This kind of laconic if self-centered headline has always amused me. We tend to think things are important if they affect us and less so if they do not. On that basis I wonder if we should have been concerned about the recent report from NASA that preceded one of its satellites falling to earth. The agency did not know when or where the satellite would drop but in order to assuage the fears of the populace at large said that it will be somewhere between Alaska and the tip of Southern America, it would be in late September but could be in October and, doubtless, we were all pleased to learn that there was only a one in 3,200 chance of satellite parts hitting anyone.

If ever there was a piece of more useless headline information, I have yet to see it. Presumably, the inhabitants of the whole continent of America would have been taking precautions for an event that had a real chance of catastrophe. After all, a one in 3,200 chance spread amongst about 500 million people is still a 0.000006 chance that someone might suffer from a severe headache when hit by part of the stray satellite falling out of the night sky, clobbering them on their way to work.

This event has now happened [NASA Satellite Falls to Earth... But Where Did It Land? SPACE. com, 24th Sep, 2011] and, as far as I know, nobody was hurt. Panic over. Frankly it would have been just as useful if they had said that they had not the foggiest notion where or when the satellite would fall to earth or even better, had said nothing about it at all.

But I must be careful because I have been taken to task in the past for (so the critics say) reporting ungrammatically and ambiguously about being struck by goats spotted over Bishops Square (round the corner from Allen & Overy) so I am very aware of the need to take care when describing any strange phenomena that I may occasionally see on my travels.

What can I report? It is just possible that I have seen a report of the fabled Missing Link.

The Missing Link was a being of a ferociously unfriendly nature often depicted as the Yeti or the Abominable Snowman in boys’ books at the time I was a child. I then came to understand that scientists were keen to find a link between the ape and its evolution into a human being, apparently being unwilling to accept the natural evolution which Darwin suggested was the norm.

Legal Process Outsourcing (LPO) is less in the news these days than 12 months ago but I have to assume it is still flourishing as I have seen no reports that Exigent or CPA Global or Pangea have gone out of business. I assume therefore that they are still making money and indeed, as if to confirm the health of the sector, The Lawyer recently published a report of a new kid on the block (not another story about goats!) [In a 'Galexy' far, far away The Lawyer, 25th Aug, 2011]

Revelling in the name of New Galexy Legal Process Outsourcing is a joint venture between New Galexy partners and M V Kini, an Indian law firm. I understand that the slightly odd spelling of the word “galaxy” is to distinguish the new entity from the universe around us and/or a certain well know brand of chocolate, although, if I may mix my nutritional metaphors, that may well just be pie in the sky!

I recall attending a lecture by Richard Susskind where he was asked to speculate about the sort of legal grouping, if any, in which he would consider making an investment. I was initially surprised to hear him say that he might consider a well run set of barristers’ chambers and that he would not consider investing in a traditional law firm.

I will try and explain what I think he meant and how this ties up with new legal structures, technology, LPOs and dead satellites falling to earth in my next post.

So, if you have been, keep on reading and look out for the Missing Link!

Photo credit: NASA

First there was outsourcing. You know what I mean. Legal Process Outsourcing (LPO) in exotic places like the Philippines, South Africa, Sri Lanka and India.

Then there was insourcing. Something of a Millnet idea but more of the Smart Insourcing team in a moment.

Now there is Near Shoring.

In, out, in, out, shake it all about, that’s what it’s all about!

Near shoring? I do not know who it is who comes up with these names to describe relatively simple concepts but according to Legal Week of February 24th “Near shoring garners approval in the City.”

The idea is simple. Find a location in the UK or in Europe where the costs are cheaper than, say, London or Manchester or Cardiff and either send your staff there or hire in locals who will not be so expensive. I recall that this is not a new idea having been around many years ago in the guise of warehouses situated on the M1 (supposedly within easy reach of anywhere in the country but in reality miles from anywhere) where lawyers doing low grade or customised work could be accommodated. It never really took off until they started to call them call centres!

Near shoring is a variation on that theme and is merely the relocation of staff to lower cost centres. According to Legal Week, 59% of partners interviewed thought that near shoring was very considerably attractive. Possibly not to the staff to be relocated but to the partners you understand!

Big City firms spoke warmly of the idea and only 12% of partners who responded said that they thought it was a bad idea.

Is it a sure (no pun intended) thing? As Chinese Premier Chou En Lai said in the 1970s when asked for his opinion on the effect of the French Revolution, it is too early to tell.

What is clear, however, is that a combination of pressure from clients for lawyers to reduce costs and greater competition in the market for good quality work is driving law firms to consider new ways to save money and in some cases pass on the savings to their end clients.

In the field of insourcing, Millnet believes that it can combine the benefits of the provision of LPC graduates to help with a range of tasks, including document review, with the advantages if having the tasks done by people located near our clients’ offices and in the same time zone. In our London centric country, Belfast may be a good place to set up an outsourced office and as one of the partners interviewed by Legal Week said, it is “relatively easy to get to” but it is easier still to get to London from most places in the UK. Add to that the fact that most European law firms look to London for the e-disclosure requirements when they have them and you have a number of good reasons why insourcing, at the right price, is here to stay.

