Taking the law out of the old firm
Outsourcing is shaking up the legal profession.
Outsourcing is shaking up the legal profession. TRADITIONALLY the domain of lesser-skilled and lower-paid jobs, outsourcing is spreading to white-collar professions, including the law, and is attracting a workforce that craves flexibility and variety.A new company, Plexus, is trying to shake up what it has labelled the "incredibly conservative and risk-averse" Australian legal market and its "legal industry duopoly" where work is done either by a law firm or in-house.Plexus insists it is not a law firm. Instead, it is a network of 280 lawyers founded by barrister Andrew Meagher and consultant Andrew Mellett on the premise that not all lawyers want to work for a firm, or full time.Plexus' legal work goes beyond basic due diligence and discovery to more complex work including contractual reviews, rebuilding compliance functions and reviewing credit collection functions.However, the legal outsourcer does not run litigations or advise on mergers and acquisitions. Mr Mellett sees the new market for outsourcing in the legal profession as part of an overarching trend."Companies are looking to build more dynamic resourcing and more dynamic talent pools and people are looking for greater flexibility," he said."You will see an increase across the professional services industry of more flexible opportunities for people to manage their careers."You have already seen it in information technology, finance is not too far behind that and the legal profession is just lagging."Plexus calls its employees "law firm refugees" and offers lawyers higher pay and the ability to work from home or a client's offices.The company claims it charges 70 per cent less than law firms as it saves by not having offices, information technology and human resources teams or the same profit margin as the major firms. The company was started last year and counts Holden, AMP, CSL and major law firms among its clients.Brian Salter, the general counsel and company secretary for AMP, said the decision to use legal outsourcing was all part of responding to the "dynamic" Australian legal market, which has experienced the entry of international law firms, the rise of specialist low-cost firms and the advent of legal process outsourcing both in offshore locations and cheaper parts of Australia."We are obviously quite conscious of all of these trends and we try to manage as efficiently as possible our legal expenditure and so we keep our finger on the pulse in relation to all these developments."The contractor market can offer something to us that we may not necessarily have in-house, at a considerably reduced cost of going to a law firm."Mr Salter admits that AMP is still considering the accountability issues associated with legal outsourcing such as privacy and confidentiality.However all Plexus staff sign confidentiality agreements and are bound by the Legal Services Act. Mr Mellett points to the established nature of outsourcing in the legal profession overseas where companies such as Axiom operate as "virtual" law firms with 800 staff in the US, UK, Hong Kong, India and Singapore.Australian law firms have also started outsourcing work with King & Wood Mallesons signing an agreement with the Indian firm Integreon last year and Corrs Chambers Westgarth appointing Integreon and South African-based Exigent to its newly appointed legal process outsourcing panel.As yet, Plexus does not have any offices outside Australia and has no international expansion plans. This keeps the Law Institute of Victoria happy as the professional body is concerned the conduct rules and legislation that govern outsourced work performed in Australian jurisdictions do not apply overseas.Michael Holcroft, president of the institute, said: "It does get a lot more difficult once you start talking about facilities when you do not even know where they are."Does a lawyer in India have the same safeguards, the same client privilege, the same privacy laws as we do? Who else has access to that information that we would treat as being private and confidential in Australia?"As long as outsourcing stays within Australia, the law institute believes the trend will not lead to job losses.Mr Holcroft said: "I would hope that it would actually lead to an increase in the retention of people in the legal profession who might have otherwise have drifted away."This will allow people to pick and choose their work if, for example, they have family commitments.'' His attitude echoes that of Mr Salter, who claims engaging legal outsourcers will not lead to layoffs at AMP or elsewhere. "I don't think it has any implications for our in-house legal team ? I think that what we are doing is just constantly examining where it is appropriate to send our work."
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free