NEW YORK — Outsourcing is a big topic in the legal industry lately. As corporations in general continue to outsource many tasks, legal departments are also focusing on what can be outsourced. A recent panel, entitled Beyond Borders: Building Strategic Outsourcing Initiatives from the General Counsel’s Office, held at the 2nd Annual Corporate Counsel Leadership Forum, sponsored by Thomson Reuters’ Legal Executive Institute, discussed what exactly outsourcing is, its benefits and how to make it work.
Indeed, a key theme emerged around whether the practice of law is an art or a science and how outsourcing can help free up lawyers to work on the art of law, while finding more efficient ways to complete and deliver the science of law.
Panelist Arvind Vij, Managing Director and Associate General Counsel at J.P. Morgan, helped the audience distinguish various types of outsourcing, first clearing up the common misnomer that outsourcing necessarily equals off-shoring. But near-shoring, such as when you outsource your work to a group, company, third-party or affiliate within your own country, is popular also. In fact, sometimes work can be near-shored from your group to a captive center within your own company.
The flexibility for corporations to gain greater resources for new areas of development without having to hire full-time or even part-time attorneys is great, especially for a company trying to achieve continuity and quality control.
Outsourcing has become quite popular for certain functions, like know-your-customer regulatory investigations, contract management, or for the popular choice of ediscovery. “As we matured in outsourcing, we started moving work up the value chain, to keep people engaged and give them more opportunities,” Vij said, adding that now many of those talented legal minds overseas conduct M&A due diligence. For instance, outsourcing attorneys who started doing normal contract work and ediscovery review for J.P. Morgan now have virtual data rooms with the ability to conduct analysis at a higher level, Vij explained.
Vij and fellow panelist Michael Sonsteng, head of Legal Process Outsourcing at Infosys BPO, noted that several new hotspots for overseas outsourcing hubs have developed beyond India, in such places as South Africa, the Philippines, Poland, Dublin and the Czech Republic.
Nadia Dombrowski, Senior Vice-President and General Counsel at Community Federal Savings Bank, explained that there are many reasons for outsourcing — it’s not just about saving money. “Of course at the top of the list is cost-effectiveness — anywhere from 30% to 80% in cost savings — but for smaller departments, you can achieve incredible flexibility with these resources,” Dombrowski said, adding that while sometimes you’re outsourcing work to well-trained legal secretaries and paralegals, “you also often get highly-achieved attorneys, who can give you expertise you don’t currently have in your department.”
The flexibility for corporations to gain greater resources for new areas of development without having to hire full-time or even part-time attorneys is great, especially for a company trying to achieve continuity and quality control. Beyond that, outsourcing allows you to leverage time zones, freeing up your own attorneys to focus on more complex matters, she said.
Additionally, engaging an outsourcing solution is not just about cost and flexibility but about helping a company engage in process improvement. As Vij noted, when engaging another entity, whether a third party or a support group overseas, to “look at it from a strategic perspective you are forced to put things down on paper in terms of effective process.” This especially helps with routine work. The inherent risk in outsourcing is not knowing what you do well; you can’t just outsource an entire swath of work without first determining what is being done and what can be changed.
Indeed, Infosys BPO’s Sonsteng explained that companies benefit from outsourcing just because of the initial process of figuring out which duties are already “process-ized” or can be outsourced. “Figuring out what truly is a legal task or function, or what is a quasi-legal function that could be handled by paralegals or foreign attorneys, is the key”, according to Sonsteng. Any resulting document from that initial exercise which dictates exactly what needs to be done is very valuable, he said. “We think of law as an art — and it is — but an awful lot, sometimes even 50% to 60% of it, can be broken down into more routine tasks.”
But often general counsel face opposition to outsourcing, the panel noted. The key to getting your company to outsource is building consensus, Dombrowski explained. “You need the buy-in of the enthusiastic and the tepid supporters,” she said, adding that it’s important to focus the company on assessing the best use of their resources and needs.
Dombrowski observed that it’s often easy to initially get procurement and finance departments onboard with outsourcing, since they are getting more involved in how to control legal spend; but that risk and compliance departments are another growing source of support for outsourcing, especially if the company has a fair amount of anti-money laundering or know-your-customer work to do. Putting in place a good governance structure and communication plan can very effectively reduce a company’s risk, she advised.
You can find more information on legal outsourcing services from Thomson Reuters here.