What the market is saying, and this is confirmed from our experience, is that routine or mundane work can and should no longer be done by highly paid lawyers sitting in swish corporate offices. However you look at it, alternatives to the old model have to be found. Near shoring may be one, outsourcing may be another, but insourcing combines the best of both worlds for lawyers and their clients alike.

That’s what it’s all about! Come on, sing the chorus with me:

You get work in
You send some out
In, out, in, out
Millnet gets a shout
It gets reviewed and turned around
That’s what it’s all about!

We have all had to get used to a snowy theme in the past week or so. Tales abound of difficulties encountered by this person and that but I wonder if you heard the story of the woman who dialled 999 and explained to the switchboard operator that her snowman had gone missing?

“I went out to have a fag,” she said, “and he’s gone.”

After the police had spoken to her sternly about the real purpose of emergency calls she told them that she thought it was an emergency because his eyes were pound coins and his arms teaspoons! They must have been very small arms if they were represented by teaspoons and if you don’t believe me, read the story on the BBC News website:  Woman dials 999 to report snowman theft in Kent.

Sometimes it is hard to credit what you see and hear but I find it hard to believe how cross some people appear to be about the story that one of our largest and well known law firms has opened up an office in Belfast.

Herbert Smith has taken the unusual step (for a large City of London firm) of opening an office in Northern Ireland to handle document review for their litigation clients. Judging by some of the reaction you would think they had proposed opening an office in Lapland to handle enquiries about the possibility of viniculture in the region!

Reaction has not been universally positive. “An awful idea” said one commentator providing a flavour of the criticism. “Don’t they know that Belfast lawyers are only qualified in Northern Irish law?”

Not all the reactions were critical of course and as someone pointed out it will be a boost to the local economy. For myself, I am by no means sure that this idea is a bad one. After all, Herbert Smith did not get where they are today by taking ill thought out and generally poor decisions about its practice. And what is more, I recall many commentators urging law firms to start offering innovative solutions to their clients and to try delivering legal services in a more cost effective way. As soon as one firm tries it, the idea comes in for a barrage of criticism!

It seems to me that provided Herbert Smith takes responsibility for the work carried out in its Belfast enclave the clients are better off because the work done will carry the Herbies’ stamp and the cost should be significantly less.

Further it seems to me that this is all of a piece with the changes taking place in this area. Consider the recent acquisition of Pangea3, one of the leading LPO operations by Thomson Reuters or CMS Cameron McKenna’s huge outsourcing deal with Integreon and Rio Tinto’s outsourcing of a large chunk of their legal work and ultimately their GC Leah Cooper to CPA Global. There is more: deals such as Berwin Leighton Paisner’s deal with Thames Water and Freshfields’ outsourcing work to Mills & Reeve.

Readers will by now have seen the formal announcement of our own Smart Insourcing service. I firmly believe that there is merit in this approach just as there is in the approach adopted by Herbies. Ultimately the clients will decide if they like it or not but in the meantime we will concentrate on delivering an excellent service of eg document review and look forward to competing with the offering by Herbies or anyone else!

It will take more than a cold snap (or ill informed criticism) to put us off. As the woman who lost her snowman said:

“It ain’t a nice road but you don’t expect someone to nick your snowman.”

The main suspect, we feel, has probably melted away by now.

What is smart insourcing? Simply put, smart insourcing allows law firms to draw upon a pool of local paralegal talent as if it were an extension of their own in-house paralegal team.

Document review, in particular, is one of those requirements that tends to come up at short notice and with a degree of urgency that can place a serious strain on a law firm’s own resources. Millnet Smart Insourcing allows law firms to augment their in-house capability, using local resources, at times of the greatest need.

Why have we done it?

Our LPO Survey earlier this year revealed genuine concerns in the sector that outsourcing is depriving homegrown young lawyers of the opportunity to learn their craft. The inescapable effect of the recession on law firms has only worsened the already dire employment prospects for new law graduates, and a virtual doubling of the number of LPC students in the past two years has only fed the glut.

In the midst of all this doom and gloom, Millnet’s Smart e-Discovery service has never been busier, confirming our belief that value for money is the best incentive that we can offer our clients in the post-Jackson, post-recession (we live in hope) era.

The new insourcing team is managed and backed up by some of the most experienced electronic review practitioners in the UK and has at its disposal the widest range of e-discovery technologies of any independent supplier.  The team itself consists of a handpicked group of recent law graduates, ready to rise to any challenge in the field of document review and discovery.

The team is headed up by Millnet directors Charles Holloway and Emma Bolsover. Charles is a former litigation partner at Eversheds and Emma holds a degree in law and a Postgraduate Diploma in Legal Practice from the College of Law, York. She has worked for Millnet for over 10 years.

As a minimum, junior members of the team have passed the LPC or its equivalent and are likely to be awaiting the start of their training contracts. Membership of the team offers them the chance to broaden their horizons and become familiar with the practical aspects of the litigation process right through the EDRM model.

Unlike Legal Process Outsourcing, issues such as Data Protection, risks to client confidentiality and problems with language are kept to a minimum. Accessibility and understanding of the issues and concepts involved in the particular case or matter are enhanced.

