts in the field, learn the right questions to ask and then build successful legal outsourcing solutions based on leading industry best practices.”

Case study organizations highlighted in the report include:

Osborne Clarke
Pinsent Masons
ISS UK
MyHomeMove
Underwoods Solicitors

Download the table and contents and introduction.

UK Government Minister Interviewed on Future of the Legal Profession

noreply@blogger.com (Mark Ross) — Thu, 24 Sep 2009 17:13:00 +0000

I highly recommend reading the transcript of the CNBC interview of Lord Bach - Parliamentary Under-Secretary of State, Ministry of Justice.

Lord Bach covers many of the issues I have discussed on this blog numerous times in the past, namely: liberalization of the Indian legal profession; deregulation of U.K. and other common law jurisdictions; introduction of multi-disciplinary practices; access to justice via “Tesco Law” (commoditized legal services); technology and the legal profession; and of course, legal process outsourcing.

Click here for the transcript.

Low Value Personal Injury Claims Ripe for Outsourcing

noreply@blogger.com (Mark Ross) — Thu, 24 Sep 2009 16:48:00 +0000

The UK’s Ministry of Justice confirmed yesterday that a new streamlined claims process has been agreed for road traffic accident (RTA) personal injury claims valued between £1000 and £10,000.

According to the MoJ statement (click here):

“The new process would provide for early notification of claims; promote early admissions of liability and early settlements; and remove duplication of work from the process.”

The original manifestation of fixed fees for personal injury claims came into being on 6th October 2003. Let me digress for a moment and take the opportunity of explaining briefly how the fixed cost system works. Generally speaking, in the U.K., attorneys’ fees are not recoverable from a client’s damages. The fees are recovered from the losing party, in addition to recoverable damages. This somewhat archaic system is referred to as the “indemnity principle”. Following their introduction, fixed costs applied to pre-issue (i.e. cases which had not reached the filing of proceedings) road traffic accident cases (RTAs) where the ultimate value of compensation recovered by the claimant was less than £10,000. The amount of recoverable costs was calculated on the basis of a fixed fee of £800, plus 20% of the damages figure up to £5,000, and 15% of the damages between £5,000 and £10,000. So, if an RTA case was eventually settled for £5,000, the law firm received a £1,800 fixed fee.

The new streamlined claims process imposes a lower overall recoverable costs regime and a defined timetable for the progression of relevant claims. The incessant downward pressure on recoverable costs, together with the tightening of the case continuum timeline, necessitates, in my opinion law firms embracing innovative models for case handling.

The process is divided into three stages, for which fixed recoverable costs (FRC) have been agreed as follows:

For stage 1 (including, broadly: provision of early notification of claims to defendants and insurers; inclusion by the claimant solicitor of all the information the defendant or insurers will need to make a decision on liability; the insurers will have 15 business days to respond. The FRC will be £400.

For stage 2 (medical evidence, offers to settle and negotiation, where liability is admitted, including, broadly: within 15 business days claimant solicitor to confirm medical report as factually accurate, prepare a settlement pack (including any claim for special damages and supporting evidence) and send settlement pack form along with an offer to settle the entire claim to insurer; insurer has 15 business days to accept or reject the offer and make a counter offer, which attracts an extra 20 business days for negotiation) the FRC will be £800 (base costs).

For stage 3 (where quantum cannot be agreed and the court has to determine) the FRC will be £250 for a paper hearing; £500 for an oral hearing.

Under the new system, for a case with quantum agreed at £5000 by the end of stage 2, the fixed recoverable fees would be £1,200. This represents a 33% reduction in recoverable fees in comparison with the existing system. The percentage reduction in fees recovered is more pronounced as the value of the claim increases. At £10,000 under the current system, the recovered fees amount to £2,550.00. If the case settles under the new system by the end of stage 2, the fixed recoverable fee of £1,200 would represent a reduction in excess of 50%.

Where does legal outsourcing come in? With the new system expected to be rolled out in April 2010 it will become counter productive for law firms earning their daily bread running personal injury cases, to conduct these cases utilizing U.K. qualified solicitors, while incurring the overhead associated with housing and employing such individuals. Particularly if one factors in the referral fees, paid by many, road traffic accident firms’ profit margins have been further dramatically slashed overnight. In order to remain competitive, and make a reasonable profit by running such a case load, it is obvious that these cases must be processed as efficiently, quickly and frankly as cheaply (without compromising quality of representation), as humanely possible. Without exploring alternative methods of processing large volumes of such cases, in time, many firms will be unable to survive. The most cost effective approach for law firms is the LPO route. LPO offers claimants’ firms, in effect, a blended model; incorporating the claims management, process reengineering and technological expertise on hand within the outsourcing community, together the requisite legal domain knowledge.

Globalization of the Legal Profession Two Day Symposium

noreply@blogger.com (Mark Ross) — Tue, 01 Sep 2009 16:48:00 +0000

I want to bring to my readers’ attention an extremely noteworthy upcoming event that if not for the imminent arrival of my first child, I would definitely be attending. Harvard Law School, Oxford University, Jindal Global Law School and the American Society of International Law are hosting a joint event, at Magdalen College, Oxford, on September 11-12. The Globalization of the Legal Profession two day symposium follows on from an earlier successful, related event, held at Harvard last November. I have consulted on several occasions with the organizers of these events, and several of the esteemed speakers and I have no doubt that the assembled faculty will ensure a thought provoking debate. For an overview of the event click here.

Speakers include Stephen Denyer (Allen & Overy), Ted Burke (Freshfields), Chris Kenny (Chief Executive, UK Legal Services Board), David Wilkins (Harvard Law School), Richard Susskind (Oxford), and Selvyn Seidel (Burford Advisors LLC).

Click here to access the full conference agenda. Alternatively if anyone wishes to contact me directly for further information, please feel free to do so.

Ohio Rules of Professional Conduct Do Not Prohibit Outsourcing

noreply@blogger.com (Mark Ross) — Fri, 28 Aug 2009 23:53:00 +0000

The Supreme Court of Ohio Board of Commissioners on Grievance and Discipline issued Opinion 2009-6 on August, 16 2009. The Opinion concludes that the Ohio Rules of Professional Conduct do not prohibit an Ohio lawyer from outsourcing legal services domestically or overseas. There is little novel in the Ohio Opinion, however, it does a reasonable job of bringing together some of the key ethical issues raised by earlier Opinions released by the ABA and various State Bar Associations.

The most interesting discussion point that I gleaned pertains to the current modus operandi within law firms of engaging with, and subsequently marking up the cost of domestic based contract attorneys, and the lack of disclosure of this practice to clients. According to the Supreme Court of Ohio the scenario whereby disclosure, consultation and informed consent is not necessary when a law firm engages a contract attorney, is in a situation when for example a sudden illness of an employee requires a temporary replacement who functions as an employee of the law firm. The Opinion states that,

“Outside this narrow circumstance, disclosure, consultation, and consent are the required ethical practice”.

