Media Coverage

If there were ever an iceberg that was truly just the tip of the iceberg, the recent decision by Rio Tinto Group to hire Indian lawyers to do basic corporate-commercial legal work may well qualify.

"It won't be long before inhouse departments start looking at the elements of even the largest transactions that are amenable to outsourcing," says Carla Swansburg, president of the Association of Corporate Counsel's Ontario chapter and senior counsel at Royal Bank at Canada. "I'm thinking things like due diligence, contract review, data collection, legal research and lease abstracting."

This type of thinking could spell the beginning of the end for the highly leveraged, associate-hour-heavy work that makes up so much of law firms' prized transactions.

"Big M&A has a huge price tag, and that's enough of an incentive for seeing what you can commoditize," she says.

Rio Tinto, bypassing its external counsel, has worked directly with legal outsourcing company CPA Global to recruit 12 Indian lawyers who will perform what managing attorney Leah Cooper calls legal tasks "at the basic end of substantive," such as using old agreements to draft new templates that allow internal or external counsel to carry out more complex work.

The goal is to save about $25-million annually by effecting a 20% reduction in the Australian-English mining company's $126.8-million legal budget. So far, the goal seems quite realistic. In less than two months since the Indian team began operations on May 1, Rio Tinto has saved approximately $1-million by paying rates that are one-seventh of what it pays its main external counsel, Linklaters and Baker & McKenzie.