The July 2003 issue of Corporate Legal Times in an article titled U.S. Companies Dsicover Cost Savings Down Under, describes how General Mills is saving up to 50% on outside lawyer fees by using Australian and New Zealand law firms to draft US patent applications. Lawyer rates there are 30% less than in the US and the exchange rate adds to the savings.
A sidebar to the article reports that GE has saved $1.7 million in outside lawyer fees in the Plastics and Consumer Finance units by sending basic legal work to GE lawyers in India. (See my prior post on this topic.)
Large corporations are under tremendous cost pressures, which transmit to law departments. I think the surprise is not that legal work is being outsourced. Rather, it is that a much larger volume is not sent offshore. Corporate America is not the only one to feel cost pressures. The current issue of American Lawyer, the annual AmLaw 100 issue, reports that one reason many law firms were able to increase profits in 2002 was careful cost control.
Technology easily allows sending documents, spreadsheets, presentations, and the other raw materials of lawyers’ work anywhere there is an Internet connection. That same connection also allows anyone to access online legal research services, collaborative tools such as extranets, or even formal work flow systems that control document flows.
Certainly the legal market has seen many other significant structural changes, for example, the use of staff attorneys and the growing ranks of non-equity partners. Not every AmLaw 100 firm works on unique matters and even those that do perform some elements of commoditized work. Which global law firm will be the first to test seriously routing work to lower cost locations?