Although the Opinion does not reference the common practice of engaging domestic based contract attorneys for large scale document review projects, as I interpret it, that would not fall within the “narrow circumstance” detailed above.

This appears to somewhat contradict a Legal Blog Watch piece that I recall reading a few weeks ago. The article, A Post About Ethics Rules, Offshoring and Mark-Ups on Contract Attorney Fees was first written back in 2007, but referenced again more recently in the article, Is Marking Up Contract Lawyer Costs Worse When Plaintiffs Lawyers Do It?

The author comments early in the piece:

“As a general matter, virtually every state bar allows lawyers to mark up the cost of legal research and writing services, so long as the overall costs are reasonable. However, firms are not required to disclose the cost differential for legal work performed by U.S. lawyers, whereas disclosure of mark-ups are required for foreign lawyers.”

Stephen Gillers, a Professor of Legal Ethics at New York Univeristy School of Law in Manhattan comments further, stating:

“Law firms can earn more by using labor they can mark up without disclosure,'' said Stephen Gillers, professor of legal ethics at New York University School of Law in Manhattan.”

I appreciate that the Legal Blog Watch articles are dealing specifically with the lack of any requirement to disclose the level of mark up to clients, rather than the very existence of the contracting relationship. However, it isn’t a huge leap to assume that oftentimes, in practice, law firms are also failing to “disclose, consult and obtain consent” as to the very existence of the temporary attorney engagement.

Better, Faster, Cheaper. The Recipe for Law Firm Success!

noreply@blogger.com (Mark Ross) — Thu, 20 Aug 2009 18:52:00 +0000

Law.com’s legal blog watch references a recent article featured in the Canadian Bar Association publication, National.

The article’s author Mitch Kowalski, envisages a hypothetical acceptance speech in 2020, by Canada’s Legal CEO of the year, the fictional Nancy Kwan. Ms. Kwan is CEO of BFC Law Corporation, formerly the law firm of Bowen, Fong & Chandri. She jokes that, “some of our lawyers and staff playfully yet proudly suggest that BFC actually stands for better, faster, cheaper.”

She sums up her company's success as being due to four factors. These include the elimination of the partnership structure, outsourcing, the promotion of knowledge management and fixed fee billing. I want to avoid doing the article any disservice by simply regurgitating what Mitch has so expertly penned, however I will sum up a couple of the main points. I do however highly recommend that you read the entire piece as it is both well written and in my opinion, remarkably on point. To access the full article click here.

Elimination of the partnership structure

BFC eliminated individual ownership rights and created a separate corporate legal entity, with the decision making process in the hands of a board of directors comprised of independent company GCs. These GCs were paid a directors’ fee as well as owning shares in the company itself. Senior lawyers, formerly would be partners, were now Senior Vice Presidents recompensed by an annual salary, bonus, and of course shares in the company.

Outsourcing

BFC identified HR as their biggest expense, and set about minimizing these costs. They unbundled their legal services into separate constituent tasks. Anything routine was outsourced to low-cost legal services providers. Nancy reveals that BFC outsource to India legal research, document preparation and due diligence work. Furthermore, the tasks previously undertaken by the law firm’s night staff, were now outsourced by the company to support staff in the Philippines. In addition to utilizing offshore resources the company also contracts with a pool of “work from home lawyers” domestically.

Law Society Cautions Against Career in Law

noreply@blogger.com (Mark Ross) — Thu, 06 Aug 2009 23:43:00 +0000

The Lawyer.com reported recently (click here for the full article) on the U.K. Law Society’s information campaign targeting law students, warning them off a potential career in the law. According to the article the campaign will target university and secondary school students, and contain information about the cost of legal training as well as the shrinking number of training contracts of offer. The article quotes a Law Society spokesperson as saying:

“We’re not telling people not to be a solicitor, but we are warning them about the risks and cost implications attached.”

On the one hand I applaud the sense of realism demonstrated by the Law Society and the recognition that without putting too fine a point on it, in a legal profession impacted by the forces of globalization and commoditization, there is simply not going to be the need for quite so many lawyers. However, perhaps the Law Society, and here in the U.S., the ABA, would be equally well served in liaising with academic institutions, which are in my opinion, still in large devoid of law school curriculum tailored to meet the requirements of a modern day, fast changing, and global legal environment.

I wrote almost a year ago, in my article Lawyer, Rainmaker, Candlestick Maker:

I believe firmly that there is insufficient emphasis placed on the development of rainmaking skills within the law degree………..Universities must take an increased level of responsibility in helping mould young attorneys so that they are capable of hitting the ground running on day one with an understanding of the requisite qualities necessary to succeed in the business that is law.

The J.D. adopts the Case (a method of studying landmark cases) and Socratic methods (a method of examining students on the reasoning of the court in the cases studied) as its didactic approach. I am not advocating for one moment the removal of this structured form of tuition, however I question whether it alone, ……… is sufficient adequately to prepare young lawyers for the real world. It is all well and good being able to regurgitate case law and to construct a written legal argument, but there are people all around the world who can also do this at a much lower cost and to whom we are now easily connected.

Insufficient time is spent on practical client interviews, networking skills, understanding the business of running a law firm, communication and negotiation techniques. Yes, all newly qualified attorneys are aware of the billing requirements soon to be incumbent upon them, but do they understand why these requirements exist? Are any law students able to learn about alternative billing structures, the history of the hourly rate, fixed fees, fee-capping arrangements and how billing accurately and clearly for the provision of legal services can actually be utilized as a marketing tool in attracting clients? Do any Law courses require their students to prove their mettle within a networking situation? Would it be impossible to replicate a networking event or to send students to such events with a variety of goals to be achieved?

While many of the skills highlighted above are in fact honed over time, that does not diminish their ever-increasing importance and the role that these skills can play in guiding young lawyers’ careers to the top of the ladder. By decreasing the focus on antiquated teaching methods, and improving law students’ understanding of the role that technology plays in the practice of law and the delivery of legal services, universities, Law Societies and Bar associations will greatly enhance law graduates’ long term chances of success.

Global 100 UK Firm Goes Public on Legal Outsourcing

noreply@blogger.com (Mark Ross) — Mon, 20 Jul 2009 17:31:00 +0000

The Lawyer.com reported on June 22nd that acclaimed Global 100, U.K. law firm Pinsent Masons, was to outsource litigation work to South African LPO, Exigent. Comments on the Lawyer.com article from interested readers, ranged across the entire spectrum, from negative fear mongering to positive endorsement. I have highlighted a few below. Click here to access the full article, entitled Pinsent, First Firm to Offshore Work of Qualified U.K. Lawyers.

“It WILL result in unacceptable drops in quality. Being unable to communicate properly with the people doing the work offshore will lead to the same frustration, errors and delays that arose when the callcentre industry started outsourcing.”

“How can any professional body be expected to protect the public from unscrupulous practitioners who cloak themselves through offshore arrangements?”

“If a document can be reviewed by a senior south African lawyer more cheaply than a junior English associate – or even trainee or paralegal – just how is the client suffering?”

