A shore thing

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24 May 2010

Posted by Michael Bell, managing principal, Fronterion

South Africa: firms moving towards mix of on and offshore outsourcing

A recent survey released by outsourcing consultancy Fronterion revealed a rising interest in onshore and hybrid on/offshore legal outsourcing arrangements. The 2010 Global Sourcing Study (see story) polled ten of the top 20 UK law firms and 17 of the world’s largest legal outsourcing vendors, and found that some 300 legal professionals in the UK currently provide onshore legal outsourcing services to UK clients. These numbers are likely to climb as 41% of legal outsourcing vendors anticipate a ‘significant’ increase in the number of onshore qualified lawyers they employ in the next three to five years.

Rise in interest in onshore and hybrid shore legal outsourcing reflects a maturation in the legal outsourcing competitive landscape and the realisation that, while certain tasks are better performed outside of the traditional legal structure, they are also better performed onshore by domestic legal professionals. These trends are validated by the onshore sourcing strategies of US firm WilmerHale and City practice CMS Cameron McKenna.

The ascent of the onshore legal outsourcing industry may change the shape and structure of traditional law firms from high street to major City firms. The onshore component also raises questions regarding the relationship dynamics between general counsel, their respective law firm(s) and outsourcing vendors.

The Global Sourcing Study also revealed that legal outsourcing has changed the roles and dynamics of domestic lawyers and legal professionals. General counsel and lawyers who remain within the traditional legal structure of law firms and corporations will increasingly find themselves acting as aggregators, aggregating and integrating legal matters delivered from sources within and outside of their organisations. Services sourced outside of the organisation can be delivered both on and offshore. This shift to the aggregation of legal services is a sharp departure from the traditional legal services model in which attorneys offer bespoke legal advice within a discrete function area.

Dechert has already embraced these trends of the changing role of legal professionals as aggregators and, according to The Legal Intelligencer, recently put their partners through extensive project management training.

As noted in the Global Sourcing Study, the increase in onshore legal outsourcing will create a profusion of opportunities for legal professionals outside of the traditional law firm partner track. Currently, the majority of onshore legal professionals employed by legal outsourcing vendors are staffed in business development roles. As onshore legal outsourcing gains momentum, this new breed of legal professional will be integral to the delivery and coordination of legal services delivered from both onshore centres as well as centres abroad in jurisdictions such as India, South Africa and the Philippines.

These trends, including the growth of onshore legal outsourcing and changing roles of legal professionals, present growing opportunities to legal professionals and traditional law firms alike. The key to success will be anticipating and capitalising on these shifting dynamics of the ever-evolving legal profession.

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