Late last month, Pangea3, one of India's largest providers of legal process outsourcing services, became the first India-based LPO to enter the Australian legal services market after announcing a tie-up with Australian law firm Advent Lawyers. The two organisations will collaborate on the whole spectrum of 'junior end' legal work, from contract drafting and revision to compliance and risk management work as well as M&A due diligence, and litigation and IP support.
The unique move could serve as a litmus test for other India-based LPOs seeking to grow out of their traditional markets in the subcontinent, the Philippines, the US and the UK into Australia.
David Perla, co-CEO of the Mumbai-based Pangea3, said that clients' willingness to explore cost-effective augmentations to the traditional in-house lawyer/external counsel relationship in light of the financial crisis makes Australia an obvious choice.
"For the past five years we have seen a transformation in the US and European legal industry," said Perla. "Many of the largest corporate legal departments around the world are embracing innovative solutions such as legal outsourcing to help increase internal efficiencies...The Australian legal market is experiencing similar pressures to the US and European markets [and] corporations are demanding better value and cost containment." Pangea3 says it is also helping the in-house legal departments of Australian companies to integrate legal technologies and offshore 'legal talent solutions' into their own processes.
But despite Perla's enthusiasm, other LPOs with much more on-the-ground experience in Australia have stated that cracking the market Down Under is easier said than done.
CPA Global is one such LPO. The company, which has been in Australia (Sydney) since 2002, had been handling mostly IP filings until it recently broadened its offering to incorporate transactional, contract and litigation support work.
The company's Asia-Pacific senior manager, Eve Johnson, said that while LPO can deliver cost savings of 80% when compared to the hourly charge-out rates of large law firms, the broader Australian market, including in-house legal departments, remains cautious on the idea; "They are very head-in-the-sand about this sort of stuff in Australia," she says, pointing out that for LPO to really take off in Australia corporates will need to force the larger law firms into more flexible billing, forcing the firms in turn to seek LPO solutions to lower their costs. This, she says is how LPO took off so rapidly in the UK.
The future
Even if corporate Australia does 'force the hand' of larger law firms in the country, there is in fact no guarantee that they would look to LPOs as the solution. As the results of the recent ALB In-house Survey show, the majority of responding general counsels and in-house lawyers in Australia and New Zealand expressed reservations about either using LPO themselves or having their external legal advisors use it. The risks to privacy, quality and confidentiality that so often accompany use of LPO were gambles that few were prepared to take.
While the success of any LPO provider's venture Down Under will turn on the extent to which they are able to allay those fears, finding a suitable model is perhaps just as important, and entering the country via an alliance. Under its arrangement with Advent Lawyers, Pangea3 is able to leverage its ability to offer access to a seemingly unlimited pool of workers in the subcontinent while leveraging Advent's local contacts and knowledge of local conditions.
LPO providers would do well to look at the strategies already being employed by firms such as Advent and also the Perth-based Balance Legal. Both of these firms have pioneered cost-effective alternatives to the traditional delivery of legal services through the use of secondments: the placement of lawyers of varying levels of seniority with clients for fixed periods of time to help them deal with increases in workload. Since opening for business, both Advent and Balance have built up both impressive client lists that include some of Australia's largest companies and a reputation in the local legal services market for efficiency, accuracy and excellence. The latter in particular is something that many LPOs crave but few have obtained.
Perhaps the model espoused by Advent and Balance (soon to be quite a few more according to a number of sources in Australia) is not 'outsourcing' in the conventional sense, but it demonstrates that the traditional LPO model is not necessarily the only answer to the resourcing pressures that in-house legal departments and law firms experience.
LPO providers looking to penetrate new markets in the Asia-Pacific, whether Australia, New Zealand, Mainland China or elsewhere, will need to think similarly broadly and creatively about how they package their services; after all, discounting will only get you so far.