Following the announcement of the Pinsent deal, and the subsequent wave of publicity, I’m delighted that Mark Surguy, Pinsent Masons' Legal Director, and one of the driving forces behind the firm’s outsourcing initiative has agreed to indulge me and be interviewed for the blog. I interviewed Mark on 9/7/09 while he was still in Cape Town supervising the recruitment of the offshore team leaders. My questions are italicized.

Mark, first of all, many many thanks for agreeing to contribute to my blog, I’m sure my readers will find your insight illuminating. Perhaps you could enlighten my readers on your own background and how you developed your personal interest in legal outsourcing and technology?

I have been a commercial litigator for over 20 years. My own interest in globalization, technology and how these two forces impact the legal profession goes back to my time working for the legal arm of Arthur Anderson. The innovative use of technology together with forward thinking colleagues and the way that they performed their work opened my eyes to the possibilities ahead. Since joining Pinsent Masons I have been banging the tech drum among my colleagues now for a number of years.

So why now, what has tipped your firm over the edge so to speak, not only to actively embrace legal outsourcing, but to do so publically?

The decision was made partly due to pressure from clients, but primarily because of an internal desire within the firm to provide our clients with an innovative, cost effective solution to the legal problems they are facing. As far as the legal profession is concerned the recession/credit crunch is the most significant event by far over the last ten years. Corporations are now bypassing law firms and going directly to LPOs and contract lawyer agencies. As far as billing inflated, junior associate hourly rates for routine document review work, clients are now routinely saying to us “we won’t pay those fees to do this type of work”. I have personal experience of clients saying exactly that to me.

As to why we went public, we wanted to have the first mover advantage, offering something to the market that is more efficient and cheaper. After the initial press frenzy, we discussed internally the comments circulating for example, on the lawyer.com website, and yes there was a lot of negative feedback, but there were many positive comments as well.

Many law firm partners I speak to privately acknowledge that they view LPO as a threat. An operating model that takes food from the table that has traditionally fed them. You don’t see it this way, do you?

The desire to provide our clients with added value is paramount. Our model going forward will involve fees for the management and supervision of the services since we are taking responsibility for the work, we are supervising the work and we are assuming the risk. Of course this is all done with our clients’ consent and agreement. I see this as a way for the firm to make money and save our clients cost –a win win.

You’re in Cape Town right now, getting the ball rolling, so to speak. What particularly attracted you to South Africa as opposed to say India or the Philippines?

Correct, I am in Cape Town for an initial period of two weeks recruiting two team leaders and to all intents and purposes training the trainer. We chose South Africa because of our own existing relationship, the availability of common law trained talent, and the time zone similarity. Initially we are looking at document review work, however if it is successful, this might be expanded further to include other practice areas.

Mark, you mentioned that initially you are focusing on document review. Why did you choose this practice area as opposed to any other?

Document review - certainly at "first pass" level - is a relatively low level exercise. It is carried out by paralegal and junior staff already and the only issue has been supervision. A low level exercise that can be done by junior staff subject to the right supervision is ideal for offshoring. It is possible that we will expand the range of outsourced services in the future.

As I understand it, unlike in the U.S. there are very few, if any, domestic based providers of large scale document review staffing services. Do you have any thoughts as to why this might be the case, and do you anticipate that this market will also develop domestically?

Electronic disclosure is relatively recent in the UK compared with the US. The market is therefore less well-developed. Furthermore, clients have been happy to have all aspects of the litigation or investigation process carried out by one firm on UK soil (or at least within a branch network environment). However, the volumes of ESI have been increasing substantially which has in turn increased the legal costs. That combined with the economic downturn has been sufficient to bring about change. There is every chance a market will develop domestically as there are many lawyers now out of regular work who if innovative might look to develop this area.

What has the feedback been like within the firm following the announcement?
As regards internal feedback I have already conducted a couple of roadshows and will be doing several more following my return to the UK. We have received mixed reactions ranging from “we’re exploiting poor people in Africa”, to “are people in the UK going to lose their jobs”. We have explained to our employees that neither is the case.

If I can indulge you for one final question, and please feel free to prophesize, looking into your crystal ball, where do you see the document review practice area, the LPO industry and the legal profession as a whole five years from now?

There is no doubt in my mind that the volumes of ESI is a real problem. The volumes are continuing to increase and I see no reversal in that trend in the next 5 years. What will change is how corporate clients and their advisers will respond to the problem, which has been an ever increasing problem for 5 years or more. A more targeted and proportionate approach will develop and the use of technology will increase. Technological development may automate more of the document review process but it cannot be completed without some human intervention. The Courts will require the parties to adopt suitable technology and will penalise lawyers who do not. Document review will become more organised, streamlined, acutely measurable and hence increasingly commoditised. Document review will perhaps therefore become a specialist area for specialist service providers. The technology companies may also expand their services to offer review services.

As far as the LPO industry and the wider legal profession is concern, we’re looking at a serious restructuring of the profession, driven by the market. You can’t just withdraw from the market. The market will decide. We will see less people employed on a full-time basis, more people employed on a project basis, some firms will merge and some will go bust. As far as LPO is concerned I believe the industry is set for huge growth.

U.K. Law Society Pressures ABA to Allow Alternative Business Structures

noreply@blogger.com (Mark Ross) — Thu, 02 Jul 2009 23:03:00 +0000

I have blogged on several occasions about the implications of the U.K.’s Legal Services Act on the legal profession on both sides of the Atlantic, and also the wider repercussions on the legal outsourcing and offshoring industry. To recap, the Legal Services Act permits through the formation of Alternative Business Structures, external investment in law firms. The House of Commons website review of the key benefits of the Legal Services Act defines Alternative Business Structures:

“Alternative Business Structures (ABS) …….. enable lawyers and non-lawyers to work together on an equal footing to deliver legal and other services in ways that better meet the needs of consumers. External investment will be possible, and new business structures will give legal providers greater flexibility to respond to market demands.”

Almost a year ago to the day, I asked the question, Are Magic Circle Firms Set for outside Investment? I wrote at the time;

“I have been convinced for a number of years now that the profit margins routinely enjoyed by the world's leading law firms would prove to be extremely enticing to the private equity market and that once the legislative restrictions on external investment were lifted, it was inevitable what would follow.”

Eight months earlier, in my November 2007 piece, The Legal Services Bill and its Impact on the Legal Process Outsourcing Industry, I discussed the passing of the bill in tandem with an overview of an article written by Tony Jomati, former Clifford Chance Managing Partner. He wrote at the time about a number of trends impacting on the U.K. legal profession.

Trend number 6 stated: “High Street legal services will be fundamentally transformed by the Legal Services Act. A number of major brands will dominate the provision of retail legal services. Will that be law firms, or outsiders such as supermarkets or banks? It is too soon to tell whether existing law firms will be able to develop strong enough retail brands.”

