The Next Generation of Outsourcing: Offshoring High-Value Legal Services To India. That’s the topic of a panel discussion at the ALM Outsourcing Conference 1115am session. 

[This blog post comes to you live from the ALM-sponsored Legal Industry Outsourcing Forum (May 23, 2007, NYC). Notes and comments are real time with minimal editing and posted as a session ends. I am taking notes in Microsoft OneNote, so use the outlining format.]

1. Panelists
a. Moderator: David Perla, Co-Chief Executive Officer, Pangea3 LLC
b. Sandip K. Berri, Senior Vice President, General Counsel, Genpact
c. Janine M. Dascenzo, Managing Counsel, Legal Operations General Electric Company
d. Nancy Laben, Deputy General Counsel, Accenture
e. Ramona E. Romero, Esq., Managing Counsel, Operations and Partnering, DuPont Legal
2. Genpact
a. Was spun out from GE
b. Originally started as entity that set up the GE captive legal processing in India
c. Started with basic contracts, legislative monitoring, corporate housekeeping
d. We divided work into 3 buckets of varying levels of complexity, starting with least complex
e. Work was kept simple initially, in part because of politics
f. Customers now ask for legal outsourcing services
3. Accenture
a. Laben manages 350 lawyers around the world at Accenture
b. We initially looked for service providers. Found GE, but it was captive at the time
c. We set up our own captive center for contract review and management in Mauritius. 10 lawyers who are bilingual in English and French. They have moved up the value chain since we opened the center
d. We will repeat this model in Spanish in Buenos Aires. Also will open a center in the Philippines.
4. DuPont
a. Romero joined as a litigator. Has managed partner program for last couple of years.
b. Last year, entered into contract with Office Tiger for legal outsourcing
c. We have been outsourcing commodity legal work domestically for 10 years, with Kelly Law Registry and other providers
d. The only news for us is the offshore element
5. GE (General Electric)
a. Dascenzo joined GE a few years ago. Now is managing counsel of Global Legal Organization. 1300 lawyers worlwide; 800 in US
b. We are talked about as pioneer in legal outsourcing.
c. Early on, we outsourced via Genpact; now we have spun it out (but retain 30%)
d. We spend $3mil annually for routine legal work offshore – simple contracts, warranties, trademark management
e. Now looking at legislative monitoring, higher level corporate governance, routine compliance (anti-money laundering, prohibited person list management) via Genpact
f. WE have 65 captive lawyers (employees) who work on US patent applications. These are attorneys trained to US PTO standards and the work is supervised by properly licensed US lawyers
g. GE has not yet taken the next step to more complex legal work – others are ahead of us
6. What drives the move to consider moving legal work offshore. What work occurs offshore.
a. DuPont: cost is the biggest driver. Bulk of our spend is on litigation. We saved over $500k on $2.5mil spend in first year. These savings are measured against what cost in prior year.
i. Not all Office Tiger work has been conducted offshore. Export Control limits what can be sent offshore. Our goal is to drive as much work offshore as possible.
ii. All litigation support functions offshored also occur onshore. Export Control drives the decision. Office Tiger does conversion, objective coding, database development, initial subjective review, privilege and responsive review. This is all done under the supervision of the inhouse legal team. OT did work on a database – this work was instrumental in a damages case against one of our insurer (DuPont was plaintiff). OT worked under supervision of domestic expert.
iii. Data collection is performed internally with a custom built tool – outsourcing begins with conversion of data to other formats.
iv. In the DuPont Legal Model, working with Office Tiger follows the same pattern of other partners – a long term relation. DuPont network members refer work to one another, even where DuPont is not the client
v. Using teams in India and Philippines. I don’t see a difference in training required between onshore and offshore personnel
b. Accenture: our business changed. We had just done an IPO. On the road show (to investors), we heard that we needed consistent revenue. We grew outsourcing aspect of our business. The legal support required for outsourcing is greater. We had to expand our capabilities. We looked at increasing higher value work domestically. 85% of legal effort is negotiating outsourcing contracts. We save about $55k per person for each employee in Mauritius. Data collection is an internal function, not outsourced.
