Thursday, August 27, 2009

Legal Outsourcing

Financial Post's Julius Melnitzer writes on the growing trend of outsourcing legal work to India, after a decision by international mining giant, Rio Tinto, to do just that with its corporate-commercial legal work:

"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.

...No one, including Rio's Ms. Cooper, denies the risks involved in outsourcing. But Ms. Swansburg, who worked at Osler, Hoskin & Harcourt and Ogilvy Renault before going in-house, says lawyers and clients diverge in their evaluation of the risks.

"The law firms almost always wave flags about quality and control, but their mistake is that they approach risk calculation in an extremely different way from in-house counsel," she says. "In-house counsel, whose budgets are being squeezed so hard, can't afford a zero-tolerance approach and they're being asked to analyze the cost-benefit equation much more closely these days.""

See the full story: Outsourcing is Taking Hold.

Rio Tinto decribes itself as "a leading international mining group, combining Rio Tinto plc, a London listed public company headquartered in the UK, and Rio Tinto Limited, which is listed on the Australian Stock Exchange, with executive offices in Melbourne."

- Shashi K. Raina, Toronto

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