In summary, smart insourcing is flexible, economical and easier to manage than taking your own staff off other things, bringing in contractor staff or sending the work offshore. With virtually no setup cost, no callout charges and the possibility of rapid deployment, the solution to your legal process resourcing is right here on your doorstep!

After only four weeks, the feedback we are getting from clients is positive – usually along the lines of, “What took you so long?”

If you are interested or would like more information, please contact any member of the team on +44 (0)20 7422 8850.

Consider, however, how much more frightening than a mere week must have been the predicament of “Los 33” at the start of their ordeal. In the end they were all safely rescued after 69 days but 10 weeks must have seemed like an eternity to them at the outset and the original prediction that they would not be rescued until Christmas must have caused an agony of despair unknown to a politician.

I must confess I did not give much for their chances on the August day when the news first broke that they had been trapped but, as we all now know, they were eventually released from their underground prison and Chile is rightly in a mood of national celebration.

Mercifully, the miners appear to be none the worse for their ordeal apart from the need to wear wrap around sunglasses which may well be more fashionable in Chile than in the UK but are clearly necessary in a country where the sun shines at least occasionally, unlike here!

Los 33 ( did you know that where we say “cheese” when we want someone to smile in a photograph, the Spanish say “treinte y tres” or 33? Try it and see! It is impossible to say without a smile!) whether smiling or not, will have to get used to living with their families again which will doubtless have its problems not least for the miner who was met at the pithead by his mistress rather than his wife who had only found out about the existence of the other woman while her husband was incarcerated underground!

The world probably looks different to the miners to what it did when they started their shift on 5^th August. Since then we have seen:

• The collapse of law firm Halliwells.
• England beating Pakistan and Australia losing to India with the “old enemy” slipping below England in the world rankings for the first time since the current system was introduced in 2003.
• The introduction of the new Practice Direction 31B dealing with electronic documents in multi-track cases.
• Continued discussion about the merits of legal process outsourcing.
• The start of a new debate about the whole area of legal training with even the usefulness of the training contract itself being called into question.

Now I would love to spend more time on the cricketing story but I fear that my editor will not allow me to say more than that former Australian bowler Ashley Mallett is predicting that England will retain the Ashes easily and Geoff Lawson and Shane Warne have both questioned Ponting’s tactics in the latest India match and his suitability to continue as captain. I fully expect my Antipodean readers to respond that this is all a bluff to wind up the Poms, but before my editor or my Aussie MD call time on these musings, I must move on!

While the thoughts of the Chilean people are focused on the rescued miners, the thoughts of legal commentators have recently been trained on two aspects of legal life in this country which both have some bearing on our industry and in particular the connection between the lawyers trying to come to terms with new technology and new rules for dealing with such cases and the difficulties which, according to our recently conducted survey, lawyers perceive with the issue of outsourcing.

I understand the huge difference between multi-million pound deals whereby law firms outsource to India the whole or part of their back office function over a period of 3 to 5 years and the regular but still occasional use of LPOs for legal review in particular cases. The headlines for the former are there for all to see, (for example Rio Tinto outsourcing to CPA Global not only part of its legal work but ultimately its General Counsel, Leah Cooper, or CMS Cameron McKenna’s recent deal with Integreon) whereas there is little mention of the latter.

Legal Week of October 14^th carried an article called “Inside the Revolution” where author Anthony Lin’s byline read that the LPO industry in India continues to grow, “but not as fast as its cheerleaders hope or its detractors fear.”  LPOs still only account for a small fraction of corporate legal spend and CMS Cameron McKenna’s £500 million deal involved no billable work at all!  [Inside the Revolution, Legal Week, 14th October, 2010 (subscription section)]

The article went on to claim that the LPO industry includes a number of different business models but that the one most familiar to US lawyers-“the use of cheaper Indian lawyers to handle document review and other routine litigation tasks- is not necessarily the most widespread or fastest growing.”

Unlike Integreon, Pangea3 focuses on lawyers’ work such as document review for litigation and due diligence and Lin quotes Pangea’s Sanjay Kamlani as saying that few others have copied them apart from the likes of Quislex, Mindcrest and UnitedLex.

Whatever the position on the ground, the jury appears still to be out! If I were an aspiring lawyer today, I would have real concerns about LPOs effectively removing from law firms the opportunity for their trainees and more junior lawyers to learn about the litigation process. If I were still a partner in a law firm I would worry about that too, as well as about the other apparent disadvantages of outsourcing about which I have written before [e.g. You are only Jong 1200 times, 9th July, etc]

Whoever is right, the clients still need legal review done swiftly, cost effectively and well. The model may be to outsource this process to India and elsewhere and it may be to continue doing it in house at the law firms provided that up to date modern technology is used sensibly and strategically bearing in mind the costs savings which can be made today over previous approaches to this problem.

The Times carried an article (also on October 14^th) asking “Has the training contract had its day?” Doubts have surfaced about the efficacy of the current training arrangements for lawyers and the numbers of trainees is falling. This is at least partly due to the recession/credit crunch and I was told by one young lawyer the other day that despite a decent degree from a decent university and a commendation in the LPC, the best offer was for a training contract in 2013! While this may be an isolated example, it would have been unthinkable a few years ago.