i. Training and turnover is a significant cost onshore, offshore, employees, or outsourced. We are looking at ways to outsource the training of legal personnel.
c. GE: we do not outsource work that would otherwise be done by law firms. It’s only work that would otherwise be done inhouse. $3mil savings is not that much relative to our $500mil outside counsel spend. The benefit is letting inhouse lawyers do higher value work. As we move more complex work to India – work that might now go to outside counsel – we will see a much bigger saving.
i. Long term relationships are critical. You must know who your team is. There is upfront investment in training. GE lawyers cannot just “dump” work offshore. Especially for repetitive work, absent turnover, it does become autopilot. In the context of a longer term relationships, it becomes easier to deal with doing a one-off transaction offshore.
d. Genpact: most of our employees work on a dedicated model. But in some work, non-dedicated works better. Where work may spike, to manage capacity, we look at non-dedicated personnel. Clients understand you cannot manage to demand without non-dedicated personnel.
7. What were critical success factors in making offshore? Where did offshore work and not? What drove success and failure?
a. Genpact: Success factors
i. Biggest factor is willingness of US process owners to invest in moving the work.
ii. Training is second.
iii. Ongoing communication – process owners need to be available and make offshore personnel part of the time
b. GE: Success factors
i. Upfront investment
ii. Supervision with clear lines of communication. You need a point person – onshore or offshore – whom you trust, who will make sure expectations are set and quality standards met
iii. Picking the right work to send offshore. Routine contracts have worked well; some areas of law don’t work so well offshore
c. Accenture: Success factors
i. Culture at Accenture is strong. Whether captive or 3rd party, you need to include in the culture
ii. Continuous and consistent demonstration of value, not just cost-savings. We regularly document the delivery of services more quickly (because of time zone offset). One reason we will set up in Buenos Aires and Philippines will allow around the clock operations AND two sets of eyes to review work.
d. DuPont: Success factors
i. Selecting the right partner (especially at DuPont with its partnering mode). We were looking for fit, use of Six Sigma, established expertise, range of services
ii. After narrowing candidates, we sent 3 employees to India to conduct due diligence. One of the 3 was a very senior litigator, another was our litigation support manager with strong skills, and I went as manager of partnering manager. When we came back, our team made the case for selection AND integration plan.
iii. Invest early to make sure relationship start well and things work. A lot of communication is essential early on.
8. Best Practices – what are the best practices in offshoring
a. Training sufficiently and early
b. Keeping the offshore team close through close communication – don’t ignore team once set up
c. Visit the offshore site regularly
d. Data security must be ensured
e. Commitment and persistence – need to overcome law department and outside counsel resistance without shoving process down their throats
f. Service providers must create good career paths for employees. It’s one thing to attract the best talent at outset; to keep them, you have to provide the right path
9. Choice of country
a. Accenture chose Mauritius for several reasons. Looked at 5 locations including one onshore (Cleveland). India, Canada, and one other on list. Mauritius and India were close on cost. Because one-half of our work is in Europe, we wanted similar time zone. Also, there was too much competition for talent in India at the time. Others are following us to Mauritius. WE get a lot of site visits. So we are working on keeping our employees there. Buenos Aires will give us Spanish; Philippines gives us time zone coverage for Asia and Australia
b. GE looked at quality first, though cost is always a factor. With India, there are many qualified and sharp lawyers who know common law. India was natural for us because of internal business unit (now Genpact) that did BPO in India.
c. Genpact: India attractive because of breadth of skill set beyond legal (e.g., finance, engineering, science). This is beyond common law training and English language. Indian rules keep law firms small and often family – owned. That means LPO opportunities are attractive for Indian lawyers.