Recently I have been exploring “Law Factory” – the concept that the legal market will offer low cost, industrialized processes for routine work that are separate from “bet the farm” operations for high-stakes matters. An open question is whether the two can co-exist under one roof. Recent news points to one way for the two to co-exist.

Herbert Smith to open Belfast office to handle disputes document review in Legal Week (24 Nov 2010) reports that UK law firm, Herbert Smith will open a wholly-owned document review center in Belfast, Northern Ireland. Belfast is a relatively low cost, onshore location in the UK.

Herbert Smith is prominent for its strong and large litigation practice, definitely a ‘bet the farm’ firm. So what motivated opening a separate law factory? Sonya Leydecker, the partner responsible for the Belfast center explains that the Belfast Center

“will enable us to offer clients a combination of quality, efficiency and value for money. Clients are increasingly looking to their lawyers for more imaginative approaches to the management of disputes. In particular, complex projects such as disclosure are important but can increasingly be systematised and managed in new ways. The Belfast office will make a new range of resourcing options available to clients.” [See the Herbert Smith press release.]

A few large firms have low-cost, captive centers to support their middle offices or law practices: Orrick (Wheeling, WV), Wilmer Hale (Dayton, OH), White & Case (Manila), Baker McKenzie (Manila), and Clifford Chance (Delhi). Other firms work with legal process outsourcing companies to achieve a similar effect. (I work for Integreon, an LPO that offers such services.)

These examples illustrate how large firms can move some of their support needs to lower cost centers with economics more like LawFactory than Bet the Farm. An open question is whether the same is true for entire practice areas. Consider that only a few large US firms have immigration law practices. Or that large US law firms with big employment law practices tend to have lower cost structures and margins their BigLaw brethren.

Over time, additional law practices may be subject to the same cost pressures as immigration and employment law. If so, it will be interesting to see whether BigLaw finds a way to run them as Law Factories or if they spin off into separate firms. As for the factory elements integral to BigLaw-Bet-the-Farm cases, the pressure will increase to find lower cost ways of managing them.

I think quite a bit is happening in the legal market to develop the LawFactory concept but The Lawyer takes a seemingly different view. Authority figures add up (today, 13 Dec 2010) is rather critical of UK law firms response to the Legal Services Act. “No firm, as yet, has come up with a coherent vision of disaggregated legal services and applied it forensically across the business, with all the HR shake-up that implies.”

I welcome reader comments on or examples of the Law Factory idea.