So where is this all going? I am not clairvoyant but I think that we may be able to square this particularly difficult circle. We are currently looking at recruiting interns who will have passed the LPC or its equivalent but who, for one reason or another, have had their training contract deferred or where they are for other perfectly good reasons not ready to take one up just yet. With the right people we believe we can offer law firms the best of both worlds. We will be able to offer very cost effective outsourcing of, say, legal review, on their doorsteps and under their instruction without all the disadvantages of outsourcing to another jurisdiction or another time zone, while at the same time offering the interns training in the litigation process and making them knowledgeable about the sort of work they will ultimately have to do when they take up their training contracts.

I will keep you informed as to progress on this front but that optimistic prospect leads me to conclude that not all is doom and gloom in the world of e-disclosure. Far from it! I am confident that this will prove to be a success because those to whom we have spoken about the new service have been enthusiastic about it. Coupled with some of our current offerings including Nuix 3, Equivio Relevance and Index Engines, we are confident that there is every reason to be optimistic about the future.

So much so, that with our 15^th anniversary looming, we are planning to celebrate with clients and friends on Guy Fawkes’ Night with drinks and eats, a fashion show, a tasteful girly show and, of course, fireworks. If you have not yet secured an invitation, and when I last checked they were going like hot cakes, you will have to contain your impatience and wait for the doubtless sensational report following the event from our very own roving reporter, Bridie Sheldon.

Finally, back to the miners! Did you know that Robert Peston, the BBC’s economics editor, may well not be able to attend the G20 summit next month? I have heard it said that the BBC sent so many people to accompany reporter Matt Frei to Chile that they have no money to send poor Mr Peston to report on the economic summit. They will just have to find another deputy director on £400,000 plus of licence payers’ money and ask him/her to pay for the flights!

Alternatively, perhaps the BBC should outsource their reporting on this occasion!

Incidentally, why do we all still have to suffer bank holidays? Given to bank workers in the late 19^th century who did not have proper holidays, they are an outmoded concept where the state allows you to have a holiday on a given Monday when the weather is “guaranteed” to be poor and everyone else is on holiday so you cannot get anything done. Note to Coalition: Abolish bank holidays (except Christmas and Easter as these are religious festivals) and allow everyone an additional number of days of statutory holidays to be taken when we want and not just because it is ghastly Wilsonian May Day or August 31^st!

Politics aside (and I am not going to talk about Florence Rose Endellion or “Uncle” Nick, still less the effects of the June Budget or the forthcoming Spending Review) the next few months in the legal and technology world seem likely to be dominated by:

• Strong competition between law firms for juicy big ticket litigation.
• The introduction in October of the new Practice Direction 31B and the formal passing into the rules of the Electronic Documents Questionnaire.  (A commentary will appear shortly in the resources section opposite).
• Ongoing debate about LPOs.
• The emergence of the Third Party Litigation Funders as mainstream providers of funds for litigation (always assuming there are willing investors brave enough to provide the funds in the first place).
• Continuing downward pressure on law firm costs exerted by clients and general counsel. In turn this will lead to increased pressure on profit margins as much of the low hanging fruit has already been plucked by the managing partners and CEOs of firms keen to reduce costs as demonstrated by the recent reported profits surge across many of the larger firms. It will not be so easy next time round and the firms who succeed will be those which are prepared to offer fresh and innovative solutions to old problems.
• The increasing use of technology in Early Case Assessment, Document Review, Disclosure, etc
• Further rationalisation of the technology vendor market: economic pressures and the ability to keep up with the changes in technology will take their toll.

I predict that we will see all of the above soon even if the timescale I have suggested turns out to be more elastic.

We are all in for a bumpy ride. Squid and Cream anyone?

A recent report in The Times from Japan noted that an electrical engineer is out to change the culinary world as we know it. I cannot provide a link as that newspaper has decided to cut itself off from the reading public who are encouraged to pay for what was previously free and Google has therefore taken down the links! So that we can share the phenomenon, I can tell you that, armed with a gadget the size of a large marker pen, Professor Kiyoshi Toko of the University of Kynshu prepares combinations of food, for instance carefully mixing soy sauce with crème caramel to create the exact taste of sea urchin. It is all about electrical impulses sent to the brain by the taste receptors in the mouth when they come into contact with food and drink. The implications, according to Professor Toko, are huge. (Implications are always huge! Has anyone come across “tiny” implications)?

A prod with the gadget (a sort of sensor) which can replicate the minute electrical differentials as food hits taste buds could immediately establish provenance and quality. No pun intended, but in essence, the good Professor is trying to make taste objective. And squid and cream? Apparently it tastes like strawberry shortcake!

The point of all this is our old friend innovation coupled with a dash of experimentation on the side. Sadly it does not always work out as I am sure the guinea pigs at Kynshu University will readily testify. Some things just do not change for the better. I was sad to learn that the ancient post of Judge Advocate General of the Fleet had been abolished as long ago as 2004. Established in 1663, the post was held by a civilian judge responsible for the supervision of the Royal Navy’s court martial system. The 28^th and last holder was Commander His Honour Judge John Sessions who died in June this year and the duties he discharged have now been subsumed into those of the Judge Advocate General who deals with the Army and the RAF as well no doubt with a phalanx of officials at the MOD. I have bemoaned the passing of the Lord Chancellor’s Department and the arrival of the Ministry of Justice before and time will tell whether these changes are an improvement or not.

However, innovation and experimentation are vital to law firms and particularly in the area of litigation. Examples include:

• Litigation Funding, where to next?
• LPOs, the debate continues!
• New technology, because technology always changes. Ask Professor Toko!

I will return to each of these at a later date as I believe we will hear more about them all in the coming months.

In the meantime, and as a taster (since we are experimenting with food) I was interested to read the article by Gabe Acevedo, an attorney in Washington DC, writing in Above the Law, which contemplates the growing use of technology and the social media as a possible counter to the rise and rise of LPO:  Could Technology Turn The Tide Against Legal Outsourcing Overseas?, Above the Law, 12th August, 2010.

• Of those responding, a clear majority of about 70% had not outsourced and had no experience of the process. Of the 30% who had some experience, over 80% had experienced mixed or negative aspects of the process – only one respondent said they had had an entirely positive experience.
• Of those who were thinking of outsourcing, the results were again mixed with 46% agreeing they would consider outsourcing of large disclosure exercises but 54% saying they remained to be convinced of the benefits or who had come to the conclusion that the work should not be outsourced in any circumstances.
• In response to the question about which aspects of their work they would consider outsourcing, 77% thought that they would consider outsourcing initial document review, the collection and processing of ESI and document review or aspects of their middle or back office functions.

• More interesting were the specific factors to be weighed up when considering the whole question of outsourcing. Among the many factors, both good and bad, mentioned by respondents were:
  • Standards of work.
  • Ability to pass on costs to the client.
  • Fee reduction for the firm.
  • Quality assurance and control.
  • Concerns about the process for litigation and legal review. At least one respondent thought the whole idea of outsourcing was a bad one.
  • Here to stay and could help smaller firms handle bigger cases.
  • Necessary for smaller firms particularly with large scale e-disclosure.
  • Concerns over future of legal profession if everything outsourced.
  • Confidentiality.
  • Regulatory compliance.
  • Cost.
  • Ability properly to interrogate documents.
  • Concerned how to test document review as it was being done.
  • Why outsource if you can do it in house?
  • Jurisdictional and data protection issues.
• 18% thought that there should be no outsourcing and that all work should remain in the UK for fear of what might happen to the legal profession in the event of outsourcing becoming widespread.

Once again, many thanks to all those who participated. We will use the information to shape our own Smart Sourcing service that is due to be announced shortly. And naturally, we will continue to respect the confidentiality of the responses and the respondents alike – which makes it a tad difficult to announce the winner of the lunch on me but you know who you are (or you will shortly)!!

I am not talking about Legal Process Outsourcing, nor Smart e-Discovery. I am talking about a report I first heard early last Thursday morning on the Today programme about the discovery of more than 70 flint tools and chips unearthed in Happisburgh on the North East coast of Norfolk.

Happisburgh (hands up all of you who thought it was called Happy’s Berg, when it should be pronounced Hazeboro’!!) is a small village on the coast of Norfolk between Cromer and Great Yarmouth. Until last week it was remarkable for little more than a red and white painted lighthouse, a nearby garden owned and cultivated by one Alan Gray and a propensity for its houses nearest to the sea to fall off the cliffs into the waves below, a phenomenon common enough on the east coast of England and one which arouses huge controversy every time someone suggests that it would be a better use of taxpayers’ money NOT to shore up the ever crumbling cliffs against the encroaching sea but to pay proper compensation to the house owners to enable them to move elsewhere.

Now, since Thursday morning July 8th 2010, it is famous for relics of an ancient human colony of homo antecessor or “pioneer man” a species from about 800,000 years ago in Spain. New techniques have dated the find to between 780,000 and a staggering 950,000 years old, showing that early humans reached Britain almost 250,000 years earlier than previously thought.

The previous oldest ancient human site was at Pakefield in Suffolk and dates to about 700,000 years old. As The Times put it that day …”British civilisation began in Norfolk”.

Often, it is a case of being in the right place at the right time. The ancient East Anglians migrated and/or died out as a new Ice Age turned the temperature from balmy to bleak and the area was recolonised later on so the pioneer men weren’t really in the right place at the right time.

According to Legal Week of 8thJuly, a number of deferred associates who might well have thought they were not in the right place at the right time and who went to work in the public sector while awaiting their places at recession hit law firms absolutely loved the experience. The report says they received reasonable pay, worked for the greater good and worked on more interesting and responsible jobs than they would have done as a menial worker ant in a big firm. Some were even said not to want to return to their firms!!

The sad thing is that almost certainly if and when they do return they will be treated to a diet of mundane tasks such as document review despite their experience gained elsewhere. That is the way of large law firms who have to keep the pyrimidical structure going. In the meantime the deferred associates may come to view their secondments as being in the right place at the right time, something they would not necessarily have thought likely when they first heard that their appointment was to be deferred.

