Tuesday, December 28, 2010
So says legal job market guru and Indiana School of Law Professor William Henderson in an interview with the Chicago Tribune. The article notes some important outsourcing mergers of late.
Two recent mergers in the legal industry speak volumes about the forces reshaping the business of law at its highest levels. What's also notable is that neither deal involved large law firms.
Thomson Reuters, a media and information-services company, acquired Pangea3, a legal-process outsourcing firm with most of its lawyers in India, in November. A month earlier, Axiom Global Inc., which provides lawyers-for-hire to big corporations, bought another legal staffing company, Chicago-based LawyerLink LLC.
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LawyerLink, Pangea3 and other alternatives to law firms have been around for several years, but their business models have gained momentum since the recession because they have found ways to cut costs out of basic legal tasks.
. . . .
Jennifer Bertoglio, a lawyer who founded LawyerLink, said her company manages discovery less expensively than law firms. It's not just about paying her lawyers less. LawyerLink uses technology and quality-control processes borrowed from manufacturers to make document review more productive and with fewer errors, she said.
Professor Henderson notes that there is
still the widely held belief among law firm partners and general counsels that outsourcers don't offer the same quality of work as law firms . . . . The perception, right or wrong, has prevented outsourcing from becoming embraced in the legal industry. Only about 1 percent of the money spent on lawyers in the United States goes to outsourcers, according to various estimates.
But Thomson Reuters' acquisition of Pangea3, based in New York and Mumbai, appears to at least validate the business model. Lawyers in India charge $25 to $35 an hour for routine corporate work such as drafting contracts and complying with regulations, said Ganesh Natarajan, president and chief executive of Mindcrest, a Chicago-based rival of Pangea3.
In announcing the deal, Thomson Reuters, which owns West, a legal publisher, said outsourcing will be key to helping law firms and their clients be more 'responsive and cost-effective.'
Henderson agrees: 'This is the beginning of a wave that's only going to get bigger in the years to come.'
Hat tip to Above the Law.