Among the many issues Ontario’s legal community will face in 2010, legal outsourcing is likely to be an important item on the agenda.
Until now, the contracting out of legal services to firms as far away as India has remained in the early stages in Canada. But with companies such as the Royal Bank of Canada having started farming out work to India last year, it’s clear the movement to save money through alternative ways of delivering service will continue.
Of course, with many law firms here having survived the recession relatively unscathed, the hope is for a better year as work in areas such as mergers and acquisitions ramps up. But despite that promise, clients are looking for value, which means lawyers will face added pressures to cut costs.
The issue of outsourcing is on people’s minds. In February, for example, the Canadian Institute is hosting a conference in Toronto on legal process outsourcing. Recently, meanwhile, U.S.-based legal outsourcing consultancy firm Fronterion LLC released its top 10 trends in the area for 2010. They include a shift in source countries as competition heats up from places such as South Africa and the Philippines.
But the firm, which of course has a vested interest in the subject, also says 2010 will be the year the outsourcing industry must prove its value to its customers. How much money does it really save? In the case of the Royal Bank, executive vice president and general counsel David Allgood said the savings aren’t huge.
Nevertheless, he called the move “a toe in the water around what can be done out there” during a discussion with Canadian Lawyer InHouse magazine last summer.
The issue of outsourcing raises many other questions. When does it make sense to do it? How do lawyers manage the ethical dilemmas involved, such as proper supervision of the work taking place overseas, maintaining solicitor-client privilege, and handling the inevitable privacy concerns?
At the same time, how should the legal profession respond to the challenges outsourcing poses, particularly when it represents a threat to the amount of business lawyers here will be able to pick up? And with India effectively shutting out foreign law firms from operating there, what types of reciprocity issues does outsourcing entail?
But beyond the practical matters is the question of whether the migration of legal work overseas is a good thing. From a strict economics standpoint, the shift of routine tasks to places where professionals can do them more cheaply makes sense. But after years of watching our manufacturing and, to some degree, parts of our service sectors move offshore, such developments in the legal field are somewhat troubling. What higher-value work will be left for Canadians to do?
While concerning, some of the changes are inevitable responses to market forces. The challenge for the legal profession, then, is to develop those areas of business that don’t make sense to outsource while continuing to invest in new ways of operating, often through technology, that make retaining Canadian lawyers the more cost-effective option.
Many practitioners are already going through that process, so we can look forward to seeing what happens in 2010. Already, it looks like it will be another challenging year.
- Glenn Kauth
