AN ALTERNATIVE TO MERGERS: Small and Medium Law Firms Looking to Expand- An Alternative Solution to Mergers

SMALL AND MEDIUM LAW FIRMS LOOKING TO EXPAND- AN ALTERNATIVE SOLUTION TO MERGERS

How small and medium law firms can grow with the help of a supporting Legal Process Outsourcing Unit.

INTRODUCTION:


Most law firms always wish to expand and encourage growth of business. What mid-level law firms do is that they merge with other similar firms in the hope of creating a larger and better collaborated firm. However, that is not the only alternative available to them. In this article, I will try to put forward my view of the alternative- how small and medium law firms can grow with the help of a supporting Legal Process Outsourcing Unit.

Mergers are not the only hope for medium law firms.
There is an alternative!

In this regard, I shall be writing this article in three major parts. The first part of it will look into the law firm mergers over the last few years and what the firms look for while merging with another similar or a larger firm. The second part will try to analyze the alternative, the possible greater growth of law firms if they outsource to LPO’s. The analysis in both these cases will be theoretical, though some areas will be spiced up with the use of statistics. In the third part, I will try to analyze the two alternatives, with respect to different benchmarks and try to ascertain which the better option for mid-level law firms is.

Written by:

Anagh Sengupta


Part I of this article- "Are Mergers the answer to Mid-level law firm Growth" is available at <http://megalpo.blogspot.com/2010/10/are-mergers-answer-to-mid-level-law.html>

Part II A of this article- "Can Mid-level law firms seek to grow by entering into Outsourcing Deals?" is available at

 <http://megalpo.blogspot.com/2010/10/alternative-to-mergers-can-mid-level.html>

P.S. The other parts of the article will follow soon.

THE LARGEST MAY NOT NECESSARILY BE THE BEST: Outsourcing can bring about the maximum potential in mid-level law firms.

THE LARGEST MAY NOT NECESSARILY BE THE BEST: Outsourcing can bring about the maximum potential in mid-level law firms.

“Size may no longer be everything. In fact, it may not be anything at all.”

An Analysis of the second part of the article ‘Outsourcing- The New and Improved Business Model Big Law Needs’ in AmLaw Daily (By Stephen Harper)

The piece by Stephen Harper is available at:

http://amlawdaily.typepad.com/amlawdaily/2010/08/harperoutsourcing.html

In the second part of his article, Harper makes a very interesting observation. He says, one of the biggest positives of legal process outsourcing is that it portrays a scenario in which mid-size law firms with ‘talented senior attorneys’ may rise up to the level of the monster law firms all over the world. Assisted by effective talent in research and other zones like document review, contract drafting and due diligence (which are the basics for most LPO’s), these talented but mid-level law firms may dedicate their valuable time solely on their clients and their cases without paying much attention to these ‘menial’ tasks. This can enable them to provide the same or even better quality work than that which is provided by most mega law firms. As it is well known that these huge law firms mainly use their junior attorneys for doing these kinds of basic work, the mid-level law firm can easily outsource such work to an LPO in India, who will have the expertise to deal with the work given to them.

A talented LPO, thus, can assist a mid-level law-firm to achieve new peaks and work at their maximum potential. As Harper notes, this might very well slow down the growth rate of large law firms and foster more effective competition in the legal market. It can also open a whole new arena of law firms to choose from for the client who mostly want the best. The largest then, may not be necessarily be the best. Top clients may migrate towards smaller firms with a more talented pool of resources, if they find them well assisted by an LPO. The attorney’s of these firms will not have to tire themselves with ‘mind-numbing’ tasks. They can rely on the LPO’s to do this work and can dedicate their time to other brain-consuming tasks.

A partnership with an LPO thus, will enable these mid-level law firms to compete more effectively in the big arena. Not only law firms, but also attorneys with a lot of clientele can outsource their ‘menial’ work to these LPO’s and make more and more thriving business. The mega-firm concept may vanish altogether and soon may well be replaced by the firm or attorney assisted by LPO concept. As Harper states, an altogether ‘new business model’ may develop in which quality and not quantity occupies the front-seat. A change may soon come about in the legal industry. Outsourcing can change the entire dynamics of market control and can foster much improved quality in the legal field.

Written by:

Anagh Sengupta,

The first part of the article is available at: http://megalpo.blogspot.com/2010/09/no-more-menial-jobs-young-associates.html

NO MORE MENIAL JOBS: Young Associates set to do the real job.

NO MORE MENIAL JOBS: Young Associates set to do the real job.

An Analysis of the first part of the article ‘Outsourcing- The New and Improved Business Model Big Law Needs’ in AmLaw Daily (By Stephen Harper)

The piece by Stephen Harper is available at:

http://amlawdaily.typepad.com/amlawdaily/2010/08/harperoutsourcing.html

In his article, Harper talks about how outsourcing has for quite some time now been a ‘profit-maximizing’ technique throughout corporate America. Though it has resulted in a loss of jobs for a lot of people in the United States, it has been accepted globally simply as a ‘necessary price’ for firms to thrive in the modern competitive market.

Legal process outsourcing is however, a comparatively newer phenomenon. It is only recently that it has received such hype throughout the world. Quoting the New York Times article in this regard(http://www.nytimes.com/2010/08/05/business/global/05legal.html?_r=1), Harper notes that outsourcing is quite advantageous in the legal profession when it comes to ‘mundane legal tasks’ like due diligence and document review.

According to the New York Times Article, we note that, legal outsourcing is steadily gaining popularity in India. According to Valuenotes (a Pune-based consultancy firm, reported in the article), the number of legal outsourcing companies in India has dramatically increased from 40 in 2005 to more than 140 by the end of 2009. Apart from this, the revenue of Indian legal outsourcing firms is expected to grow to $440 million in 2010 and easily cross the $1 billion mark by 2014.

Harper notes that clients will thus move towards law firms who have outsourced attorneys who work at lower rates and effectively perform ‘necessary but no-critical work’. According to him, young graduates may as a result face a dearth of entry-level jobs at these law firms. On the other hand, he states that though this might be bad for these graduates who miss out, it will mean a comfortable and better standard of work for the best that get through with the law firm. This is because such associates will not have to perform the ‘menial jobs’ which usually young associates do nowadays.

Thus, we see if that the legal profession at the top-most level is set to be more and more elite, with only the best being able to survive at the top. The graduates getting into law firms as associates, in the era of legal process outsourcing, will not have to do the so-called ‘menial jobs’ but instead concentrate on matters strictly important for the law-firm and the type of cases it handles. With the crème only benefiting, the legal profession is set to break new barriers as the standard improves considerably all over. The good research and backroom work by the outsourcing firms in India along with effective performance by the on-site law firms is all set to bring about a drastic change in the legal industry.

The analysis of the second part will follow soon.

Written by:

Anagh Sengupta,