Source: www.businessweek.com
While, India is undoubtedly the world’s outsourcing leader, its legal sector has yet to make the most of legal off-shoring / outsourcing opportunities. A rival for outsourcing possibilities, cost killer Manila, Philippines is trying to achieve what the Indians began ten years ago. And, it is American law firm Baker & McKenzie that is leading the field in off-shoring important operations, with the help of crack staff in the Philippines and elsewhere.
Unfazed by challenges of the global economy, Baker & McKenzie opened its first foreign office in Caracas in 1955, barely six years after Russell Baker and John McKenzie teamed up to form a partnership in Chicago. The firm, today, has grown into a $1.35-billion enterprise comprising of 8,900 lawyers in 69-offices United States-wide and 37-other countries. Its 200-person office in Manila shows exactly where the pioneering outfit is headed next, and where perhaps, other law firms probably will be, too.
That makes it imperatively urgent that India ensures it is a far more attractive legal off-shoring / outsourcing destination than next-door to USA Philippines, if it wants to be the world leader in legal off-shoring / outsourcing, as it is in other fields. And, there is no reason why it cannot do it, after all English is widely spoken here and all legal matters are handled in the English language. Besides, its legal system is based on that of Great Britain and has much in common with that of both UK. And USA.
But, why is that while Indian law firms, such as, Pangea3 are doing higher-end legal outsourced work, it is Manila, Philippines that makes the headlines in Business Week. I guess, the West has always been unsure about how to view Indian smarts and hot intelligence. They would rather deal with humble, floor scraping bows Filipino maids, nannies, et al offer them, than have a cockily brilliant Indian show them that when it comes to sheer genius, Indian is the best brand.
However, the lessons the US law firm has learnt from off-shoring / outsourcing to Manila, Philippines may help those that wish to follow its example. And, India’s fledgling legal outsourcing (LPO) industry can take note of how Manila made the mark.
It was in 1963 that Baker & McKenzie first opened its Manila outpost that provided front line IT support, computer maintenance for personnel worldwide, including marketing support for the firm around the world, using desktop publishing to create high-quality sales materials and other documents, as well as, doing a lot of word-processing, clerical tasks and some translation work.
In addition, Manila carries out business research for the firm globally, pulling together analysis reports on its biggest 200-clients and their markets and industries. It is a part of the firm’s aim to deepen its relationship with its clients, undoubtedly an important goal, as the competition for multinational clients intensifies. “Our ambition is to be counsel of choice,” says John Conroy Jr., Chairman of Baker & McKenzie’s management committee. “That requires more than just technical competency, how well you draft an agreement or do an oral argument in court.”
That may be so, however, India’s LPO sector has taken off by providing more upscale services to the US and European law firms, such as, patent filing, full-blown legal research and contract and document drafting. But, what it has to ensure is that Baker & McKenzie’s replication of its Manila office, with a similar back office in Juarez and a satellite office in China doing translation work and some market research, does exactly that while the top-end, better paying work wings its way to India.
James Jones, Executive Vice-President of Hildebrandt International of Somerset, NJ, a management consultancy for the legal industry, says the trend up until now has been for giant US law firms to outsource back-office functions or other lower-skill work to cheaper locations within the US, such as, West Virginia and North Dakota. That makes Baker & McKenzie a legal-outsourcing pioneer. “Law firms tend to lag behind the rest of the business world in terms of innovative ideas because of the conservative nature of lawyers. Baker & McKenzie is far out ahead of most folks,” says Jones.
The pay-off, of course, is lower costs and higher earnings per partner. A fresh-out-of-school attorney typically starts at $125,000 to $145,000 in New York or London, plus benefits. In the Philippines or India, he or she would get less than $20,000. Just by centralising its desktop publishing in Manila, Baker & McKenzie saved $500,000 in 2005. “It has been a major contributor to our profits,” says Conroy. “Our globally managed costs increased by only 1% last year, notwithstanding the fact that we have way more professional support.”
Cautious in its outsourcing strategy, Baker & McKenzie hired a consultant in the 1990s to look at saving money by moving more work outside of the US The consultant identified loads of jobs that could be shipped off, but also recommended firing a lot of the support staff in USA. The recommendation did not go down well with the management.
In 2000, the issue was again re-considered by the firm’s management committee, as it looked at how to manage its Asian operations better. This time, Baker & McKenzie decided to embrace ‘off-shoring‘, though on its own terms. Scoping out what functions should be moved to a low-cost site, the firm decided where its off-shore facility should be located.
Manila made sense, since Baker & McKenzie already had a long-established office there that understood the firm’s culture. Also, the staff was fluent in English, the firm’s official language, and with a less-noticeable accent than people typically have in China or India. As well, the Filipinos were viewed as being very loyal employees, according to Conroy. “If, you took 200-people out of the organization and moved their work to Manila, that would have created a major challenge,” Conroy says. “We haven’t created morale problems. We’re very positive about it.”
Baker & McKenzie started the Manila back office in 2000 with six typists responsible for preparing documents for Baker & McKenzie’s operations in the Asia/Pacific region. Later, it added IT work. “It had a slow beginning,” Conroy says. “I think people initially were sceptical about it.”
The firm then began to assign other tasks to the Manila facility. Sometimes these new functions worked, other times they didn’t. For instance, Baker & McKenzie found out putting together bids for new businesses, couldn’t be done well in a remote office. Instead, it worked better if the pitch assembly team was located in the same offices as the lawyers providing counsel to the clients, since ‘face-to-face’ communications are important in the business.
Slow going for the first few years, the lawyers used to having support staff down the hall, took some time to get comfortable dealing with someone on the other side of the world, via e-mail or phone calls. As well, the Manila staff took time to learn their responses had to be quick and free of mistakes. “We learned we had to set expectations not only for the lawyers, but the people in Manila,” says Conroy. “We set expectations and became zealous about them.”
With a head-count of 200-people, the Manila office has half of them doing document preparation, and a quarter doing computer tech-support work, which includes manning a global help desk 24/7 and maintaining and repairing the firm’s computer servers around the world. The office is seen positively by lawyers, too. Even when they’re travelling and might be without backup support in the home offices, Manila is always open and available. “It has become a travel companion for them,” Conroy says.
Craig Courter, the law firm’s Chief Operating Officer, notes that he now sends materials to Manila to be typed up and formatted without thinking twice about it. Usually, he gets the documents back within 45 minutes, the same as if someone on his floor had prepared them. By mid-2006, the Manila headcount hit 240, and more hiring is expected in the forthcoming years.
Indian law firms like Pangea3 are onto a good start in legal off-shoring / outsourcing, however, the entire legal sector in India has to organise themselves into a body that can lobby effectively and ensure that they get a major share of the very lucrative LPO pie. The clerical work can be left for countries, such as, Philippines, while Indian lawyers do more important white collar work like research and preparing cases, which is already being being done in India.
On the right track, the thing that remains is for Indian lawyers to impress the socks off US and UK law firms. All they have to do put on display their razor sharp, on the feet thinking grey cells, Indians justifiably are renowned for, and the rest is a piece of cake. Another bastion stormed, another scalp on the belt! Proven once again that India is the best choice, for whatever needs to be fixed or done! The greatest gene pool as far as brains and intelligence are concerned!
