The announcement today by Rio Tinto that it is outsourcing its legal work to India is bound to send shudders down the spines of some of the large global law firms. This is serious stuff. This is not just back room chores. Rio Tinto are talking hard core legal work - they are looking at knocking $20 million off their annual legal bill of $100 million.
This is a further example of the good that is coming out of the current recession. The severity of the issues facing many businesses is such that people are looking for fundamentally different solutions - they are not simply tinkering in an effort to maintain the staus quo. In effect, the evolution of the legal profession - and many other business processes too - is being accelerated.
Richard Susskind, writing in The Times today, said that "firms hope that outsourcing is a temporary phenomenon that will lose appeal as the economy recovers. But the recession will highlight for all time that traditional law firms are inefficient, that new ways of sourcing legal work are possible, and that legal costs can be cut dramatically. When these truths are widely recognised, not least in boardrooms, there will be no backtracking".
It's hard to disagree with Susskind's view - but the point needs amplifying. Outsourcing is almost certainly not a temporary phenomenon for large global businesses, but smaller and mid-sized businesses are going to be challenging the way in which their legal services are provided too. Such businesses may not be spending the $100 million that Rio Tinto are, but they are still wanting a more responsive and cost-effective solution than they have perhaps had in the past.
Which is perhaps why the business model of the global association of professional service firms is proving so resilient in these difficult times. At MSI Global Alliance (www.msiglobal.org), our mid-sized member firms are certainly noticing the different buying patterns of clients, and whilst the very largest businesses may be intrigued by the Rio Tinto approach, many smaller ones see the association model as the right way to go.
James Mendelssohn (jmendelssohn@msiglobal.org)
www.msiglobal.org
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