May be this is all too gloomy a view. Reading about a Strategic Technology Forum held recently in that Mecca of the legal world Marbella, I was struck by the comment (Legal Week, 8th July) by Mark Dawkins, managing partner of Simmons & Simmons who have recently struck a deal with Integreon to outsource document review, due diligence and document production, that he expects the gearing between partners and assistants to decline. He accounts for his views by saying that junior lawyers will be expected to focus on higher quality work which needs to be kept in house while the other less valuable work is sent to India.

He may well be right but I fear for the growing number of aspiring lawyers who will, on that basis, graduate and not be able to find a job in a law firm, one of the unintended consequences I suspect of the current rush into outsourcing.

I have already expressed the view in recent posts that outsourcing should not be regarded as a panacea and that a well organised review of documents after sensible application of technology here in the UK may well provide a quicker and more cost effective e-discovery solution than sending everything to India, however good the reviewers there may be. Add to that, the real possibility that lawyers here will just not get the right experience and you will soon find that the pyramid is not nearly so broadly based with all the unintended consequences that brings in terms of a drop in partner remuneration and fewer funds for expansion, together with a contraction in the amount of work which clients feel it right to send to their lawyers when it can, according to those very lawyers, be done better and more cheaply elsewhere.

Being in the right place at the right time is sometimes pure chance but sometimes can be engineered. The early Norfolk inhabitants migrated or died and others took their place. Was that chance or poor planning?

I make a prediction. Despite the headlong rush to outsourcing, the next big idea will be…… insourcing.

You may laugh! After all, it is known that I live in Norfolk, where we now know civilisation in this country began and so what do I know?

But when insourcing is a reality, remember you read it here first!

LPO/LSO appears to be pretty high on the agenda of managing partners of law firms and others at present, presumably because the notion that you can use lawyers offshore to carry out tasks for a fraction of the cost of your own lawyers within the jurisdiction is irresistible in these straitened times. I am not sure what the army of paralegals and others who would have been engaged on the various tasks in this country think about it; they are surely going to be out of work if outsourcing increases, but for present purposes, I propose to leave consideration of that aspect of LPOs to one side.

LPOs operate from a number of hubs around the world. India appears to be the favourite hub at present doubtless because most outsourcing is done by lawyers and organisations whose mother tongue is English and India contains a high proportion of native English speakers or at least those whose command of the language is at the higher end of the scale. Also, insofar as we are talking about legal work being done by Indian lawyers, it is a considerable advantage that the legal system in India is based on the English system.

Other hubs exist in Japan, France, South Korea, Australia and South Africa. Coming up on the rails are China and Sri Lanka, although China will have to train more of its millions to speak a higher level of English and will have to review its internet policies before it can rival India.

CPA Global’s deal with Rio Tinto last year which resulted in General Counsel Leah Cooper moving from the mining company to CPA after effecting a 20% reduction in the company’s legal bills, stands out as one of the more successful pieces of outsourcing. Other companies come into the frame such as Pangea 3 and United Lex to whom BT outsourced its commercial contracting and anti-trust regulation work.

But the largest deal to date has been won by Integreon who are reported to have signed a whopping $852m deal over 10 years with CMS Cameron McKenna, covering marketing, accounting, HR, training and IT. Integreon also claim that they undertake work for 32 of the 50 biggest law firms including Clifford Chance, Allen & Overy, DLA Piper and some of the world’s largest organisations.

Investors are falling over themselves to get a slice of the action. India is investing heavily in infrastructure and IT as well as in training lawyers and ensuring their people speak a high quality level of English. It will be fascinating to see what the Chinese in particular make of all this. There is already a nascent LPO industry in that country and reports suggest that the Government in Beijing is intent on training 200 million and more Chinese to speak English fluently. Evidently, they cannot bear to see their great rivals India walk off with the prize but there is a long way to go before outsourcing to China will feel as comfortable as it does to India, not least because of their highly publicised censorship and control of the internet.

We have seen many instances of outsourcing in relation to legal review recently. The experience has been a bit of a curate’s egg, to be frank, as can be seen from my previous post. [Technophobia alive and well and living offshore, 2nd July, 2010] 

Nonetheless there are some impressive instances of successful outsourcing out there and if even a small proportion of the deals which have hit the headlines prove successful for the participants, outsourcing will have become a truly global phenomenon.

It is always easy to nitpick about new initiatives and this is something which should be avoided if possible. I am, however, interested to learn how those who have been involved in outsourcing or those who are thinking about it have been able to reconcile the problems which undoubtedly exist. Surely, it cannot all be about money, can it?

If you accept that you are going to go for outsourcing of, say, legal review, there are obviously a number of issues you have to overcome. I do not pretend that the list is exhaustive, but questions will surely include:

• How you choose an outsourcing company.
• Does its location matter?
• Will it have sufficient resources.
• Is a different time zone a problem? India goes to bed as America wakes!
• Data Security.
• Adherence to quality standards.
• Cost
• Confidentiality.
• Quality control.
• Liability of service providers.
• Lawyer/client privilege.
• Language abilities (English)
• Training of lawyers carrying out the review. Will they have enough training to be able to grasp complicated concepts and the needs of the outsourcers to make the process worth while.
• What happens if, despite best endeavours, the work is less well done than hoped for so that the work effectively has to be done again in the country of origin at higher cost and involving a considerable waste of time?
• Lawyers at the other end may not be subject to the same professional regulations or ethical standards.

