Indian legal process outsourcers see “a fat, complacent and profitable market place” in England and Wales “and they want a piece of it”, solicitors were warned last week.
Mark Jones, former managing partner of Addleshaw Goddard and now leader of its professional practices consultancy, described legal process outsourcing (LPO) as “a game changer for all of us” – he reckoned that 25% of Slaughter and May’s work is outsourceable, as is 50% of his own firm’s and maybe 100% for firms outside the top 50.
Speaking at the Butterworths Legal Services Act conference in London, he continued that one LPO provider wants to become a panel firm to a FTSE 100 company by the end of 2010. “I don’t think they’ll do it by the end of this year, but they will do it.” He added that Indian law schools are producing over 50,000 graduates a year, meaning that every three years India produces more new lawyers than there are qualified lawyers in England and Wales.
Outsourcing was one of five key implications of alternative business structures (ABSs) identified by Mr Jones, the others being:
- Commoditisation – “This is at the heart of these changes,” said Mr Jones. “It’s not a dirty word and it won’t go away. We must embrace it.”
- Financial failure – Mr Jones said he would be “surprised” if Halliwells was the last firm to go down.
- New business models – “They are [already] here but are they appropriate for you?” asked Mr Jones. “And if your answer to that is ‘no’, what are you going to do to differentiate yourself ‘as you are’?”
- Offshoring (“or onshoring or northshoring”) – “This reflects the new reality of pricing pressures – all firms are grappling with the challenges posed and those challenges won’t go away. If you aren’t looking at [offshoring], what are you doing? We should all be looking at how we respond to and use these new opportunities.”
ABSs, and consolidation of the profession, were putting ever greater pressure on the problem of how firms differentiated themselves from their competitors, Mr Jones said. He identified three core issues that professional services firms always have to address: what clients does a firm want to act for; what kind of work does it want to do for them; and how does it differentiate itself from its competitors?
While the first two elements have arguably not changed despite everything that has happened and is happening in the legal world, “differentiation has become steadily more difficult to achieve”, he said.