Recent LPO news has included a number of press releases announcing that a Magic Circle firm has entered into an agreement with this-or-that global legal outsourcing firm. What's behind this trend? Tough economic times? Perhaps not.
Instead, I think that we can look at the U.K.'s Legal Services Act of 2007 as the prime-mover in this change. The stated goals of the act are to improve service choices and reduce costs for customers. In effect, it allows lawyers and non-lawyers to join forces, with the implication being that lower-cost non-attorney workers will be able to perform legal services.
Magic Circle firms, not wanting to be left behind, are lining up arrangements with offshore providers. This will provide them with access to lower-cost services when appropriate for the client – in theory maintaining competitiveness with other domestic entities that form to take advantage of the law.
It isn't clear whether this approach will allow the Magic Circle to fend off other alternatives, but certainly it will create a new market opportunities. However, when reading the outsourcing providers' hype, it will be important to remember that simply having a deal in place doesn't mean that revenue is flowing. So read the proclamations with care – so far, the emperor may not yet be fully dressed.
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