None of this is intended to suggest that the issues cannot be resolved. After all, US $582 million ought not to be wrong, although the credit crunch and the banking crisis may be examples of how wrong one can be!

However, they are matters which need to be considered, and as reflected in my last post, outsourcing should not be viewed as a universal panacea for problems of cost and resource. I do not seek to comment on issues such as HR and marketing but in relation to legal review there will be circumstances, and personally I will be surprised it this is not more often the case than not, when an efficient application of the technology here in the UK coupled with a review based on the results of that application will deliver a better and more reliable result at less cost.

Currently I am preparing a short questionnaire on legal outsourcing which will be emailed to selected recipients canvassing their views. The carrot is that the questionnaire will be short (no more than 6 questions), easy to complete and I propose to offer lunch on me for the best reply (judged by me)!

That said, if there is anyone out there with an interest in the subject who would like to be included in the mini survey please let me know. You can add a comment at the foot of the post or you can contact me via the contact form on our website.

Talking of India and China, I read an article in The Economist recently on the issue of title inflation. [Too many chiefs: Inflation in job titles is approaching Weimar levels, June 24th, 2010]  Do you remember when the ratcatcher became the rodent officer? Even if you do not, you will understand the concept of giving people fancy titles to make them feel superior and to deny them a pay rise or similar.

India and China were singled out as countries where there is a longstanding obsession with hierarchies. If you have more than a passing acquaintance with the lonely hearts columns of some Asian newspapers you will know that fancy job titles can be the key to getting a bride, as the article points out.

I had no idea that Southwest Airlines has a chief Twitter officer. Equally, it has passed me by that Coca Cola has a chief blogging officer and that Kodak has one of those as well as a chief listening officer.

The article is full of such splendid monikers as Sanitation Consultants (lavatory cleaners), vision controller of multiplatform and portfolio (our old profligate friend the BBC) and, of course, the Chancellor of the Duchy of Lancaster (sorry Lord Strathclyde).

But the best “title-fluffing” is reserved for the man with no fewer than 1200 official titles, including apparently guardian deity of the planet, lodestar of the 21st century, eternal bosom of hot love and the greatest man who ever lived. Step forward, not the Right Honourable the Baron Mandelson of Foy in the County of Herefordshire and of Hartlepool in the County of Durham, Privy Counsellor and formerly First Secretary of State, now Shadow Secretary of State for Business Innovation and Skills, but our old friend the North Korean dictator and all round monster, Kim Jong IL!!

I do not know whether the burgeoning buildings in Gurgaon, 30 miles outside Delhi and a few miles only from the Indira Gandhi International Airport, are filled with people with fancy titles (The Economist suggests Chief Stationery Officer, Global Multi-Platform Paperclip Interface Ambassador and Lodestar of the Supply Cupboard). I am sure that, as in many organisations, there are some extravagant descriptions applied to a number of (self) important people. Indeed, The Economist reports that the number of members of LinkedIn with the title of “Veep” grew 426% faster than the membership of the site as a whole in 2005-9!

What is important is that we keep an open mind about LPO while never failing to ask the important questions. After all, that is what true consultancy is all about: asking the questions that people forget to ask because they think they are too obvious and then being surprised when the unresolved problems come back to bite them!

This was not a reference to the E M Forster story written in the 1920s, which uses the trial of Doctor Aziz accused of raping Adela Quested on a visit to the Marabar caves to produce a trenchant commentary on the sometimes awkward relations between India and the British Raj some quarter of a century before Independence. This was a story about the growth of legal outsourcing with a subsidiary strap line proclaiming “Companies and law firms are turning to India for cut price legal services”.

Much has been written recently about the growth of legal process outsourcing and in a piece entitled A cunning plan  [7th April, 2010]  I mentioned that, on the back of outsourcing legal work to Indian lawyers at CPA Global thereby saving 20% of its legal costs, Rio Tinto’s general counsel Leah Cooper had jumped ship to join CPA as its strategy director.

A number of high profile outsourcing contracts have been signed by law firms with household names such as CMS Cameron McKenna, Osborne Clarke and Simmons & Simmons. The LPO industry in India is predicted to grow from $146 million in 2006 to $440m this year and $1.1 billion by 2014.

With Indian based lawyers charging around $50 per hour for their services against the $400 charged in this country, concerns about quality and confidentiality appear to have taken second place to considerations of cost and cost cutting. Equally, others have raised the fear that lawyers in this country will never learn to “cut their teeth” if the work they traditionally do is outsourced to Delhi. Leah is dismissive. She says “I hear that every day and my response is I didn’t learn a thing as a baby lawyer digging through boxes in a storeroom. We may have to rethink how our lawyers are trained.”

Despite my status now as a non practising lawyer, I retain a considerable affection for my chosen profession and it has been one of my enduring concerns that many lawyers are failing to keep up with the fast moving world of e-discovery, the changes in the practice directions, the new cases and the improving technology which can assist law firms to retain their influence over the course of a piece of litigation for a client. Too often, I fear, the lack of expertise or knowing where to turn for help is in danger of driving the client to bypass the lawyer and turn to an expert, with the result that the lawyer only gets to see the papers after decisions have been made about review.

