Search This Blog

Tuesday, September 12, 2006

DuPont Legal Model Version 2.0 (beta)

I have just been reading an interesting article this lunch time about yet another innovation that DuPont may be exercising on the Legal World, that if it is fully carried through successfully may well have as much an influence on the Legal market not only in the US but potentially in the UK .

What DuPont has done is off shore some of their legal work to the Philippines covering product liability cases and you can see the full article by clicking on the link in the title bar.

The aim of this work is aimed to reduce $6m from their legal spend estimated to be about $200m.

The article highlights the following quote that I place in full

"DuPont's legal department has been a pioneer in cost-cutting since the early 1990s, saving more than $100 million over that time through automation, outsourcing, and reducing the number of outside law firms it uses. Off shoring is the logical next step. While firms in India, the Philippines, and elsewhere have been processing legal documents for years on a small scale, the size and complexity of DuPont's deal with Office Tiger pushes it to a higher level. "If DuPont does well with this, you will find other companies taking a good look," says Bradford W. Hildebrandt, chairman of the legal consulting firm Hildebrandt International Inc., which estimates U.S. firms can save 25% to 35% by farming legal work to Asia. "Ultimately, there may be little limit to what can go offshore."

I suppose that this is DuPont imitating Lovell's 'Mexican Wave' where work was passed down to more cost effective regional firms and then sent back to Lovell's for quality control. The success or otherwise of this move off shore of course presupposes that there off shoring supplier Office Tiger can overcome some of the logistical and quality problems that some outsourcers have faced in the past.

However if this is successful it may impact on the way that companies who place commoditised work with their legal suppliers in the future. This has been executed in the past by cost efficient para legals who obviously do not cost as much as a fully qualified lawyer. These revenues via this source have been very useful to law firms especially as the article highlights in the US. also the costs of hiring a lawyer say in India or the Philippines is somewhat less than that of say a UK lawyer.

I can't see a swathe of lawyers disappearing as they will be needed to work on the more high value work that law firms should perhaps be looking at and maybe firms can utilise the experienced para legals for other more value added work that benefits the firm in the future such as legal research.

This is a position worth keeping an eye on - however it may act as a wake up call to re-examine their processes to ensure that they are as lean and computerised as they should be - otherwise their clients using a Coasian view of transaction costs may find it to be to their benefit to have this work done offshore.

No comments: