Legal outsourcing to India is bringing fundamental changes to law-firm business models in Australia, according to the most senior judge of New South Wales. In a speech to a gathering of the state’s lawyers on 31 January, Chief Justice James Spigelman said: ‘Those responsible for purchasing legal services in commercial corporations are subject to pressure to reduce costs, in the same way as those responsible for any other cost centre.’
An outspoken proponent of reform in legal business – with a long track record of criticising law-firm costs – Spigelman observed that Australian firms are starting to follow the US example of developing ways to save clients money with the aid of outsourcing solutions. He argued: ‘The commercial pressures to follow the Americans in this respect will increase. I repeat what I said a few years ago when I was informed that, for any significant commercial dispute, the fixed fee for the discovery process was something in the order of $2m. That level of expenditure is not sustainable.
‘Outsourcing through the use of Indian-based support services, such as digital dictation transcription and document management for discovery and due diligence, is an available way of containing such costs,’ he added. ‘However, overseas legal services are not limited to administrative matters of this kind.’
As an example of the wider benefits and expertise to be found within the sector, Spigelman referred to mining corporation Rio Tinto’s recent work with leading legal services outsourcing (LSO) provider CPA Global. In Spigelman’s view, the reworking of Rio Tinto’s legal department achieved in the arrangement was ‘high-end legal work – not merely legal process outsourcing’.
Spigelman’s remarks on law-firm fees echo comments he made in a speech to the New South Wales Law Society in 2004. On that occasion, he attacked the ‘tyranny of the billable hour’ and said: ‘The business community will expect a more cost-effective service. For example, we need to consider the adoption of a stopwatch system by which the parties agree, in advance, to the total time that a case can take. How they allocate their time is a matter for each party – but the total time does not change.’
Find out more about Chief Justice Spigelman here.
Influence of legal services outsourcing providers means that traditional law-firm business models are no longer sustainable, says Chief Justice of New South Wales