Leah may well have a point when she says we will have to look at how lawyers are trained. Lord Justice Jackson also urged the profession to have some training; echoing Tony Blair’s mantra of education, education, education!

It must be legitimate to ask how long will clients be prepared to go on paying for lawyers to educate themselves at the clients’ expense?

But what do I make of this apparent rush to outsource? I am not sure how widespread it is despite the high profile announcements and I am going to see if I can conduct some research in the marketplace to see how deeply law firms are engaged in this process or at least are thinking about it.

In the meantime, I wish to strike a note of caution! Indeed I am prepared to be a little provocative.

It will doubtless be argued that there are considerable cost savings to be made by using the undoubted expertise of well trained lawyers based in India where the costs of providing the infrastructure to support them is a fraction of the same cost in the West. In our current economic straits there is irresistible pressure from clients to drive down the costs of legal advice and if law firms can deliver aspects of the preparation of a litigation case at a reduced cost by using Indian based lawyers, everyone is a winner. It creates jobs in India and the law firms can present a lower bill to their clients. This in turn will satisfy the bean counters back at the ranch and the clients may even be more inclined to contemplate other and better litigation, if they can see it is not too expensive.

But is this all an illusion? What is actually happening? Why is it thought to be a sensible move to spend a good deal of time and therefore money instructing lawyers in a different jurisdiction to understand enough about a complex case and the issues involved only for the bulk of the review to be re-exported back to the UK for an experienced and expensive lawyer to carry out a review?

Let’s imagine a typical scenario. A law firm is consulted over a piece of litigation which involves a considerable amount of electronic documents. When I say considerable I do not mean that the case has to have terabytes of data but it should have more data than can be comfortably handled manually using paper. The partner and associate involved have to decide how they are going to advise the client on the strengths and weaknesses of the case early on so that a strategy can be devised either to settle the case as soon and as cheaply as possible or to defend the case robustly ( with many other possible outcomes in between!).

They are tempted by what they have heard about legal process outsourcing and decide that they should engage one of the LPO companies to assist. In order to provide instructions to the outsourcing companies the lawyers have to understand enough about the case to ensure that sufficient information can be given to the lawyers in India to carry out the review exercise efficiently. Assuming they do so the lawyers in India then return the reviewed documents to the instructing solicitors, who then have to conduct their own review of what has been reviewed together with the next stage of disclosure or witness statements, etc.

It is conceivable that this process will result in a saving of cost but it is also possible that unnecessary extra costs will be incurred.

What if the instructing solicitors were to work smarter in the first place? They might not need the outsourcing lawyers at all, they could deliver results to their clients more quickly and they will dramatically reduce the risk that their client decides to cut them out of this early pass review process altogether next time round.

The technology to enable lawyers to do this is here. It is readily available and there are people out there willing to train lawyers to use it.

Let me give you a real live example from our recent experience!

A law firm identified around 70,000 documents which were responsive to a series of agreed keywords and was faced with the problem of how to review these in a two week period. At a cost of approximately £7,000, Equivio Relevance was used to prioritise the documents for review with 1800 documents selected as a statistically significant sample. The remainder of the documents were ranked from 0 to 100 where 0 was totally irrelevant and 100 was totally relevant. The lawyers decided that they could skim read around a third of the total that fell below the 30% relevant ranking, leaving time to carry out a more detailed review of the higher ranked documents. Despite these decisions, it was clear that there were insufficient resources to complete the task in the limited time available. It was agreed that the review would be outsourced offshore where 30 reviewers were engaged on the task at short notice. Even so, the reviewers only managed to conduct a first pass relevance review of half of the documents at a cost to the client of £15,000. The process was much slower than anticipated on account of differences in understanding the issues offshore and the fact that there was no dedicated team of lawyers sitting around carrying out the review together and able to discuss issues as they arose. In the event, most if not all of the documents that were reviewed offshore needed a second and in some cases a third pass review to resolve issues of consistency and privilege. The net result was that the UK based lawyers ended up reviewing pretty well all the higher ranked documents at least once and 8 people were involved in the process! I can guess at the expense but have no actual figures to share with you!

The conclusion to be drawn in that particular case is that outsourcing provided little or no benefit and no savings to the overall project.

This is not in any way intended to denigrate the process in general but serves merely to illustrate that not all outsourcing is automatically the answer to your prayers. In that particular case, an efficient application of the relevant technology in the UK and a review based on the results of that application would have cost significantly less than the outsourcing and would have delivered a better and more reliable result.

There is a danger that the recent increase in LPOs is replacing one problem with another. The legal profession appears to be overcoming its xenophobia but is in danger of not overcoming its technophobia; xenophobia in outsourcing to another jurisdiction with all that may mean in terms of quality control and confidentiality and technophobia in the sense of an unwillingness to get to grips with the technology available or engage with an expert to help them master it.

Sadly if the technophobia is not overcome too there is a real risk that clients will no longer be prepared to pay lawyers to do something at which they are not expert and will engage others in the process thus cutting out the lawyers from a vital part of the work they traditionally do as litigation advisers and managers!

In short, xenophobia, pretty well sorted! Technophobia, not much progress yet and danger signals ahead!