I read with interest the National Law Journal article Will Increased Compliance Burdens Lead to Legal Process Outsourcing? (12 August 2009) about using legal outsourcing to help meet new compliance requirements. 

In my June post Legal Outsourcing Tipping Point? I suggested that the publicity surrounding Rio Tinto’s legal outsourcing reflected a tipping point for the legal process outsourcing (LPO) market. The NLJ article puts more weight on the scale to tip the market.

For years (literally) most legal media articles about LPO questioned outsourcing and raised caution flags. Many quoted large law firm partners as skeptics. While I’m sure these views were honestly held, I never saw facts or analysis to back them up. Then came recent articles about Rio Tinto merely reporting the facts of an outsourcing deal. This week’s NLJ article may represent a further shift: from skeptics, the legal media are now virtually advocates.

The article explains the proposed federal Financial Regulatory Reform, that it would increase corporate compliance cost, and that general counsels should consider using offshore lawyers to do some of the work. The article is by an executive at an LPO so the advocacy is perhaps not surprising. The surprise, if any, is that the legal media published it as a news story.

Going beyond editorial decisions, the logic in the article applies equally to any heavily regulated area. That is, there is a lot of relatively routine legal work associated with many regs and such work is in the sweet spot of legal outsourcing.

In my pre-crash May 2008 post The Right Resources to Solve Legal Problems, I suggested that clients think systematically about their portfolio of legal problems and the optimal resource mix where the resources include inhouse counsel, outside counsel, contract lawyers, paralegals, automation, and offshore lawyers. What logic and good business practice could not force, perhaps economic crisis will. With luck, the economic crisis will also help break down lawyer caste mentality, though I don’t hold my breath on that.

The shift in thinking by both lawyers and the media does not surprise me. Beyond the passage of time, which helps the legal market digest all things new, the economic crisis has forced corporations to reduce costs. Legal outsourcing is a lower cost resource for a range of work GCs must do.

[This was adapted from my Legal Media Shift on Outsourcing? at the Integreon blog.]