At trend number 7, he went on to say that, “If the Clementi reforms (the forerunner to the Legal Services Bill) are broadly successful, one can expect firms higher up the chain to take in outside capital and float on the market.”

To the best of my knowledge this concept of external investment in law firms remained firmly entrenched within the UK’s legal borders, that is until I came across the following Law Society Gazette article dated June 25th - New-Model Law Firms Face Barriers in the U.S.

On the surface, the article appears to reaffirm the position that the U.S. has some distance to go before the concept of alternative business structures could ever take off over here. However, this is the first occasion of which I am aware that senior figures from within the ABA have publicly acknowledged the concept and its implications on the practice of law here in the U.S.

Tommy Wells, ABA President is quoted as saying that the concept of ABSs raises,

“important regulatory and ethical issues that must be examined and addressed”.

The article goes on to state that if the ABA does not change its stance by the time ABSs are permitted in 2011, U.K. law firms that choose to become ABSs will be barred from practicing in the U.S. From a practical perspective, this stance is clearly operationally unworkable for any of the U.K. magic and silver circle firms, with a U.S. presence, contemplating external investment.

What is perhaps even more illuminating is the public stance displayed by the U.K. Law Society who will “work hard” to persuade the ABA and the U.S. regulatory authorities that ABSs are viable business models. Bob Heslett, Law Society vice-president, said:

“We will work hard to seek to persuade the Americans on this, but we will only be likely to succeed if we can demonstrate that ABSs are just another law firm, subject to the same requirements and regulated by the same regulators as existing law firms, and in particular that client confidentiality is fully preserved and protected.”

My personal belief is that the pace of change within the legal professions on both sides of the Atlantic has picked up dramatically over the course of the last couple of years. The financial crisis is acting as a further catalyst of change across numerous sectors of the profession. Clearly, if one reads between the lines, the U.K. Law Society believes that the ABA position is not a static, immovable one. Although the first step may be a modification of the relevant rules to permit U.K. firms with external investment to practice in the U.S., I predict that it is only a matter of time before external investment in U.S. law firms is also permitted. Once such investment is common place within both the U.K. and U.S. legal professions, this in turn will only spur the growth towards legal outsourcing and alternative and more efficient law firm operating models.

Register for MCLE Ethics Course: "Legal Outsourcing, the Ethical Implications"

noreply@blogger.com (Mark Ross) — Thu, 25 Jun 2009 18:16:00 +0000

On July 15, at 11:00am PST, I’m hosting an updated version of LawScribe’s MCLE Ethics accredited webinar: Legal Outsourcing, the Ethical Implications.

Only last week the ABA released their Summer issue of The International Lawyer. Offshore Legal Outsourcing was identified as a "hot topic". The International Lawyer comments that 6 Bar Association Opinions have concluded that,

“a lawyer could satisfy her ethical obligations and outsource work offshore."

However, the ABA publication goes on to address four general issues associated with legal outsourcing, namely;

1. duty of care in selection and supervision (which relates to the issue of unauthorized practice)
2. duty to maintain confidentiality
3. duty to avoid conflicts of interest
4. duty to inform the client that the delegating lawyer is outsourcing the work

All the above, and more, will be covered in my webinar.

To reserve your Webinar seat, click here.

The webinar provides attorneys with practical advice relating to the ethical implications of offshore legal outsourcing. The webinar materials have been updated to include a look at the ethical implications associated with a real large-scale document review project. The session also provides analysis of the July and August 2008 USPTO Notice re Foreign Filing Licenses and the ABA Ethics Opinion.

Attorneys from the following States will be entitled to 1 hour of MCLE Ethics credit - CA, NY, CO, FL, MO, TX, WA, WI. For those not able to attend, I will be posting the audio and slides on my blog and the LawScribe website, where the course will be available for self-study.

The following issues will be covered:

• Avoiding the Unauthorized Practice of Law
• U.S. Attorney's Supervisory Responsibilities
• Duty to Act Competently
• Client Confidentiality
• Duty to Disclose
• Conflict of Interest Implications and Risks
• Billing Appropriately for Outsourced Legal Support
• USPTO Notice re Scope of Foreign Filing Licenses
• Large scale offshore document review case study

Joining me on the faculty for the webinar is Spyros James Lazaris, head of Zuber & Taillieu LLP’s patent and trademark prosecution department. Mr. Lazaris will be providing the large scale document review case study. I’ve detailed his biography below.

Mr. Lazaris practices intellectual property litigation and counseling, and is the head of Zuber & Taillieu LLP’s patent and trademark prosecution department. He has extensive experience in all phases of patent infringement litigation. He has successfully drafted and prosecuted patents for Fortune 500 companies in diverse areas of industry and technology, both here in the U.S. and internationally. Mr. Lazaris also focuses his practice on electronic discovery issues, and assists his patent litigation clients in managing discovery obligations in the complex world of electronically-maintained corporate data. Prior to joining Zuber & Taillieu LLP, Mr. Lazaris oversaw the patent prosecution practice of the Los Angeles office of Sidley Austin LLP, one of the 20 largest law firms in the world as ranked by The American Lawyer.

ABA Identifies Offshore Legal Outsourcing and Litigation Funding as "Hot Topics"

noreply@blogger.com (Mark Ross) — Mon, 22 Jun 2009 17:11:00 +0000

Less than one month ago I wrote a blog piece entitled: Litigation Funding and Legal Outsourcing – A Marriage of Convenience and a Glimpse into the Future. I discussed the rise to prominence of the Litigation Funding industry, during a time when the number of litigations as well as the potential cost of such litigation is rising. The gist of my piece was that by working in tandem, LPO and litigation funding possess synergistic solutions to this dilemma.

This weekend I perused with great interest the Summer issue of the ABA publication the International Lawyer (TIL). The Summer issue always contains a review of significant developments in international law over the past year (the Year-in-Review) and is prepared by the responsible Section committees. Well, in addition to the global implications of the UK’s Legal Services Act (which I have discussed numerous times, specifically in my article The Legal Services Bill and its Impact on the Legal Process Outsourcing Industry), two further subjects were identified as transnational legal practice “Hot Topics”. What might those topics be, I hear you ask?

I quote directly from TIL:

"In addition to the UK Legal Services Act the topics of litigation financing and offshore legal outsourcing were frequent topics of discussion."

The article goes on to discuss the 6 Bar Associations that have released Opinions on the subject of LPO, as well as of course the ABA Opinion from August 2008. The author comments correctly that each opinion concludes that a “lawyer could satisfy her ethical obligations and outsource work offshore." The author does go on to identify four key areas of concern, namely:

1. Duty of Care in Selection in Supervision (which relates to the issue of unauthorized practice)
2. Duty to Maintain Confidentiality
3. Duty to Avoid Conflicts of Interest
4. Duty to Inform the Client

I will be hosting another MCLE Ethics accredited webinar on July 15th. The webinar, “Offshore Legal Outsourcing, the Ethical Implications”, will cover all of the issues raised by the ABA in above referenced International Lawyer Summer edition. If you are interested in signing up for the webinar please email me directly.

LawScribe Proud to Continue ProBono Sponsorship

noreply@blogger.com (Mark Ross) — Tue, 16 Jun 2009 23:24:00 +0000

With LawScribe being proud sponsors of ProBono Net, Kunoor Chopra and I were delighted to be invited to both Mannatt Phelps & Phillips and Orrick Herrington & Sutcliffes' downtown LA offices on 10th and 11th June respectively, to celebrate the official launch of the SoCal Pro Bono Center.

The center provides a new website that supports pro bono legal services by linking private attorneys, law students and other advocates with legal services providers throughout Southern California. Coordinators of the new venture include the Southern California Pro Bono Managers and Pro Bono Directors at the Alliance for Children's Rights, the Legal Aid Foundation of Los Angeles, the HIV & AIDS Legal Services Alliance, Mental Health Advocacy Services, Inc., Neighborhood Legal Services of Los Angeles County, and Public Counsel. The website is located at http://www.probono.net/ca/socal/.

The SoCal Pro Bono Center is part of the national Pro Bono Net network. Pro Bono Net is a national nonprofit organization dedicated to increasing access to justice through innovative uses of technology and increased volunteer lawyer participation. More than 50,000 lawyers and other advocates are registered members of Pro Bono Net websites.

At LawScribe we are committed to continuing our ongoing support and sponsorship of Probono.net. We have always strived to be at the forefront of innovative initiatives across the LPO industry. Increasing our own involvement within Probono.net, and in turn calling upon other LPOs to do the same is merely an extension of these initiatives. Probono.net announced LawScribe's sponsorship earlier this year with the following linked press release.

"At a time when the need for legal aid is increasing tremendously, we truly appreciate LawScribe's support," said Mark O'Brien, Executive Director of Pro Bono Net. "The commitment of LawScribe and our other sponsors enables Pro Bono Net to continue connecting people in need with free legal assistance, and to develop new programs that allow pro bono and legal aid organizations to respond to emergent needs."

If any of my peers within the industry would like to find out more about how they can support Probono.net feel free to email me.

Managing Partners on Outsourcing, Cost Control, Indian Liberalization, and Law Firms of the Future

noreply@blogger.com (Mark Ross) — Fri, 12 Jun 2009 22:06:00 +0000

The annual Global Managing Partners Summit in London, chaired by Law Society vice-president Robert Heslett and Law Society Gazette editor Paul Rogerson, revealed a staggering reduction in the demand for legal services among leading US law firms. In the first quarter of this year demand shrank by 6% compared with the first quarter of 2008, while the average hours billed per lawyer fell 8.2%.

Managing partners from the world’s leading law firms were responding to the challenge by embracing outsourcing and cost control. Check out the excellent review of proceedings in the Law Gazette article “Global Managing Partners Summit”.

I’ve highlighted below a handful of the most relevant quotes.

‘I see no reason why fee-earners shouldn’t have a secretary based in India,’ .......‘If it’s not high value, we will move it to another location,’ …….Indian lawyers are often as good as, if not better, than English lawyers.’ David Childs (global managing partner at magic circle firm Clifford Chance).

‘Outsourcing will play an increasing role in removing aspects of front-office, not just back-office, work,’ ........‘Some general counsel at investment banks carry out 80% of their equity research in India. This makes them well aware of the potential for outsourcing legal work.’ Tony Williams, (principal at legal management consultancy Jomati).

Who Said Clients Can Be Demanding?

noreply@blogger.com (Mark Ross) — Fri, 12 Jun 2009 21:07:00 +0000

I rarely, if ever post "funnies" on this blog, however the video linked here, is well worth a look. I'm sure LawScribe isn't the only outsourcing provider for whom this skit will raise a wry smile.

Change Afoot Within India's Law Ministry

noreply@blogger.com (Mark Ross) — Sun, 31 May 2009 12:15:00 +0000

Opinion appears to be divided as to whether the unexpected dropping of H R Bhardwaj, from the post of India’s Law Minister, in Prime Minister Manmohan Singh's new Cabinet, will have a detrimental impact on the pace of liberalization reform for India’s legal profession. In Legally India.com’s coverage, one Delhi lawyer, discussing the likely pace of change had Bhardwaj been invited into the new cabinet, commented:

"If he had come in, we would probably be looking at a December opening."

The dichotomy of views was highlighted by Mulla & Mulla & Blunt & Caroe partner, Shardul Thacker:

"This change will not in any manner hamper the legal liberalization of entry of foreign law firms."

According to Legally India.com, Bhardwaj’s replacement, Veerappa Moily is something of an unknown quantity. With the caveat that I am simply an interested observer, and a million miles away from being an expert on the issue, from a personal perspective, bar the recent passing of the Limited Liability Partnership (LLP) Act, little progress has been made over the course of the last decade. I discuss the LLP Act’s passing in my earlier blog piece, LPO and India News Roundup.

Perhaps a fresh face is just what the doctor (or should I say lawyer?) ordered. Liberalization of India’s legal profession has been tantalizingly just around the corner now for approaching a decade. I first covered the issue in July 2007, in my blog piece Liberalization of India’s legal services market and the impact on the Legal Process Outsourcing Industry. The UK Law Society, however, carried a piece back as far back as 2001 entitled, “India may open the door to foreign practices under licensing agreement”.

Litigation Funding and Legal Outsourcing – A Marriage of Convenience and a Glimpse into the Future

noreply@blogger.com (Mark Ross) — Tue, 26 May 2009 23:58:00 +0000

While reading an article in the U.K. Gazette, entitled "Litigation funding: an overview of a contentious area of growth", I experienced one of those rare revelatory flashes one hopes to encounter regularly but which in reality come along all too rarely.

To set the scene, let us revert for a moment to the recent ValueNotes report, "Legal Services Outsourcing- What do Law Firms Think?", and contemplate both the drivers and the barriers to entry impacting on law firms considering or rejecting legal outsourcing. Despite valiant attempts within the LPO industry to downplay its significance, cost remains the ultimate driving force. While it has become almost de rigueur to ignore the labor arbitrage differential as an attraction, I however embrace this. Simply identifying cost as the clear frontrunner in the driving forces does not equate to a disregard of quality and efficiency as being essential alternate drivers, but rather, to an accurate comprehension of our clients’ and potential clients’ motivations.

In my blog piece discussing the report’s findings, I commented that unsurprisingly data security was rated as the top concern among those that had previously offshored legal work, whereas the perceived lower quality of work was the top rated barrier to entry for those yet to dip their toes in the offshore waters.

What if there was an option that accelerated a potential litigant’s legal representation to embrace cost control, and concurrently shifted at least part of the risk burden associated with the legal outsourcing relationship on to another party’s shoulders?

That option exists in the emerging litigation funding industry. Litigation funding, a private equity and investment industry active already in the UK, is now rising in prominence in the U.S. On June 2nd, RAND Institute for Civil Justice and UCLA School of Law are hosting a conference entitled Third Party Litigation Funding and Claim Transfer at Rand Corporation’s offices in Santa Monica.

Through litigation funding, companies and organizations can seek funding to support their litigation and arbitration claims. If a claim is approved for funding because of its merit and other factors, it receives funding for legal fees and other litigation costs through to resolution and hopefully to recovery. If there is a recovery, the Funder receives out of the proceeds, the money it spent to pursue the case, and in addition, a negotiated share of the proceeds.

Funders offering funds to support claims have widely varying requirements and criteria. Some, for example, generally favor matters where the potential recovery is between about $25 million and $50 million or more, in claimed damages, and expected costs between $3 million and $10 million. Others have much lower thresholds and favored claim/cost zones. Obviously, the specifics vary depending on the case. Historically, according to unverified information in this mostly private industry, Funds have in the past generally approved 1 out of 10 applications. Today, with the surge in litigations and applications for funding, the approval rating could well be lower than before. Of course, at all stages, crucial threshold requirements come into play, including having a strong case in terms of liability, with the potential of significant damages recovery. What is especially significant to the legal outsourcing industry, is that in addition to the importance of these requirements, the level of litigation fees and costs potentially on the line for the Funder is clearly also of central importance.

Let us now turn our focus back for a moment to LPO. According to the 2007 Socha-Gelbmann 5th Annual Electronic Discovery Survey, attorney document review accounts for 24% of entire legal spend. This figure relates to the entire legal spend, not merely the costs associated with litigation. Of course those within the LPO industry have all referenced many times the much vaunted KPMG estimate that first level document review encompasses anywhere between 58% and 90% of total litigation costs.

Specifically pertaining to document review, conservative estimates identify cost savings of 50% achievable through the utilization of offshore legal process outsourcing. If we hypothesize a case with anticipated pre-LPO legal fees in the region of $2 million, and if we base our calculations on the KPMG figures, with LPO, those anticipated legal fees for our hypothesis now come down to $1.1 million to $1.42 million. How many more applications for funding would be approved if the level of fees for which the funder could potentially be on the hook was reduced by such margins?

Now let us return to those main law firm concerns i.e. security and client confidentiality and of course quality of work. Clearly any application for funding requires due diligence and investigation of the suitability of any expert, professional body and of course, if an LPO is involved or recommended, the LPO involved in the incurrence of legal fees and costs. It is not even beyond the realm of possibility that in addition to the extra layer of vetting of the LPO carried out by the Funder, that the same Funder could take on an element of the risk burden associated with the contracting for LPO services. Of course this would likely necessitate recognition of an as yet unidentified uplift in the Claimant’s costs, namely the agreed percentage of the recovery going to the Funder.

So to recap, on the client side there is the ongoing pressure to reduce legal spend; during a time when the number of litigations as well as the potential costs of litigation are rising. Both LPO and litigation funding possess synergistic solutions to this dilemma. In addition, the very existence of LPO as an option can increase the likelihood of a litigation funder to commit to funding a particular matter, whereas the involvement of the funding company might help assuage some of the main barriers to entry into LPO on the part of the client’s outside counsel representation. In an LPO world where innovative and forward thinking providers are continuously striving to identify synergistic partnerships that can provide clients with cost-effective solutions right across the legal vertical, I anticipate that over time we will witness significant collaboration with the Litigation Funding industry.

LPO News and Articles of Interest Roundup

noreply@blogger.com (Mark Ross) — Tue, 19 May 2009 21:39:00 +0000

Lovells are reportedly extending an outsourcing programme for document production work across its London office. The firm is also in the process of piloting the scheme in several international offices. According to Legalweek.com the top 10 City law firm is planning to send document production work from all practice areas to Exigent in Cape Town, following a pilot scheme launched in its London real estate practice last year.

The potential impact of the UK’s Legal Service Act on the structure of the law firm of the future was highlighted in another Legalweek.com piece. The article discusses how external investment will radically alter the traditional operating method for the delivery of legal services. Lyceum Capital have made no secret of their intention to target the legal sector ahead of the Act’s full implementation.

The Daily Telegraph also stirred the hornets nest on this particular issue with their headline piece, “High Street Shops will Sell Legal Services within Two Years.”

Offshoring legal work is clearly flavour of the month at the Legalweek.com reporting desk. The article “Offshoring-outside the box?” provides an eloquent roundup of recent happenings in the UK’s LPO space.

For those readers wanting further information on the upcoming LexisNexis LPO event, being held in Delhi, June 3-4, the updated brochure can be accessed by clicking here.

In last month’s issue of Corporate Secretary magazine, Gwen Moran provides a detailed consideration of the growth of LPO to date in her article “Cutting Legal Down to Size”. Contributors to the article include both myself and John Croft of Integreon.

Finally it’s rare to find a gem of an article dealing with e-discovery, from the UK side of the pond. But in the article Voyage of Discovery, Reza Alexander, Lee Gluyas and Emma Hogwood, of DLA Piper UK, provide a step by step guide to effective e-discovery litigation management and readiness.

ValueNotes Release LPO Report Based on Client Data

noreply@blogger.com (Mark Ross) — Tue, 19 May 2009 20:39:00 +0000

The latest report from ValueNotes makes for interesting reading. This is ValueNotes’ first foray into an LPO report based entirely on data provided by LPO clients and potential clients. Responses were received from 102 law firms (over 80 classified as mid or large size i.e in excess of 300 employees). Less than 3% of those surveyed testified to having utilized offshore legal resources. The naysayers may well reference this 3% figure as evidence that the LPO industry is all smoke and no fire. On the contrary, I prefer to view this as evidence that we are at the tip of the iceberg. The number of LPOs has trebled over the course of the last three years alongside an equivalent increase in revenue. Although market consolidation is surely around the corner, which will inevitably result in a deflation in the number of LPO companies, there is little doubt in my mind of the tremendous potential of this industry. Click here to access the report’s executive summary home page.

Unsurprisingly data security was rated as the top concern among those that had previously offshored legal work, (see my prior blog article “Security and Client Confidentiality the Number One Concern"). The perceived lower quality of work was the top rated barrier to entry for those yet to dip their toes in the offshore waters.

Although clearly of no statistical value, what I found particularly illuminating from a personal perspective were the anonymous quotes from those participating attorneys, belonging to the anti-outsourcing camp. These viewpoints demonstrate the necessity for ongoing LPO education of the US and UK legal professions. Clearly many who object do so based entirely on prejudice and inaccurate hearsay, as opposed to fact based research. A couple of quotes which caught my eye, illustrative of this point, follow:

“If an offshoring program takes you any time at all from a management perspective it doesn’t save you any money.”

And: -

“There is a very real risk of having the service provider sell your information.”

Finally the quote that demonstrated how out of touch many within the legal profession are with their clients:

“If we offshore legal research or contract review, how will our junior associates get trained?”

I remain both transfixed and shocked by this antiquated viewpoint even as I type this piece! In today’s technologically advanced world, what justification is there to immerse young attorneys in the repetitious drudgery of traditional “training work”, AND to bill the client for this? In his book The End of Lawyers? Richard Susskind discusses this very dilemma of how young lawyers of the future are to be trained.

“Using…wide variety of advanced e-learning systems… to simulate a wide variety of legal scenarios and in so doing provide junior lawyers with a safe, well-bounded environment within which to experiment and from which to learn.”

In addition to the above, I would simply add that whether a law firm wishes to embrace advanced e-learning and simulated training techniques is a question for the law firm, and not the paying client. What is clear, is that clients will no longer be prepared to pay firms to train their junior associates on tasks that can either be outsourced or automated or both.

Report From Financial Times LPO Roundtable

noreply@blogger.com (Mark Ross) — Fri, 15 May 2009 21:38:00 +0000

The FT Legal Outsourcing roundtable took place the very same morning that thelawyer.com reported on Simmons and Simmons’ proposed plan to outsource work offshore. The timing could not have been more perfect!

The panel speakers included Nigel Emmerson, Partner, Dickinson Dees LLP, Iain Monaghan, Partner, Pinsent Masons LLP, Bavita Rai, Partner and Head of Litigation Operations, Weightmans LLP and John Croft, President, Global Sales and Marketing, Integreon Managed Solutions, Inc.

Two key points emerged from the discussion. First, where does KPO end and LPO begin? Second, what does the future look like for newly qualified lawyers and young associates and students still at law school in a legal profession being buffeted by the forces of LPO, the Legal Services Act, alternative billing, law firm restructuring, technological advances and globalization.

As to the first point, Wikipedia defines legal outsourcing as

the practice of a law firm or corporation obtaining legal support services from an outside law firm or legal support services company.

The question then becomes one of what are legal support services? Surely if the purchaser of outsourced support is a law firm, but the support services being outsourced are help desk, IT, or HR, this should not come within the LPO definition, rather HRO and ITO. Furthermore the passage of time clearly impacts on the particular bracket into which a service comes. Insurance claims management and large scale conveyancing transactions are routinely processed offshore in their hundreds of thousands. Only fifteen years ago these tasks were considered appropriate for fully qualified solicitors and paralegals. One only has to consider the less than $50 fee now generated for processing a remortgage to fully comprehend the impact of automation and offshoring on a task that was once a regular source of solicitor fee income. The largest players in the outsourced claims management and conveyancing markets define themselves as KPO companies, rather than LPO.

On the second point, the future for the next generation of lawyers, numerous references were made to the recently published End of Lawyers?, by Richard Susskind. There was a growing consensus that the current financial crisis is acting as a catalyst to changes that are long overdue for the legal profession. An associate at an AmLaw 5 firm asked how young lawyers would be trained in the future, if the tasks that were previously utilized for this purpose were either eliminated owing to technological progression or were outsourced offshore? I refer readers to a piece I wrote almost a year ago, Lawyer, Rainmaker, Candlestick Maker, in which I bemoaned the antiquated teaching methods and subject matter covered during the JD and LLB courses on both sides of the Atlantic. I wrote at the time:

I believe firmly that there is insufficient emphasis placed on the development of rainmaking skills within the law degree. In today’s cut and thrust economy, with law firms and corporations starting to tighten their belts, Universities must take an increased level of responsibility in helping mould young attorneys so that they are capable of hitting the ground running on day one with an understanding of the requisite qualities necessary to succeed in the business that is law.

The J.D. adopts the Case (a method of studying landmark cases) and Socratic methods (a method of examining students on the reasoning of the court in the cases studied) as its didactic approach. I am not advocating for one moment the removal of this structured form of tuition, however I question whether it alone, given the market forces discussed above, is sufficient adequately to prepare young lawyers for the real world. It is all well and good being able to regurgitate case law and to construct a written legal argument, but there are people all around the world who can also do this at a much lower cost and to whom we are now easily connected.

Insufficient time is spent on practical client interviews, networking skills, understanding the business of running a law firm, communication and negotiation techniques. Yes, all newly qualified attorneys are aware of the billing requirements soon to be incumbent upon them, but do they understand why these requirements exist? Are any law students able to learn about alternative billing structures, the history of the hourly rate, fixed fees, fee-capping arrangements and how billing accurately and clearly for the provision of legal services can actually be utilized as a marketing tool in attracting clients? Do any Law courses require their students to prove their mettle within a networking situation? Would it be impossible to replicate a networking event or to send students to such events with a variety of goals to be achieved?

As for ongoing training once newly qualified associates join firms, sophisticated clients will no longer be prepared to pay for this. Firms will need to absorb the cost of this training while retaining a profitable bottom line by paying greater attention to cost reduction as opposed to unachievable billing targets.

Lexis LPO Event Gathers Industry Leaders

noreply@blogger.com (Mark Ross) — Sat, 02 May 2009 17:06:00 +0000

The speakers' list for the upcoming Lexis Nexis legal outsourcing conference in Delhi, reads like a who's who of the leading LPO company executives. Five of the top six 2008 Black Book of Outsourcing ranked LPOs are represented. I'm thrilled to have been invited to Chair Day 1 of the conference and to host the Ethics session.

The conference, entitled, Legal Outsourcing Management Strategies 2009, is being held on June 3-4, at Claridges hotel in Delhi. If any readers would like further information on the conference please feel free to contact me directly.

Have Wilson Sonsini Read "The End of Lawyers?"

noreply@blogger.com (Mark Ross) — Thu, 23 Apr 2009 23:02:00 +0000

I thought I would make an extremely brief observation following my review of today’s legal blog watch and several other postings. Both Richard Susskind’s Harvard address and the Wilson Sonsini “term sheet” announcement appear to have been referenced repeatedly on most legal blogs throughout the course of the day. None of the postings I have read though appear to have linked the two newsworthy items together. Law.com’s legal blog watch even had the Wilson Sonsini piece following immediately after the Susskind review, but failed to comment on the “coming to pass” of one of Professor Susskind’s “predictions”.

Those who have read Richard Susskind’s thought provoking book “The End of Lawyers?”, or listened to the Harvard address will be aware that he repeatedly ponders the legal profession’s journey, and indeed the pace of such a transition, along a continuum, from bespoke legal services to commoditization. He argues that law firms have to date been slow to package their expertise for clients to use for themselves.

Professor Susskind foresees a future where only those firms that proactively innovate along such lines will in the long run be successful. Within the next ten years, the internet will be the first port of call for those seeking out legal advice and assistance. Whether the search and procurement will be through social and/or professional networking, online legal services, auctions, open sourcing, or some other methodology, is yet to be finalized. However, for an upcoming generation who cannot recall life prior to the internet, this will be the standard modus operandi for obtaining legal advice.

I am unaware if the Wilson Sonsini Term Sheet Generator is the first example of its kind, however, I can guarantee it certainly won’t be the last. What surprised me was the lack of any connection made between the Susskind posting on legal blog watch and their subsequent Wilson Sonsini announcement coverage. The Term Sheet Generator is a computerized service that walks users through about 100 questions to create a term sheet outlining the financing terms and conditions of a business agreement or deal. This initially originated as an internal tool for Wilson Sonsini lawyers to rapidly generate draft term sheets, which they would then polish up and then deliver to their clients. I applaud the firm for taking such a proactive approach and reexamining exactly how they deliver value to their clients.

Panel Speakers Confirmed for FT Legal Process Outsourcing Roundtable

noreply@blogger.com (Mark Ross) — Mon, 13 Apr 2009 22:55:00 +0000

A quick reminder to my readers, that the Financial Times Global Outsourcing and Offshoring Conference is taking place at the Andaz hotel, London, 27-28 April.

The Legal Process Outsourcing roundtable is being held on April 28th. Confirmed panelists include senior figures from leading U.K. and global law firms and LPOs.

Panelists include:

Mark Ross, Vice President of Global Sales and Marketing, LawScribe, Inc.
Nigel Emmerson, Partner, Dickinson Dees LLP
Iain Monaghan, Senior Partner, Pinsent Masons LLP
Bavita Rai, Partner and Head of Litigation Operations, Weightmans LLP
John Croft, President, Global Sales and Marketing, Integreon Managed Solutions, Inc.

The roundtable will provide attendees with practical insight and case studies addressing the substantive concerns surrounding LPO, including selecting which services to outsource, sourcing a service provider, and structuring an LPO outsourcing agreement. Speakers will share their ideas on the dramatic changes taking place in the legal profession, the ethical implications specific to LPO, and the most effective LPO operating strategies before, during and after the implementation process.

If anyone would like further information on the conference or the roundtable feel free to contact me directly.

LPO, a Band Aid or an Innovative Solution?

noreply@blogger.com (Mark Ross) — Fri, 10 Apr 2009 17:32:00 +0000

The posse list blog reports today on an interview provided by Tess Blair, head of the e-data group at Morgan Lewis discussing LPO in the context of the e-discovery arena. She is quoted as saying:

“We’ve heard; for example, talk over the last several years of off-shoring or legal process outsourcing. That addresses the labor issue. Do we want to pay domestic contract attorneys, or law firm associates versus, perhaps, lower cost legal professionals and others offshore - India, the Philippines, where have you, to do this work? I think that only gets us part of the way there …………….My firm, for one, is moving away from hourly billing. We’re doing all-in pricing for our discovery work so that they get one bill and they’re told upfront what it’s going to be when a discovery project is launched. Those two pieces are much more important than some of these other band-aid type approaches like l.p.o”

According to Blair the real problem is that of volume. If you pay a lower hourly rate, but the size of the document set is still excessive, ultimately the cost sustained will remain significant. She advocates solutions including new technologies, new approaches and a move away from the traditional billable hour. Makes sense, no?

Of course it does. However, to label LPO as solely concerned with exploiting the labor arbitrage benefits, available through leveraging talent in India or the Philippines, is both untrue, and evidence of a lack of recognition of the innovation that LPO has brought to the table.

Blair comments that her own firm is moving away from traditional hourly billing for document review, and providing all in pricing for e-discovery projects. Now I don’t want to be accused of “blowing my own trumpet”, however, having been involved in LPO, long before the acronym itself existed, I reference the opening paragraph of my article, Time to Stop Time Recording, first published over three years ago.

“Clients are demanding greater transparency of charges, pushing law firms to change their old ways and move to fixed fees and offshoring. In the future, the success of your firm will depend on how you embrace new technology and how you approach offshore legal services, shared knowledge and fixed fee charging.”

I’m sorry, but who led the cavalry charge on innovative e-discovery and document review pricing models, from a practical perspective? It was the LPO industry. Well over a year ago, in February 2008, LawScribe launched synerge (a revolutionary, per document, end-to-end e-discovery and document review service). Integreon followed shortly thereafter with their doctane service offering. Pangea3, Mindcrest, Clutch, American Discovery and other leading LPOs all offer per document pricing.

Furthermore the “O” in LPO stands for “outsourcing” not “offshoring”. None of the aforementioned LPOs are restricted to just the Phillipines or India. Whether through wholly owned subsidiaries, dedicated delivery centers, joint ventures, or strategic partnerships, all are capable of providing a “best shore” or “blended shore” solution. Yes, the labor cost in India and the Philippines is lower; however, to intimate that this is all that LPO brings to the table is to be sorely mistaken. Cutting edge technologies, stringent security (above and beyond what is prevalent in the vast majority of domestic based law firms), and innovative solutions including non linear review, multi-shore operations, and fixed pricing, are all commonplace within the leading LPOs.

I am always happy to entertain discussion on the merits of offshore vs onshore, hourly vs fixed price. While I’m delighted that increasingly I am stumbling on articles from progressive figures within the AmLaw 200 corridors of power, discussing alternative fee arrangements, make no mistake about it, LPO opened the door for these firms to walk through.

Future of the Legal Profession: Two Different Points of View

noreply@blogger.com (Mark Ross) — Mon, 06 Apr 2009 23:57:00 +0000

Interesting to note the disparate views expressed in two articles I read today.

Richard Susskind, leading legal evangelist, prophesier, technology guru, and renowned authority on future trends impacting the legal profession, provided the keynote address at this year’s ABA Techshow in Chicago. Legal Blog watch expertly sums up Professor Susskind’s session and I encourage you to check out Robert Ambrogi’s excellent posting. I will however paraphrase the main points:

• The current economic crisis will fundamentally alter the legal terrain.
• Clients want more for less. i.e. more legal services for less cost.
• Collaborative social networking tools will transform the delivery of legal services.
• Legal services are being commoditized.
• Legal services are being unbundled with constituent tasks outsourced.
• Advances in technology will fundamentally alter the delivery of legal services.
• The delivery of legal services will fundamentally change.

On the other hand, Morrison & Foerster Chairman, Keith Wetmore, clearly does not subscribe to the increasingly prevalent view, that the current economic downturn will leave the world’s top law firms irrevocably changed. The MoFo Chairman is quoted in thelawyer.com as stating that:

“I think it’s wrong to say things have fundamentally changed”

According to the article Mr. Wetmore’s position can be summarized as follows:

• The economy will grow again and when it does clients will need lawyers to advise on that growth.
• The basic law firm model will continue largely unchanged.
• Law firms’ operating models are based on a number of assumptions, one of which is annual attrition at circa 20-23%.
• Current layoffs are a result of a slackening in demand for legal services coupled with a halt in attrition.
• 85% of a law firm’s expenses are salaries and rent.

Mr. Susskind is preaching to the choir as far as I’m concerned. What I find illuminating however, is the faith demonstrated by Mr. Wetmore in the traditional law firm modus operandi. Maintenance of the operational status quo is apparently an option. This is despite 85% of operating expenses being salaries and rent, and a recognition that to function effectively, not only must there be a growing economy, but also ongoing high rates of attrition.