Legal Outsourcing Update

The London Times ran a feature Saturday profiling the outsourcing of certain legal tasks.

Obviously, it's no huge disclosure to point out that LegalEase Solutions is a firm specializing in legal process outsourcing. But in terms of the blog, we try to explore all relevant trends in the business of law, of which outsourcing is just one movement.

As frequent readers know, the goal of the blog is to explore the commoditization of certain associate-level deliverables, the breadth that the internet has eliminated traditional office walls, the calls for change to 'business as usual' from clients and corporate counsel, organizational evolutions, alternative billing practices, and other paradigm shifts in the business of law.

But since the London Times article just fell in our laps, let's give it a look.

While the article focused on one legal outsourcing company, the underlying fundamentals apply to all reputable outsourcing firms.

"... an army of young Indian graduates, most of them from the country’s top law and engineering schools, sits before a barrage of computer terminals. Many are working on legal documents digitally accessed from the servers of blue-chip Western clients via transcontinental fibreoptic cables. Others are engaged in research for upcoming litigation to be fought out in American courtrooms, or are analyzing patent filings registered by British companies."

Bottom line: Highly trained international attorneys are performing associate-level work (deposition summaries, litigation support, legal research, preparation of pleadings, contract/document review, and more) at a fraction of the cost of BigLaw associates.

"Together with the fingerprint scanners that operate the locks on the doors, they lend the premises a sci-fi feel."

Bottom line: Data security and client confidentiality are imperative, and outsourcing firms are completely aware that their success depends on implementing a multiple-level approach to security.

"Much of the work... was once the preserve of trainees and associates at big City law firms. Some of those firms racked up annual revenues of more than £1 billion during the boom years, in part by billing out teams of junior lawyers for up to £300 an hour for even the most routine tasks."

Bottom line: Significant financial savings are possible -- without sacrificing quality -- when international attorneys provide the same deliverable at a cost 50 - 70% less.

LegalEase white papers on data security, ensuring confidentiality, and protecting against conflict can be read here.

Monthly Subscription Plan

Alternative billing models are a frequent topic of conversation these days, with the focus primarily on a fixed rate or flat fee for a specific deliverable.

San Francisco firm Smithline Jha, though, is putting another option on the table -- the monthly subscription model.

According to Northern California legal newspaper The Recorder, 90% of Smithline Jha's revenues are now generated via monthly subscriptions.

While clients are purely on a month-to-month contract, a projection of overall annual expenditures is prorated to calculate a monthly charge. For new clients, an exploratory month is used to familiarize Smithline Jha with the client in order to help project annual services.

Law.com's profile of Smithline Jha notes that the monthly subscription model seems inherently geared for clients with consistent, measurable work taking place over an expected period, which does seem to fit the firm's focus on IP licensing for software and internet companies.

The value add, though, is that clients are more eager to spend time leveraging Smithline Jha's experience, which fosters a legitimate relationship.

Now clients tend to invite them to the deal table earlier, while terms are still being discussed, rather than bringing them in to review a ready-made contract. "They're not afraid to call anymore," Jha said. "They didn't feel like the meter was running every time they talked to us. The net effect was we got so much closer to our clients."

It's the difference between simply receiving a product and experiencing an actual working relationship.

This allows Smithline Jha to produce invoices which list only deliverables, not hours.

In other words, invoices document collaborative goals achieved, not a divisive accounting of my time versus your money.

And maybe that should be the first consideration of any paradigm shift -- how can we improve the relationship between attorney and client.