The Billable Hour Debate Is Not About the Billable Hour

Another interesting blog post by Bruce MacEwen on the Adam Smith Esq. site - The Billable Hour Debate Is Not About the Billable Hour. The post addressed the ensuing debate of the “demise” of the billable hour. It is very interesting how Bruce reframed the debate as a basis of trust and not the other typical issues that cloud the dialogue.

Definitely worth a read.

Who Will Dominate Offshoring in 2020?

While reading through the interesting article in BusinessWeek - Who Will Dominate Offshoring in 2020?, written by Noshir Kaka, director at McKinsey based out of Mumbai, one point caught my attention in particular.

India graduates three million students every year, while the entire outsourced service industry employs 2.1 million in total. Therefore, India is effectively utilizing only 10 percent of their available workforce. Room for expansion is huge.

Kaka also discusses difficulties in the education system as well as language barriers, which are concerns for potential service buyers in more effectively utilizing this vast talent pool.

In our experience, we have seen the same trends with the legal outsourcing industry in India. We hear the often-quoted statistic that India produces approximately 80,000 legal graduates every year. But across the board, vendors typically recount the difficulties of recruiting qualified staff. In higher-level service areas such as legal outsourcing, based on our experience with a number of Indian LPO vendors, we see a significantly lower utilization rate for law graduates than the 10 percent noted by Kaka.

For the legal outsourcing industry to continue on its current growth trajectory, an increase in the supply side of the labor equation will be critical.

UK Openness

I just wrapped up my UK trip. While there, I met with a number of very intriguing firms in the industry. The US and UK have comparable levels of legal services outsourcing, but firms in the UK are markedly more open about it as compared to their US counterparts. I am not sure of the reason for this trend.

While I have a number of theories, I suspect that the upcoming Legal Services Act is influencing firms to be more open about the changes taking place at their organizations.

ABA Outsourcing One Year Aniversary

Today marks the first anniversary of the American Bar Association’s Standing Committee on Ethics and Professional Responsibility issuing of their Formal Opinion 08-451 Lawyerʼs Obligations When Outsourcing Legal and Nonlegal Support Services.

While we have not seen the tsunami flood of work sent offshore as some predicted, this past year has seen an increase of interest in and implementation of outsourcing. Firms may not be rushing to announce that they are outsourcing (particularly in a down market), but it is being done in increasing volumes. Outsourcing legal services is not part of the mainstream of common law practices yet, but it has gained considerable awareness and credibility in the legal community. Furthermore, we have noted great strides and increasing maturity of the vendors in the space, as well.

Due to quite a number of disruptive economic challenges and the proximity of core law firm functions, legal outsourcing is still in its early to mid-stages of development. Economics, client pressure, and changing dynamics in the legal industry will continue to drive outsourcing trends upward for this coming year and beyond.